Demystifying Integration in Global Payroll
Dec 19, 2019 | Topic: Integration
The ability of global payroll to support and even further the goals of multinational organizations depends largely on the people processing payslip data and the technology they use every day. Increasingly, that technology is transforming the way we work, enabling more accurate processing in less time, which translates into greater cost savings and risk management.
These gains are possible because of the optimized, standardized data and processes enabled by today’s technology. Cloud-based data records make it easier and faster to access and share up-to-date information across international teams. Centralized platforms enable broad visibility of workflows, data, and outcomes at a level that was unheard of just a decade ago. All of this means companies can equip their payroll teams with the tools they need to do their best work.
It’s at the intersection of data and access that integration makes the greatest impact. When systems are integrated, timely and accurate data flows seamlessly between functions as needed. Despite what’s now possible, research firm NelsonHall reports that just 40% of global payroll customers are using an integrated payroll and HR solution. Part of the reason for this appears to be uncertainty around what integration does and how it can benefit companies. So, let’s take a closer look.
What Integration Is
Integration refers to the process of linking two disparate software systems via an interface that enables users of each system to work from a single shared database. Chief among the numerous benefits of systems integration is the elimination of the need to manually transfer data from one function or system to another, such as from human resources to global payroll. Additional benefits include greater data security and compliance, heightened visibility and tracking, and more comprehensive analytics capabilities.
How It Works
Before systems can be integrated, the data must be stored in the same way, whether that is in the cloud or on physical servers. The connection interface uses proprietary technology to access that data and make it available for use in both systems.
From a functional perspective, you can think of it like a master file stored on a central hard drive that you are able to access and update using a spreadsheet software and a colleague is able to access and update using a different application. The seamless data interface enables both of you to use the data as needed, without sending file versions via email or FTP, or needing to manually update the data in your system to match that in theirs.
How It’s Used
In theory, any system using a common dataset can be integrated. In practice, it’s more complicated, as varying levels of sophistication and standardization, as well as industry partnerships, can dictate which platforms can work together. Payroll providers are expanding their integration capabilities all the time, so when considering provider options, it’s important to check which can integrate with your existing systems.
Depending on your payroll frequency, key employee data could be transferred between related functions multiple times per week. Historically, this meant email attachments, third-party transfer programs, or manual system updates, each method providing plenty of opportunity for data errors or loss, as well as heightened security risks. Integration eliminates those issues by making the required data available automatically in both systems.
The most common types of systems to integrate with payroll include:
Human Capital Management
Time and attendance, new starters, salary changes, benefit provisions — HR is responsible for regularly compiling a tremendous amount of the data necessary to process payroll. So it makes sense that integrating HCM and payroll platforms is an increasingly popular move for competitive global companies to make, not to mention strategic and cost effective.
Accounting and Treasury
As complex as it is, global payroll is just one part of the process of paying employees. Once the calculations and payslip data are approved, the information is sent on to the department responsible for actually making the payments to employees and statutory bodies. Integrating these systems helps ensure the accuracy of those payments and eliminates unnecessary delays.
Enterprise Resource Planning
Multinational companies are increasingly reliant on ERP systems to enable holistic management of their global operations. From a strategic perspective, payroll is important not only because it’s essential to keep employees or because it’s the largest cost centre — but because it’s your greatest source of continuously updated, company-specific data. Making sure that information exists properly in your ERP system is no longer just nice to have.
Whether or not a systems integration makes sense for a company’s global payroll really depends on their goals and their capability. Weighing the likely benefits of integrating payroll and HR systems is important, but companies should also evaluate if their teams are ready and able to integrate. The general trend, however, is definitely toward integration, suggesting that all global companies may benefit from considering the option, whether to address their needs now or prepare for change going forward.