Should you consider migrating your payroll system to the cloud?

Cloud computing for HRMS is gaining critical mass with major vendors, as well as niche providers offering a variety of cloud based HRMS. Core HRMS and talent applications have the highest adoption rate while payroll cloud offerings are less mature and have a lower take up rate. Should you consider a move to a cloud payroll solution?

The Good

Software as a Service (SaaS) vendors have cut their teeth on cloud security issues long ago when building up the first core HRMS cloud applications. Now, it’s just developing additional payroll functionality on already existing technical platforms that are certified by security standards such as the ISO 27001 as well as SSAE 16 and ISAE 3402.

In the event of an emergency, how secure is your current payroll solution from a natural disaster or a targeted attack? Cloud vendors spend a large amount of money on securing the data of many customers so they are experts in this area and are able to move data securely. How quickly can you restore your data in your current solution? Cloud solutions are fast at these tasks which is especially relevant as online pay slips are highly used functionality.

The usual benefits of cloud technology apply to payroll applications such as lower operating costs and the reduced need for onsite servers and IT staff.

Recommended reading: find cloud HRMS vendors who offer payroll functionality with our completely up-to-date HRMS vendor directory.

The Bad

Integrations can be a sticking point in any cloud solution, but especially in one like payroll where you may have multiple inbound and outbound interfaces. As you no longer have the data on premise it can be additional efforts and cost to establish and maintain integrations and you may be dependent upon the vendor’s busy schedule.

Many cloud payroll solutions offer regular, frequent updates that involve a round of testing. As payroll data is highly visible and sensitive, it can require additional staff to complete this testing plus any integration impacts.

HRMS customization options are usually limited in a cloud environment, so you are reliant on the provider’s configuration options. If you have special pay elements or calculations that fall outside of the norm you may be forced to invoke additional workarounds or tasks that did not exist in your earlier customized payroll solution.

The Ugly

If you’re looking for global payroll functionality, cloud-based payroll won’t solve your current problems. Global payroll has been a difficult nut to crack as many vendors will not put the development costs into creating a product that can address all of the payroll requirements and rules around the world, not to mention the ongoing maintenance that would be needed. Unfortunately, cloud payroll systems do not solve those issues, and while we see some entry into this market from SaaS vendors, truly global payroll vendors remain few and far between.

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Heather Batyski

About the author…

Heather is an experienced HRMS analyst, consultant and manager. Having worked for companies such as Deloitte, Franklin Templeton and Oracle, Heather has first-hand experience of many HRMS solutions including Peoplesoft and Workday.

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Heather Batyski