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Payroll Lab Small Business Payroll Logica’s Payroll Offering: A Study in Small Business Fit

Micah Fairchild Logica’s Payroll Offering: A Study in Small Business Fit

3 stars Average rating: 3 (from 45 votes)
 By Micah Fairchild

Logica’s Payroll for Small Businesses: An International Outsourcing Partner

A public business and technology service company (listed on both the London Stock Exchange and Euronext), Logica employs upwards of 41K employees across 35+ countries—delivering consulting, systems integration, and outsourcing across multiple industries and functions. Mostly known as a European vendor, the largest area of Logica solution deployment is in the UK; where the company’s HR Services business caters to some 850 organizations and supports the pay-slip process for over 18M employees (12% of the entire UK workforce and approximately 45% of the Central Government).

Logica was acquired in 2011 by Canada-based CGI to mixed reviews globally, and although technically available for a range of businesses (from the low-end of the SMB market up to large multi-national enterprises), Logica’s offering, much like ADP’s is decidedly skewed towards the upper end of the market. However, it should be noted that the reason for this larger company focus is not because of its offerings, lack of support for small businesses, or interest in this end of the market; but rather because of Logica’s strategic focus. More specifically, the company upsells consulting services and has found the bulk of its business in this regards is most easily sold to larger companies. The payroll outsourcing services provided by the company however are widely applicable across market segments.

Logica’s Payroll Options

Platform-agnostic, Logica believes in “providing a service rather than a product”—meaning, where possible, they will make use of an organization’s current technology in order to maximize return on investment and enable integration across the business. And although easily customized based on customer needs, Logica’s standard offerings include:

Bureau Payroll

Covering routine payroll administration, this offering is best suited for those organizations looking to outsource basic payroll operations while retaining a modicum of control. Covered tasks include administration, processing, and transaction work ranging from printing and distributing pay-slips and tax forms to paying direct debits and providing software support. While the specifics of exactly what will be covered is controlled by the customer, for the most part the responsibility of data collection (and its subsequent input), validation, and management does not fall to Logica in this package offering. Other capabilities that come with this vendor package include automatic system/software upgrades; access to Logica’s training platform; enrollment in the vendor’s customer support program; and the right to use the company’s consulting services when needed. Further, as is the case with other small business payroll vendors, Logica’s services are scalable to a point.

Managed Payroll

A full payroll service with additional HR options, Logica’s Managed Payroll is billed as having your own in-house payroll department without having to do any of the work. While that statement may largely be a matter of opinion, what we’ve found during this offering’s assessment is that the sentiment is fairly realistic. Specifically, this Logica package allows for the daily management of a customer’s payroll function; including data validation/input, routine administration (e.g. printing/distributing pay-slips), and the capability to tag on payroll-related HR tasks. Further, the Managed Payroll feature set also handles compliance activities and report generation; and (as an added bonus) has a flexible and evolving technology platform that allows for a host of existing software solutions to integrate with this Logica package. Interestingly though (at least from a flexibility perspective), one of Logica’s main selling points with regards to this package is its pay-as-you-go-service; which is offered in conjunction with Oracle’s HCM applications—a strategic partnership for sure, but potentially alienating and inflexible for those organizations choosing to leverage a different HR software solution. That said, this option does allow for implementation costs to be dealt with on a per/pay-slip basis—making it particularly attractive for those companies faced with significant turnover or contingent labor issues.

Logica Payroll Plus

A newer Logica concept that extends the idea of effective managed service, Payroll Plus actually consists of seven managed services (available separately or stitched together). Service 1 is Payroll Management Information, which delivers dashboards for trend breakdowns; an improved ability to identify errors (and possibly fraudulent payments); and intelligent data to quickly identify and address payroll areas that can improve cash flow performance. Service 2, deemed Basic Employee Administration, does pretty much exactly what you think; and is a managed service that handles the hiring, firing, and paying of employees. Service 3, Overpayment Recovery, is a benefits-management service based on the concept of overpayment. In all likelihood beyond the scope of what most small businesses would need, this third aspect of Payroll Plus does give businesses the ability to: recover overpayments that would otherwise have to be written-off; gain insight into the trends that could be causing overpayments; and have representation up to the point of legal action to work with employees to repay monies.

