Avoiding Overspend Risks during Payroll Software Implementation
Although Towers Watson states in the introduction to their 2011 report, New Horizons-No Boundaries, that HR is “no longer pressured to govern service delivery decisions by cost alone”, the fact of that matter is that TCO (Total Cost of Ownership) will always be a significant factor when deploying new payroll software. In fact, when choosing HR/Payroll technology, cost was the top issue for nearly 70% or respondents to the Aberdeen Group’s Future of Core HR survey. However, given the widespread impact that payroll applications have, staying within budget during the implementation phase for a new system can be a constant challenge. As such, we’ve put together the following four tips that organizations can adopt to overcome some of the potential barriers to reaching the go-live date on time and on budget.
Payroll Implementation Budget Tip #1: Don’t Forget to Plan Up-Front
As with any project, including as much detail as possible in the implementation plan will contribute to more accurate budget forecasting and therefore cost control. Unfortunately the tedium of the planning process is far less exciting than that actual implementation; leading a number of organizations to give this phase short shrift. One of the more important elements that can be unwittingly skipped in this haste to reach implementation is due diligence in regards to cost forecasting. Indeed, while cost estimates from the vendor are of course given in good faith, the actual figure can spiral past that initial ceiling figure if any organization has failed to plan. In the experience of Clay Scroggin of CompareHRIS.com, "Some vendors may provide fixed cost project costing, but even these projects can run over budget if the scope of the project [is] not fully defined". To keep on target with costs, have project documentation that contain full details of the expected software functionality, linking back to the original business case and the selection process’s request for proposal (RFP). Of course, being too attached to the original plan can also cause problems. As such, organizations should be prepared to also be flexible if necessary. As McGladrey’s David Funk notes, “Do not go-live before you are sure you have it right”.
Payroll Implementation Budget Tip #2: Don’t Overlook External Personnel
Payroll software implementations are unusual events for most organizations; often with several years between instances. For this reason (and countless others such as complexity), external help (in the form of payroll software consultants) is often sought. Typically, either the vendor will appoint an installation manager or the organization may engage its own consultant to provide independent and specialized expertise; however, leveraging this type of external personnel augmentation effectively requires diligence in both the choice and management of this extra staff. For instance, prior to settling on a specific payroll software consultant, you’ll want to know how familiar they are with the prospective solution. Further, would their previous clients recommend them? Most importantly, how many installs has this payroll consultant supported? Indeed, as Clay Scroggin points out, “Until they have performed a large number of installs they won't be able to handle all the pitfalls and issues that inevitably arise". Yet, the attention paid to these external personnel cannot stop at just the selection process. As Mike Myatt of N2growth puts it, “You need to manage the [consultant] and the process to the best possible outcome, and this cannot be accomplished with a passive management style. Make sure the project deliverables are clearly understood, and that a plan with benchmarks, milestones and deadlines is put forth outlining how to reach said deliverables.”
Payroll Implementation Budget Tip #3: Don’t Neglect Integration
Payroll might be a distinct and specific core HR function but payroll software in isolation will often fail to realize its full potential; resulting in costly issues down the line. As the 2010 Sage report, The Complete Buyer’s Guide for Payroll Software, notes, “For progressive organizations, the strategic alignment of payroll and human resource departments is no longer a ‘nice-to-have’ but rather a ‘must-have’. HR, Payroll, and Benefit functions have tremendous overlap and sharing the data ensures that all systems are in sync”. Indeed, the advantages of synchronizing systems include cutting down on data entry (one database, one entry), less paperwork (as one request automatically triggers other necessary procedures), and improved reporting (as the associated data can be used to produce more strategically-accurate analytics).
Payroll Implementation Budget Tip #4: Don’t Underestimate Data Migration
Populating the new system with existing employee and payroll data is the fence at which an implementation often stumbles, if not falls. Indeed, often by the time an organization realizes that its current data is flawed (whether it be incomplete or just inaccurate), the project will likely already be behind with the go-live date under threat. David Funk suggests for organizations to, “Work closely with your implementation partner to prepare your legacy data for import to the new system”. As Funk points out, “The data migration task requires your IT staff, expert payroll staff, and your implementation partner [to] work closely together; [however], remember, the accuracy of your data is always your responsibility.”
The Bottom Line on Payroll Budget Control
The sheer scope of a payroll software solution’s impact on the workforce means that effective selection and implementation are paramount. However, it is an inescapable fact that countless elements are capable of throwing a payroll application project off course (including additional factors such as insufficient payroll implementation training, process clashes, lack of testing or parallel running, and software/hardware conflicts). As such, keeping to budget can be an incredibly challenging issue; and organizations looking to avoid a cost explosion must pay careful attention to planning, project schedules and personnel if success is to be attained.
The advantages of synchronizing systems include cutting down on data entry (one database, one entry), less paperwork (as one request automatically triggers other necessary procedures), and improved reporting (as the associated data can be used to produce more strategically-accurate analytics)."