Organisations that are looking for ways to cut costs, increase productivity and extract maximum value from their systems, should take a closer look at the relationship between finance, HR and payroll. Outsourced providers, SaaS vendors and regular accounting systems providers all have something to offer when it comes to improving productivity and reducing costs in the HR function, says Lesley Meall, FSN contributing author.
A period of reflection can be a good thing, even if it has been enforced. So although very few people are welcoming the recession with open arms, many do see it as a ‘window of opportunity’ through which they can take stock of where they are – particularly when it comes to software and systems.
“People are putting their systems under the microscope,” says Chris Box, human capital sales manager, COA Solutions. They are trying to identify ways to increase efficiency and productivity and reduce costs and waste, and the relationship between finance, payroll and HR is one of the areas that can repay close inspection.
Having a single source of data for everything relating to employees has advantages over the silo approach, that is reflected in disconnected finance, payroll and HR systems (of which more, later). But better connectivity between systems isn’t always the primary motivation.
“More and more companies are looking for one supplier for all of these systems,” reports Box, because they want to ‘synergise’ their contracts, rather than have two or three contracts with two or three different suppliers. “It’s all about cost reduction,” he says, so the promise of more business is being used to bargain for better deals with suppliers. “People do like to haggle,” he adds.
‘Time is money’ and according toToby Davidson, director of professional services with NetSuite, the direct cost of multiple contracts is not the only cost-related reason why organisations are trying to reduce the number of suppliers they deal with. “If you have separate HR, payroll and finance systems, trying to integrate them represents a significant annual burden,” he says, citing the time, cost and complexity of data transfer, maintenance, and upgrade as just a few examples.
“We are seeing an increasing requirement for a single point of contact,” says Davidson, and over the past few months, NetSuite says it has successfully lured customers away from a number of traditional suppliers, such as Sage and SAP. But the Software as a Service (SaaS) supplier can offer the benefits of on-demand access to its integrated suite of applications including accounting, payroll, employee resource management, and more – all of which sits on an Oracle technology platform.
Switching to the SaaS approach can result in significant cost-reductions (by comparison with the on-premise delivery method), and on-demand implementations can be up and running quickly – even in situations where an organisation wants to integrate and run a mixture of on-premise and on-demand systems. “Integration using web services is cheaper and faster than a traditional ERP,” says Davidson, “and the customer doesn’t need a program team for the life of the applications, either,” he adds.
But changing systems and software provider is no small undertaking (even if it is arguably less costly and time-consuming with SaaS), and many organisations are more interested in exploring the possibilities offered by closer integration between the business critical systems they already have in place. “In the current climate, people want to maximise their past investment in systems,” says Stuart Dawson, managing director of Iris Accounting and Business Solutions.
There are various ways of doing this – all with their own inherent advantages and disadvantages. Resellers or in-house technology teams can create the necessary links between applications, so that even if data is being held in more than one location, it can be duplicated automatically, rather than manually re-re-entered; putting a layer of workflow on top of your systems is another approach.
“Even if you get your financials from company A and your HR and payroll from company B, you can incorporate them all with a single workflow tool,” suggests Box, because COA Solutions’ HR software and payroll systems are provided as a series of modules, supported by an ebusiness tool, which can be used to provide self-service and workflow functionality.
Taking a closer look at the capabilities of the software and systems that are already in place can also be time well spent. “If you have had the same system in place for the past ten years, things will have moved on,” says Dawson, and you may not be aware of how much has changed. “Look for efficiency gains,” he suggests, “with insolvency rates increasing, you need to have the right processes in place and you need to automate them.”
In many organisations, there is a range of areas where organisations could easily extract more value from their payroll and HR systems. Take payslips. ‘Providing electronic versions can be an easy win for lots of employers,’ says Box, because it reduces the printing and distribution costs, it’s faster and more efficient, and it’s more environmentally friendly.
Taking things a step further and offering employees ‘self-service’ access also has benefits – though a move to self-service approach for HR and payroll requires a level of investment that limits its cost-effectiveness to certain types of organisation. “Culture is the determining factor,” says Box, adding: “White collar organisations are more likely to embrace self service than other types of organisation.” Though even organisations that could benefit can have reservations, particularly when it comes to payroll.
“I know some companies are wary of opening their payroll systems up to employees,” says Chris Berry, managing director of Computers in Personnel (CiP), “but the software can help to ensure the necessary levels of security and privacy,” and providing online access to payroll information can improve efficiency and cut costs.
People can deal with their own queries, viewing and printing off back payroll slips etc, anytime they want to, without tying up the payroll department.
Exploit the web can pay dividends. “Because this has an efficiency dimension and offers cost savings, we are seeing a lot of interest in this area,” says Berry. He also cites the delivery of payroll and HR online, though a hosted or web-based process, as “a very big win” for many organisations. “A lot of new clients opt for this, because it eliminates the need for a big IT project, to get at the software,” he says. “More organisations that have previously been running their HR in house are also looking at it too,” or considering outsourcing the running of their entire HR system, including the software and the people.
Another area that can potentially offer big benefits is absence management. “Systems now offer organisations the capability to do a much more effective job on capturing and managing the absence,” says Berry, by using voice recognition technology to help automate the process, and exploiting mobile phones to help manage alerts. “The system can be set up to pass the recorded information on to various people, or other systems,” he explains. “The line manager can be immediately notified by text,” he adds, speeding up the process of making alternative arrangements, if necessary.
Even the process of communicating with external suppliers can be automated. “If a driver calls in sick, for example, the system can instantly send an electronic notification to the company that either handles the provision of relief drivers,” says Berry, so the process of administering absence management can be made much more efficient, for everyone involved.
But for the automation and streamlining of processes to have the maximum impact, Berry recommends the sort of integration that equates with a single database. “Using one for everything to do with employees can reduce administration and overheads, make existing staff more efficient, and get new staff more productive more quickly,” he suggests, adding: ‘Having a single source of the truth for all the employee-related information in an organisation can bring significant business benefits.”
