Employee Central Payroll: Making the Case for Multi-Country Implementors vs Local Payroll Vendors

This article explores the advantages of Employee Central Payroll (ECP) implementations utilizing proven Multi-Country service providers to enhance the employee experience and fully capitalize on Client HR investment. 1218 Global HR Solutions professionals have extensive Client-side work experience and multi-country expertise. This enables a better understanding of Client operational requirements and helps identify what features of an ECP system best address client needs.

In my last article, I discussed how Employee Central Payroll (ECP) rewrote the rules of Payroll Service Providers using SAP as their payroll platform for outsourced services. The key differentiators discussed were flexibility, seamless integration, implementation cost, unexpected service costs, and software vs low cost labor. Here is the link to the original article: https://www.linkedin.com/pulse/employee-central-payroll-rules-have-changed-jeroen-wielens/

Recently, I have received many questions on how to compare local payroll vendors with a multi-country Employee Central Payroll implementation.

Although both are providing companies with a paycheck for their employees, they are fundamentally driving very different needs within companies. SAP SuccessFactors EC Payroll is an in-house payroll software platform that slots in with the rest of the SAP landscape, whereas the local payroll provider is an outsource service which means your payroll processing is done in a black box in terms of software. So, why does it matter?

For several decades, the standard approach was to find a local payroll provider that functioned as the local HR and Payroll system for a country. In multinational organizations during any given month, the payroll provider was asked for country payroll information usually downloaded into excel and provided to the company. The company would get together to review the data with the object of summarizing headcount and examining other generic costs. It took several days, but that was part of the monthly process to understand global payroll costs and since it was always done that way it kept going and rarely changed.

However, with the current drive for the data driven enterprise and total workforce experience, many companies have started to move towards a more globally tailored and unified HR system. Integrating payroll data into one place- Employee Central – has provided organizations with enhanced and expanded insight into global workforce and enriched their talent and HR investments.

The need for global processes and an HR data driven enterprise has created a conundrum for many companies and their local payroll data; how do we fix this? Several global HR providers claim to have standard payroll connectors to many different payroll systems and payroll providers. The reality is that most of these integrations need to be built for each company and each solution, even though they look nice in their demo system. This is costly and inefficient.

Once these “standard” payroll connectors are fully implemented, most of the time, only very basic data can be sent between the Global HR solution and local payroll provider. This results in a large manual effort to provide additional data to fulfill the full payroll process. Also, some local payroll providers ask for a yearly fee, or one-time fee, to allow this interface to be accepted in their payroll environment. This is because local Payroll providers focus primarily compliance in a country, limiting liability exposure, and strongly preferring a standardized integration model. The data model and architecture are anything but globally focused or aligned to an outside global HR solution. The provider will do a fantastic job once the data is in their hands, which generically relates to the price per payslip that most companies look at as their full payroll cost, however what is not included is the cost of full end to end process and what is needed to integrate the solutions, and the additional manual effort that is inherited with this type of integration.

In short, your global HR platform is driving your employee experience and your business value in the data driven enterprise is reliant on random local payroll vendors selected for their low-cost ability to perform 25% of your payroll process. As these payroll providers focus first on their liability and not your architecture, you are now relying on manual loads and dodgy flat file interfaces to get the global HR data to this payroll service provider.

Additionally, because these vendors focus on the payroll process and not on the output or the data required for a data driven enterprise, the organization continues to live with manual processes such as excel spreadsheets for retro calculation and rely on changes made on the fly in the payroll system to meet deadlines. Lastly, the General Ledger will be manually updated into the finance system to assure that the correct payroll was run. But, what if the wrong data was captured manually? This is not the right way to run a payroll process.

Ask yourself, are these local vendors cheap when you start adding up all the numbers?  Are these vendors so cheap when you have a low-cost payroll service vendor landscape, where every individual operates as a black box? Are these venders so cheap with integration issues and different processes with limited or no employee self-service options?

SuccessFactors Employee Central, when integrated with Employee Central Payroll, is fully tailored to meet Core HR and Payroll business needs. It drives key HR elements such as compensation, performance, and other talent management processes. Importantly, it has a consumer-grade user experience that is so essential for the modern workforce. It integrates directly with SuccessFactors EC (Core HR) through the ever more efficient Point to Point connection. The Financial data flows back into the SAP Finance system using the ALE technology that is tried and tested. Integration allows an organization to stop doing manual processes, reduce errors, meet compliance requirements, and identify potentially fraudulent activities. The key is to put the right level of effort and transformation into payroll implementation, not just lift and shift existing processes, but transform processes globally. This transformation should include the full end to end solution including Core HR, Time and Payroll from the ground up. Becoming a data driven enterprise gives business the analytical processes and the employee experience worthy of a global organization. This is total workforce experience.

About Jeroen Wielens

Jeroen has over 20 years of experience in SAP ERP HCM, SAP SuccessFactors, talent management, and global payroll ranging from multi-national implementations to running global support across Asia, Europe, North America, and South America. His most recent success was the program management and delivery of a North American deployment of an SAP SuccessFactors full-suite implementation for over 85,000 employees across 5 countries.

About 1218 Global HR Solutions

1218 Global HR Solutions resources have been helping HR organizations successfully move from paper processes to digital processes using SAP and SuccessFactors HCM solution as the foundation. We have proven global HR experience to help organizations answer the tough questions. We are your “how to” resource.

Jeroen Wielens

Global Delivery Director

SAP SuccessFactors at 1218 Global HR Solutions