Clients embarking on their Human Capital Management (HCM) SaaS journey often ask whether they should deploy their Workday payroll software before, in conjunction with, or after they deploy Workday’s core HCM system. It’s not a simple question to answer. That’s because the best timing won’t be the same for everyone. The decision really depends on a number of factors, including the organization’s current and future HR and payroll landscape, both in terms of service delivery and technology.
Determining the “right” time for a payroll deployment calls for an honest assessment of the decision’s implications, risks and benefits. Here are the top 10 questions we ask our clients to consider:
What implications will the timing of your payroll deployment have on integrations?
Typically, if you go live with payroll prior to HCM, you will need to build a number of temporary integrations between the new payroll solution and the legacy HCM solution. That is simply “throw-away” work. Similarly, if you go live with payroll after you deploy a new HCM solution, you will have to build a number of temporary integrations to/from the new HCM and your legacy payroll solution. That’s also “throw-away” work. If, however, you go live with SaaS HCM and payroll at the same time, you will eliminate the need to build temporary integrations. Instead, you’ll be able to focus on the end-state solution.
While a dual deployment may, theoretically, be the best option, it’s not always the most practical one. You’ll need to asses the effort, cost and resource capacity that a dual deployment will require, and weigh that against the costs, concerns and business drivers that may have you considering separate implementations.
What implications will the timing of your payroll implementation have on the configurations of those SaaS HCM areas (i.e., core HR, compensation, benefits, absence tracking, time tracking, etc.) on which payroll is most dependent?
Organizations often need to configure these areas in a particular way to ensure the new payroll solution will process pay in a timely and accurate manner. It’s important that you understand the payroll requirements while configuring these areas. Even if you decide not to deploy payroll and HCM at the same time, payroll support and input is required when defining HR requirements. If payroll isn’t involved, you run the risk of having to re-configure those areas of HR upon which the payroll solution depends. For example, you want to make sure you include all the employee data required for a downstream payroll solution.
What implications will the timing of your payroll implementation have on processes?
Organizations that choose to deploy payroll either before or after their SaaS HCM deployment often need to build temporary manual processes to maintain employee data across two systems that aren’t built to talk to each other. They need to maintain both processes until they are ready to deploy Workday payroll. That’s labor intensive and time consuming. One client organization chose not to invest in automating a process to their legacy payroll system, since that system would eventually go away. However, the organization is now questioning whether the short-term savings were worth it. The added effort of maintaining distinct manual processes is making it more difficult for the deployment teams to focus on the end goal: successfully deploying payroll in the new HCM system.
What implications will the timing of your payroll implementation have on your resources?
While combining HR and payroll requires less effort and fewer resources in certain areas (e.g., you would need just one change management communication lead to cover both functional deployments), a concurrent deployment approach will require more resources in other areas. For example, you would likely need more IT resources to manage data conversions or integrations when deploying both HR and payroll. When deploying Workday Payroll and HCM at the same time, you need to make sure you have the capacity to support both simultaneously. If you don’t, you may be putting the success of both deployments at risk.
What implications will the timing of your payroll implementation have on your change management activities?
Organizations need to consider whether employees, managers or administrators can absorb the HR and payroll changes at one time. They also need to consider whether they would prefer to train and communicate once or on two separate occasions. While the change implications are typically minimal for employees and managers, there is a greater impact on HR, compensation, benefits and payroll administrators. It has been our experience that administrators perform better when they receive training on the full end-to-end process at once, as opposed to learning temporary and partial processes at different points in time.
What implications will the timing of your payroll implementation have on funding?
Again, while combining a SaaS HCM and payroll deployment may reduce overall cost, it may require more upfront funding. It’s often beneficial to develop a mini business case, which will allow organizations to compare the ROI of deploying together to the ROI of deploying separately.
Are there synergies to be gained by having the HR and payroll systems go live at the same time?
