3 Steps to a Better Business Case for Global Payroll
Nov 14, 2017 | Topic: Strategy
Among multinational organizations of all sizes, payroll and HR team members are increasingly recognizing the benefits of adopting a unified global payroll solution. It’s easy to see how switching from a fragmented collection of legacy systems to a single solution can help standardize processes, reduce errors, and improve productivity and efficiency levels over time. Making a compelling business case to your leadership team, on the other hand, may not be so easy.
When considering any enterprise technology switch, C-suite executives can find it difficult to look beyond the upfront costs to see the long-term benefits of change. However, when those same change-averse executives rely on outmoded, disjointed, and even buggy systems to manage one of the organization’s largest cost centers, the case for change is there to be made.
The way to advocate effectively for a permanent change in global payroll is to craft a compelling business case for the long-term benefits of the switch. The power of your case rests in its clarity and veracity, which means you need to begin by answering the right questions:
1. What are the current costs of your existing system?
2. What does your organization require from a payroll solution?
3. What value is gained by switching to a unified global solution?
The Truth of Current Costs
It’s tempting for busy decision-makers to reduce system comparisons to a simple numbers game, a side-by-side look at the monthly bill, which is often where the campaign for an enterprise software switch ends. But by taking a more nuanced approach that clearly includes all cost factors of your current solution, you have a chance at winning that game. Begin your business case with a holistic view of the known costs of your current solution, the hidden costs, and the risks and issues that place added strain on payroll and staffing resources.
While known costs are easy to list, it’s important to note what’s included in those set rates. Is your monthly payment for software only or managed services as well? How many countries are included? Some providers add service charges for issue resolution, tech support, or employee training. Note those charges as well as how often you use the services—or avoid accessing them because of the costs involved.
Include any hardware purchases made during implementation with your current vendor, as well as expenses involved in regular maintenance and upgrades. It’s also important to note any related IT expenses, including if your existing system requires you to maintain internal servers and how much strain that puts on your IT staff and budget.
Unsurprisingly, identifying the hidden costs of your current system can be more difficult. You need to evaluate shadow labor, meaning people who work on payroll activities but don’t allocate their time to Payroll. Also, consider how much of your team’s time is spent on highly manual activities that could be automated with a more modern technology.
The amount and frequency of errors is important to record, as well as how often those errors have led to processing delays, fines, penalties, or other repercussions. Have you incurred any documented incidents of fraud or noncompliance? If not, how confident are you that it’s not happening unnoticed? If yes, have you had to engage counsel or consultants to help address concerns, and at what cost?
Finally, it’s necessary to communicate the risks and issues of your current solution and the real cost implications for your company, especially when it comes to security, adaptability, and visibility. Over the years, legacy systems may have gained multiple patchwork security updates to address emerging threats—quick fixes that sometimes create new vulnerabilities within the system. How confident are you in your current system’s long-term ability to secure and protect important data?
Today’s innovative companies can experience rapid changes in terms of needs, size, and even location, meaning an effective payroll solution must be inherently flexible. How frequently are product enhancements deployed in your current system? How often are your product development needs met? How relevant is the programming language your software is built on? If you expand into new territories, will your provider need to leverage additional in-country partners and systems to meet your needs?
Your payroll data includes a wealth of operational intelligence that is essential to any effective business strategy. How much access and visibility do you have with your current provider when it comes to your payroll data? And crucially, how much time and money do you regularly spend to manage concerns related to compliance, performance tracking, and efficiency?
Know What You Need
Once you understand the total cost of your current vendors, it’s time to consider what you need from a new solution. A good business case will include measurable objectives with clear cost gains. For example, how many fewer support calls, timing errors, or overpayments do you expect per month with a new system? What industry benchmarks or KPIs are you falling short on, and how much improvement do you want to make in each area?
Beyond benchmarking, this is your opportunity to think more strategically about payroll’s role in the enterprise. Think holistically about your desired objectives, how they relate to the broader company goals, and how the right solution can provide comprehensive support to your business. The following questions will help you think through your payroll operations and goals, so you can assess your needs according to the most important requirements.
Over the next 1-5 years:
- How will your staffing levels change? A payroll provider will need the ability to scale alongside your company if it’s going to be a good fit for your business.
- How many countries will your organization expand into? In what regions? The right provider for you will have the ability and experience to support end-to-end payroll in your targeted geographies.
- What core competencies do you want your payroll team to focus on? Consider what you’d like the payroll function to add to the enterprise, whether that’s faster processing cycles, more useful data, or more value-driven integrations.
- How can payroll deliver better insights to the C-suite? A new system can better equip you to meet leadership demands by providing easy-to-access analytics, higher quality data, or both.
- What departments/software would you want your payroll function to integrate with, now and in the future? Payroll is a high-value resource for the kind of intelligence that is incredibly useful in business decision-making, particularly for capacity planning, cost cutting, resource allocation, and productivity tracking.
The Value of Change
To convince senior management that a global payroll transformation is worth it, you need to show them it will do more than meet a checklist of features. You need to demonstrate how the switch can earn returns, create opportunities, and deliver real value.
The key to earning enhanced value from global payroll is data. A unified global payroll solution can help your organization cultivate and leverage data in a more strategic way, and your business case is your opportunity to outline the tangible and abstract benefits of that data advantage in a compelling manner.
Remember that team members far outside the C-suite will need to understand the benefits of a software switch as well. There may be significant resistance among certain areas of your organization, including your local payroll teams and regional managers. Build your business case with an eye for driving buy-in across the entire enterprise by clearly communicating advantages for all parties. Whether it’s faster processing, less manual activity, lower error rates, improved employee satisfaction, or another benefit, the case is there to be made that a unified global payroll solution can deliver value for just about every employee in your organization.
A version of this story was originally written for GPMI.