The People Bulletin

There is a serious shortage of integrated human resources and payroll systems in the UK at the moment.  Traditionally HR and payroll systems were separate entities, but with the need to keep detailed records in both functions it has become an impossible task to try to maintain the separate data sets.  There are over 80 different payroll systems available in the UK today but there are less than 15 fully integrated HR and payroll systems.

Enter only once

It is only the last few years that we have seen payroll systems and traditional HR systems coming together.  Whilst it may have been perfectly acceptable to keep the two sets of data separate in the past; today most companies apply the golden rule: ‘ENTER DATA ONLY ONCE’.  One organisation that I worked with located over 1,000 separate departmental databases holding different aspects of personal data for its employees.  Some of this data feeds the payroll function like time and attendance, shift patterns etc; other databases hold information on next of kin and holidays and company cars.  You can imagine the cost of keeping all that data up to date – not to mention how much was duplicated.

Most HR professionals realise that the situation is now getting out of hand but don’t know where to turn.  There is no doubt that data entry at the point of first contact is much easier than pushing pieces of paper around the organisation.  The concept is called self-service – it enables clerks in all departments to enter the timesheet data; it enables employees to update their own records and record their expenses; it enables managers to authorise starters, leavers, salary changes, expenses and time sheets without having to process a piece of paper across their desk.  If the golden rule – of ‘data entry only once’ is applied, huge savings in efficiency can be made.  Those savings can justify the investment in a new integrated system.

In search of integration 

Some payroll system developers have been trying to link their systems to HR systems – but that rarely has the seamless integration of a fully integrated system with a self-service interface.  The only real answer is to write the integrated system from scratch – not something many companies want to do in the height of a recession.  Some will say that the demand is not there for integrated solutions – this I find hard to believe after last year’s Softworld, where the majority of customers that I spoke to were trying to find integrated solutions.

So what would you expect to find in an integrated system?  This is a list of the main functions found today in the top packages:

• Absence management
• Company car administration
• Continuing professional development (CPD)
• Employee benefits
• Employee life cycle (personnel)
• Employee relationship management - ERM
• Employee travel
• Employment law
• Expenses management
• Health and safety
• Payroll
• P11D processing
• Pensions
• Planning - succession
• Post administration
• Recruitment
• Salary modelling
• Time and attendance
• Workflow

These functions listed above can be found in most organisations but the information is rarely found in one dataset.  How reliable then is that information especially as a lot of it is duplicated?  But more importantly how much time is being wasted supporting all these datasets?  There is no doubt that as company legislation requires more and more detailed information to be available, the nightmare of keeping it all up to date has to be simplified.  Even though it may all be stored in one HR system data file, it does not mean that that information is available to all users.  Most systems have sophisticated access control to the functions and the employee levels that are available to different users.  That is why these modern HR systems can be deployed to all users – in self-service mode, to enable any employee to access and update their own static information (not their salary of course).

Traditionally most of these functions have been stand-alone with different applications or databases.  Even today few payroll systems can support the functions of P11D and employee expenses.  That is changing but slowly; we need to give the software industry a nudge to provide comprehensive integrated systems.  We saw this with the evolution of ERP in the 1990s – enterprise wide applications; but few ERP systems went deeply into HR and payroll.  HR systems can be international but payroll systems tend to be country based. There are few international payroll systems, and those that are, carry a lot of baggage in terms of usability.  So most suppliers of integrated HR systems are UK-based, with limited market growth.  Unlike accounting systems that can look for expansion internationally to recover their investment.

Upgrading bespoke systems

Large companies and government bodies have traditionally specified their requirements in detail using the ITT (invitation to tender).  These tender documents can be over 100 pages long for a complex HR and payroll system.  Many of the package software developers will not have the resources to respond to these tender documents – they can often take 10 man days to reply.  It is of no surprise then that there are still a few traditional suppliers around that can respond to these tenders with complex semi-bespoke solutions at a huge cost.  All well and good until upgrades are required – payroll changes are usually catered for but any ‘changes to the standard system’ that are made will normally cause problems with future upgrades.  It’s not surprising to find old fashioned HR systems that have never been upgraded since installation – still using outdated technology and outdated systems.

Configuration

The difference today is that modern package software developers build flexible systems with configurable templates to meet the customer’s process requirements without any need for bespoke work.  Many have incorporated best practice processes into their workflow which the customer can review to see if these processes would operate better than traditional methods.  Instead of spending six months to a year trying to get the system configured, modern systems can be installed and be fully operational in a few weeks.  They can also be upgraded easily as there is no specialist configurations that will require attention.  So the cost of these systems can be a third of their bespoke counterparts, both in terms of the initial outlay as well as the annual running costs – an important saving in a recession.

Future trends

In every recession we see new trends emerging.  Certainly online software is the hot topic at the moment – but how suitable is it for HR and payroll?  There are still very few online providers of integrated HR and payroll systems – there are of course many traditional bureau payroll suppliers who claim to be online suppliers, but I will let you be the judge of them.  For the larger company there is outsourcing of the hardware and software, but retaining all the existing self-service interfaces within the organisation.  This has the benefit of taking all the administrative worries away from the IT function; great for shared services, but rarely suitable for the smaller organisation.  Then there is facilities management where part of the function, people et al, are managed by an external body.  Great for central government but the numbers rarely add up for medium-sized organisations.