Payroll and human capital management (HCM) systems are ever-evolving technologies; the evidence of that seems to be in everything we encounter. In the payroll industry of the late 1980s, the thought of client/server offerings were mind-blowing innovations of how an organization could manage its most precious commodity: its employees.
While SAP (Walldorf, Baden-Württemberg, Germany) was the front-runner in the financials client/server world, PeopleSoft (Walnut Creek, California) was the front-runner and chief innovator in the HR/payroll/benefits world. Over the years, other software companies built onto both of those successes, and inevitably both PeopleSoft and SAP created offerings that invaded each other’s primary space. SAP entered the HR/payroll world, and PeopleSoft offered a full slate of financial services.
For many years, large organizations had PeopleSoft as their provider of HR/pay systems and SAP as their provider of financial systems. They found that maintaining two very large client/server installations was an expensive and labor-intensive way of doing business, especially if their organization had employees in countries other than the United States and Canada—because it meant installing software on desktops and laptops, potentially, all over the world. So, what worked relatively well for a North American office network became much more cumbersome when it had to deploy that technology overseas. What good is a global HR system if it does not manage your global workforce? The expensive proposition of maintaining software on desktops and laptops the world over became a begrudging requirement.
A Cloud Moves in
Then came the cloud, and what followed a few years after was the “as-a-Service” concept.
What became commonplace were companies that could rent pretty much anything, including the software that runs HR and payroll services. A related benefit was that it did not require installing software on your desktop or laptop beyond your favorite internet browser.
So, some very powerful players have emerged onto the Software-as-a-Service (SaaS) scene, and their offerings have turned the HR/pay software industry on its head. Even some of the client/server providers have tried to get into the SaaS space, with varying approaches and varying levels of success. Just so we all have the same understanding of what a SaaS offering is, here’s a brief summary:
Your organization enters into a contract with the SaaS provider to rent its software and pay to run that software on the provider’s hardware for a fee and for a period of time. The provider helps you convert your data, trains you on how to use their software, helps you set up your processing rules where permitted, and you’re done.
That’s grossly oversimplified, of course, but you get the gist. Now, imagine if your operations go beyond North America. Can you deploy the same SaaS offering to your operations worldwide? The simple answer is yes. You can do it with more ease than it took to deploy your client/server offering because you no longer have to install and maintain software on remote desktops and laptops worldwide.
We’ve heard of organizations in North America that embrace a SaaS offering for HR and payroll but then be reticent to explore doing the same for their worldwide operations. Upon deeper exploration, that level of reticence seems to depend on who your provider is because not every SaaS provider has developed its global HR and pay offering the same way.
Case Study Example
For the purposes of illustration, we will use one particular no-named vendor as an example of a successful SaaS offering for the global marketplace. We reached out to many SaaS-specific vendors to get their take on how their global SaaS offerings work for a North American-centric customer, but many declined to be interviewed for this article.
One SaaS-specific vendor exploded onto the scene and has been able to successfully build a reputation as a capable player in the global HR and payroll marketplace. This particular vendor prides itself on the success its clients have had in deploying their software, and in the depth and breadth of countries it covers—both directly, and through its partner network.
Integration is a core design principle at this vendor, so its support and promotion of bi-directional data sharing is a key tenet of how they deliver value to its customers. Built into its software is support for HR in more than 138 certified countries, and support for payroll for the United States, Canada, the U.K., and France. It also supports payroll integration for other countries via its global cloud offering partner program, where more than 100 country-specific certifications have been built by the partners in this program.
These pre-certified integrations will greatly reduce the analysis, design, and build requirements you would typically have to do to bring on a new country’s payroll integration. The beauty of these integration points is that data flows both ways—the required HR data that is required to properly feed the other country’s payroll requirements are shared by this vendor, and the resulting payroll information can be seamlessly re-integrated into the vendor, converted to a common currency, like U.S. dollars, so that accurate corporate reporting can be done.
SaaS global offerings, by design, mean that your data may very well reside in a country other than the United States, either because your production environment is not on U.S. soil, or your vendor’s backup of your database resides outside the United States. That may have privacy implications that require attention. The SaaS vendor we were talking about above, as an example, uses Amazon Web Services (AWS), one of the world’s largest data storage and web traffic management organizations.
As a result, if either your primary database or your SaaS vendor’s backup of your data resides in, let’s say, Ireland, which has been very successful in attracting huge data storage organizations, your data will be subject to Europe’s GDPR—the General Data Protection Regulation. For any organization contemplating a global SaaS rollout, ask where your data will be stored and determine what the implications are.
So, for an organization looking at moving its global HR and payroll solution into the cloud, there may be significant technological benefits in considering a SaaS solution when multiple countries are involved. Not every cloud offering out there is “pure” cloud. But there are vendors out there that were conceived, designed, and built for the cloud. There may also be other organizations that may have either added a cloud front-end to their software, or developed some kind of “cloud-like” user interface. That implies that the underlying processing may not have been developed for this kind of environment, especially when it comes to integrating data from various third parties all over the world.
Every organization needs to know what it’s buying when researching a SaaS solution for its HR and payroll processing. Spend the time needed to gather and understand any vendor’s integration approach, what it means for your data, and how much work you need to do to get the solution your organization deserves.
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Gilles Champagne is owner and principal consultant, Mosaic Advisory Group, Inc. He is a member of the American Payroll Association’s (APA) Global Issues Subcommittee and the Emerging Technologies Subcommittee of the Strategic Payroll Leadership Task Force (SPLTF), as well as a subscriber of the Global Payroll Management Institute (GPMI) and a member of the Canadian Payroll Association (CPA). His consultancy assists organizations around the world in understanding and managing their Canadian payrolls from outside of Canada. Champagne is based in Ottawa, Ontario, Canada.