We often see a 20% to 30% decrease in overall implementation costs when organizations deploy payroll and HR together. They are able to avoid much of the throw-away work related to managing manual processes, building temporary integrations, redoing HR-related configurations, and maintaining two systems and two sets of data. In addition, we often see labor synergies in the areas of project leadership, project management (1 plan vs 2), change management (more stakeholders, but not much more effort), data conversion, integrations and testing, Finally, concurrent deployments generally enjoy an increased level of accuracy, less rework down the road, and an implementation that meets the requirements of both HR and payroll.
Payroll deployments can be incredibly complex. Many of our clients opt to delay the deployment of payroll because they believe they will mitigate the risk they will face if they are unsuccessful with the HCM deployment. But in many ways, they are just delaying the risk—and, in some cases, increasing the risk of the payroll deployment. The best way to test the solution of core HR, benefits and compensation is to accurately pay the employee on the back end.
Is there an imperative to deploy the payroll solution quickly? Are you avoiding a critical risk by deploying faster?
Sometimes deploying at speed is necessary. We’ve had several clients with a critical need to move to, combine, or move off of an existing solution due to an acquisition, merger, divestiture, an aging HR solution that no longer works, or an HR solution that required an upgrade and/or license renewal. When evaluating timeline options, organizations should know that it’s not uncommon for a combined HCM and payroll implementation to take 1 to 3 months longer than an HR-only implementation. That’s due to upstream dependencies and the added requirement of deploying payroll in parallel. Some clients just don’t have the luxury of time.
Are there any risks of data being out of synch (or becoming out of synch) when deploying payroll after SaaS HCM?
Organizations sometimes deploy SaaS HCM first, with the goal of deploying payroll later. Between these deployments, they maintain employee data within both systems. In those situations, we typically advise our clients to develop an audit report within both systems for the employee data that is critical to ensuring accurate pay. Clients are often surprised at the volume of data that is out of synch when these reports are run. Without these reports, they would have had faced a massive data cleanup challenge before payroll could go live. The reports allow them to address data errors early, and give them greater confidence that core data will be in synch when it is time to deploy payroll. Equally critical is understanding the implications and updating the out of synch data in a timely manner versus waiting until the fall out in conversion or parallel.
Will deploying a new HCM solution in advance of payroll have an impact on the current payroll solution?
Often, the deployment of a new SaaS HCM system will necessitate changes to an existing payroll solution. These changes can be driven by any number of factors, including a change from a department organization structure to a supervisory organization structure, the harmonization of benefit plans or compensation plans (which could have an impact on downstream earnings and deductions), the need for integration testing, or the need for manual updates in payroll if the integration is temporarily deprecated. It is likely that organizations will have to enhance their existing payroll solutions to ensure continued accuracy and compliance. You need to prepare for the potential extra effort that will likely be required.
A couple of other things to keep in mind:
Third-party payroll providers: If you are planning to implement a third-party payroll solution and integrate it with a new SaaS HCM system, the above considerations still apply. However, you typically won’t be able to make the timing decision without input from your chosen third-party provider. Many providers recommend implementing payroll for some countries prior to the HCM implementation, some concurrently with the HCM implementation, and some after.
Rule of Thumb: It’s often advantageous to deploy payroll early within a set of countries that are the least dependent on the new HCM system. That will allow you and the vendor to learn some valuable lessons and achieve a level of stabilization. Those countries with the greatest dependency on HR (e.g., countries with large payroll volumes that require robust integration) should be deployed in conjunction with HCM. You can then deploy the payroll solution to the remaining countries after the HCM implementation—but not so long after that you begin to lose momentum.
Conclusion: If a client has the capacity and the funding—and is not facing a critical issue that requires HR to be deployed as early as possible—we believe the least risky and most cost-effective approach is to deploy HCM and payroll concurrently (or at least within the countries with critical mass). In addition to eliminating throw-away work, re-work, and decreasing the risk of data being out of synch, you can leverage resources across a joint HCM/payroll project.
If there are differing opinions as to when you should deploy your payroll solution, answering the questions above and putting together a small business case can help you determine the right answer for your organization. Payroll is more dependent on the HCM solution than many realize.