2021 will see tens of thousands of businesses updating their payroll software, with nearly all of them taking these mission-critical systems into the cloud. Even New Zealand’s IRD (Inland Revenue Department) announced in April 2021 that it was retiring its legacy HR software and replacing it with a cloud based system. It reportedly did this due to the decommissioning of an old datacenter. Thank goodness they found what they needed; even the IRD has its own payroll to run.
So why the sudden urgency to move payroll software into the cloud?
Well, aside from core accounting software, payroll is one function needed by every single business, no matter its size. Up until this point, many organisations had tried to make-do with their old payroll systems. Sometimes sheer inertia can hold you back, but inevitably a point is reached where old-school systems no longer cut it. Some businesses still use on-premise payroll processing. Some use older off-the-shelf software and others use systems that were historically custom built. But the proliferation of easy to use and simple to integrate cloud based software has made life so much easier for users, leaders and IT departments alike. One of the challenges with on-premise payroll software is that in many cases, the original software vendor no longer supports it, meaning routine problems can be catastrophic (after all everybody needs to be paid). Some organisations have managed to make their payroll software last longer by using a range of different workarounds, but these are not ideal for HR and Payroll managers who want to get stuff done more effectively.
Ultimately, the world of work has changed dramatically, leaving older legacy payroll management systems with a lot of catching up to do. When was the last time you issued or received a paper wage slip? These are now almost completely a relic of the past. There’s a good chance you’ve switched to electronic pay-slips. But how are these being sent to employees? Sending these out by email represents a major security weakness. Best practice for 2021 is for employees to login individually and securely to download their own wage-slips. And what about the hybrid workforce? For many years now, people have been working flexibly from multiple locations. They could be field-based, front-of-line workers or consultants who are location agnostic. During COVID-19, Stats NZ reported that 4 in 10 New Zealanders worked from home. When your people are no longer tied to one single physical location, you need to give them the ability to access your payroll services from wherever they need to be.
So what are the other reasons more and more people are switching to cloud based payroll software? Well it all boils down to the fact that most older (or legacy) payroll systems don’t support some of the complexities of today’s organisation. Here’s some of the common needs of today’s organisations.
Can your payroll software do this?
-Can your people self-service, with quick and easy access to their payslips and an accurate view of their remaining holidays and leave?
-Does your payroll system integrate with any other HR tools or software that you’re using?
-Is the onboarding process automated and friendly for new employees, or is it a laborious and manual?
-Is it easy to run payroll for the different types of people in your organisation? - e.g. those who receive commissions or have earnings based on piece-rates and additional allowances?
-Can you do payroll calculations for multiple legal entities in the same piece of software?
-Does it support multiple pay frequencies; e.g. for those who get paid weekly, fortnightly or monthly?
-Are you able to see an accurate real-time or up-to-the-minute view of leave, holidays and accruals, or does everybody have to wait until the end of the day to see the affect of any changes made?
-Can you get the high level reporting that you need?
-Does your software automatically update to reflect the latest accounting laws and regulation compliance?
-Date Effectiveness; when new people join the payroll in between wage periods, are you left tearing your hair out by having to manually calculate their pay and taxes?
-Are you and your team spending too much time responding to employee requests for how much leave they have left?