Migrating from legacy to cloud payroll is an excellent way to ensure payroll compliance and achieve a well-managed and secure payroll system. Many organisations continue to use legacy systems due to how deeply entrenched they are with the rest of their technology stack and internal processes. Moving from legacy payroll to cloud payroll requires a solid business case and careful planning.
Here, we outline the case for cloud payroll and four key considerations before commencing a migration.
Why cloud payroll?
The number one reason we advocate cloud payroll systems is the ability to extend and integrate with other business systems. We have a long history of integrating workforce management tools with on-premise payroll; this can be an expensive process. Cloud payroll systems are built with APIs, allowing much easier and faster integration with other apps and tools. These could be financial systems; an ERP; a workforce management system; or other HR software. Legacy payroll solutions based on traditional server and desktop software require more time, effort and code to integrate with other systems: cloud payroll is a clear winner from an extensibility perspective.
Real-time data access
The second most significant reason we see decision-makers choose cloud payroll is real-time data access. For businesses with distributed workforces, cloud technology is an obvious choice for allowing payroll access across a range of devices and locations. The immediate outcome of real-time data access for everyone is a better employee experience – and quicker, better decision-making for managers.
Paperless audit trail
A natural secondary consequence of real-time data access is the ability to ‘go paperless’. Unless a payroll system is accessible anywhere, anytime, on any device – paper-based or offline data relating to payroll will exist. With a cloud payroll system, your organisation can get rid of the paperwork needed for tracking and recording activities and leverage a completely electronic audit trail.
Reliability and Security
With cloud payroll, your vendor takes care of most functions, such as security upgrades and maintenance. IT-related issues are less likely to arise, as the vendor has far more resources dedicated to the payroll system than a single internal IT department. Also, businesses with on-premise servers need to harden their internal systems and maintain their own multi-factor authentication protocol if they are to meet the security standards of a cloud-based payroll system; cloud payroll systems look after this for you.
Internal systems are configured based on a certain number of users and a certain level of computing demand. Payroll has two kinds of scale demands: a change in employees, or a lower or higher level of system usage. End of month or end of year can put heavy pressure on an internal system that is not built to handle that level of use. A reduction in staff may also mean you are paying more for your licensing and servers than you should be. Cloud payroll, on the other hand, can neatly scale up or down in line with your usage demands.
On a cloud-based payroll system, you pay a subscription fee, rather than an upfront or annual license fee for an on-premise system. Organisational software and data are hosted in the cloud, and the subscription fee includes the cost of hosting your information. Furthermore, a cloud software provider’s business is contingent on maintaining security, so a high standard of security is typically included within the subscription costs. Support is available 24×7 with most enterprise payroll software providers, and uptime guarantees are robust. All in all, the value equation tends to be better with cloud payroll than with on-premise systems.
4 steps for successfully migrating from legacy to cloud payroll
- What are your key systems and processes?
When deciding to migrate to cloud payroll, it’s important to determine which workloads and processes you need to move and which you do not. For this, there needs to be a complete analysis of the HR system so you can better determine what services to migrate to the cloud.
- What are your measures of success?
Setting some key performance indicators (KPIs) beforehand can help you ascertain the success of your cloud migration. An example of a KPI could be analysing whether it is easy for employees to tweak, access and remove their data on the cloud. Depending on the answer, you will be able to tell if your cloud migration achieved your target goals.
- What is your roadmap?
Planning and creating a roadmap can help you go a long way. It would be best if you decided what needs to be changed, moved or kept the same. You should also brainstorm potential problems and prepare in case something goes wrong.
- Which vendor is the ‘best fit’ for your organisation?
After you have decided what needs to be migrated, it’s time to look for a cloud provider. It is vital to find a provider that has experience in migrating companies of your size. The provider should also know how to migrate from an outdated system to the cloud. They should offer you constant support during the migration process and tools that facilitate the process.
A recent case for cloud payroll systems
The importance of cloud-based applications became particularly evident during the pandemic. Many companies leveraged business systems that, in the past, required their employees to be on site. Technology teams scrambled to implement network changes, provision access points and VPNs to enable access to in-house systems – increasing cost and latency but ultimately providing a measure of resilience. Those companies that already leveraged cloud applications – including payroll – did not have this problem as they could easily access their system and manage payroll remotely.
Even post-pandemic, distributed workforces are likely here to stay and will be increasingly normal. We believe cloud payroll will eventually become the norm, even in the largest and most complex of enterprises.
Get your cloud payroll strategy right
Tambla has experience working with enterprise and government clients to design, implement and provide a range of services to manage your cloud SAP HR and Payroll systems to automate and accelerate payroll processing. We can collaborate with you on a migration project from your on-premise SAP systems to the cloud or provide services that help to reduce risk and alleviate the cost of maintaining them.
We take a flexible approach to service delivery, deployment and hosting, so we can find the right environment for your investment, whether it is in the private or public cloud. To learn more about our capabilities in this space, please visit our website and get in touch.