Service 4 is what Logica calls Payroll Control Account Reconciliation; a service designed to help with exposure to payroll errors, fraud, salary overpayments, third party payment issues, and potential cash flow problems (via over/under funding) by merging cash flow management with payroll control via system “mirroring”. It’s essentially a back-up cashbook management process tool that, like other aspects of Payroll Plus, is more geared to the larger organization. Services 5 and 6 (Payroll Health Check and Third Party Payments respectively) are basic elements included with almost any managed service or hosted payroll software solution; insight into areas of non-compliance and hardware/software maintenance. And finally, Logica’s seventh service that rounds out the Payroll Plus offering is Total Expense Management (TEM); a service delivered via the global expense platform MobileXpense which focuses on automated workflows to control operational costs.

Logica’s Strengths

  • The CGI acquisition (while not without its faults—mentioned below) positions Logica as a strategic link in one of the payroll industry’s only global, end-to-end technology service offerings.
  • The company has documented cases of shared infrastructure deployments where cost reductions of up to 50% were realized.
  • Logica’s agnostic approach to software allows the vendor to maximize (to the extent possible) customers’ already existing software packages to deliver its service offerings.
  • Logica excels at providing business process outsourcing (BPO) for a multitude of potential areas besides just payroll and HR—a particularly helpful tool for small businesses engaged in supply chain management.
  • Logica’s deep consulting knowledge-base and focus on strategic improvement for its customers can be leveraged for significant cost savings and gained efficiencies.
  • Logica’s offerings provide multiple outsourcing avenues and options for customers to leverage.

Logica’s Weaknesses

  • The recent acquisition by the smaller Canadian firm CGI has many questioning the long-term viability of the Logica solution. For now it appears that plans are to keep Logica as a wholly-intact offering; however, a number of analysts have hinted at CGI plans that include divestitures.
  • While prospective Logica customers will undoubtedly benefit by having a North American parent company running operations, according to IDC analysis, current clients should be cognizant that “there is an obvious risk of disruption to day-to-day service delivery due to [Logica] staff contemplating their future within a company that is based in Canada”.
  • According to IDC’s Douglas Hayward, “Stitching together two regional players doesn’t make a truly global player. This deal won’t create a tier-1 player with the scale to take on HP, IBM or Accenture”.
  • Logica’s “pay-as-you-go” service is tied to Oracle HCM; a potential trouble area for those organizations looking to, or already engaged with, other company tie-ins for HR processes.
  • The comprehensive outsourcing services that Logica provides will likely be too involved and expensive for customers at the lower end of the small business market.
  • As Webster Buchanan research reports, Logica’s geographical coverage is “largely dependent on how quickly partners expand country-specific capabilities”. And given the fact that these updates are typically driven by customer requests, certain areas where payroll and/or BPO are needed could be delayed indefinitely.

Short List Logica When:

  • Your company’s operations fall into Logica’s supported geographic areas.
  • You’re an organization that crosses country borders and needs an internationally-focused payroll services provider—especially in the North American and European markets
  • You’re looking for a wholly outsourced payroll solution.
  • Your company is also seeking a strategic partner that can be leveraged for consulting services.

Consider an Alternative Payroll Solution When:

  • You are a small business with less than 100 employees.
  • Strategic business analysis and/or partnership are not needed.
  • Your business is a single-country operation and no near-term plans involve expansion into international territories.
  • Your company is seeking a “payroll-only” provider and has no interest in outsourcing other administrative functions. End

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Platform-agnostic, Logica believes in “providing a service rather than a product”—meaning, where possible, they will make use of an organization’s current technology in order to maximize return on investment and enable integration across the business.

 

 

 

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