How Talent2 addresses the HR Cloud SaaS puzzle with payroll

Talent2’s cloud-based HR SaaS with integrated payroll services offering now represents 25% of the company’s HR/payroll revenues. Its revenues have been growing at ~10 % per annum and NelsonHall expects cloud based HR SaaS with payroll services to represent 30% of Talent2’s HR/payroll revenue by 2015.

Talent2’s HR/payroll platform, PeoplePay, is based on .NET technology and is designed to offer a single HR/payroll platform to meet the various legislative requirements across APAC. This is further supported by in-country personnel that can provide advice on the management of organizations’ HR and payroll functions across 11 APAC countries including: Philippines, Malaysia, Australia, Singapore, New Zealand, Thailand, Dubai, China, Vietnam and Taiwan.

The service includes:

• SaaS-based HR software
• SaaS-based payroll processing, or managed payroll operations based on a SaaS platform
• Service desk for super user queries and to assist organizations in change management.

PeoplePay also incorporates consolidated reporting as well as a user reporting tool, called Diamond.

This example of provision of cloud-based HR SaaS with integrated payroll services is part of a growing trend since it begins to address some of the following issues that can arise if entirely separate HR and payroll SaaS-based services are used:

• Achieving data consistency across HR and payroll platforms
• Achieving consistency of local country compliance and support
• Moving to unit-based pricing across HR and payroll.

Achieving data consistency across HR and payroll platforms

NelsonHall’s Payroll Market Analysis has identified that traditional bureau payrolls are being replaced by SaaS based cloud payrolls as SaaS based payroll products enable data to be more readily entered at source and payrolls can be executed and processed remotely. NelsonHall expects 80% of vendors will be running Cloud based SaaS payrolls within 2 years.

Indeed, SaaS means that organizations no longer need expensive infrastructure to support their HR and payroll, and SaaS is a key mechanism for enabling central controls and ready access to information in distributed organizations. However, SaaS-based payroll is unlikely to be available across all countries in the short-term, and aggregators, local payroll systems and enterprise systems will continue to be key for the medium to long term in support of part of the organization’s payroll requirement.

However there are dangers of lack of data consistency if separate HR and payroll platforms are used. Accordingly 49% of payroll vendors already provide payroll services alongside a HR system and this proportion is likely to grow as organizations look for improved HR/payroll compliance. In particular, data quality can be eroded where required fields in the payroll system (e.g. religion) cannot be configured as required fields in the HR system, giving rise to interface errors. As another simple example, the absence of data validation for localized fields such as post-codes across countries in the HR software can give rise to potential data errors later in the process when the payroll systems validate the data. In a similar way, if field lengths cannot be limited in the HR system, interfacing may lose data as it passes information to the payroll. According, payroll needs to be synchronous with HR.

In addition, it becomes necessary to have an understanding of the business and service sensitivities and the impact on the payroll of HR system changes. Clients using cloud technology may lack the ability to choose when and what changes are applied to HR or payroll processes and to keep these systems synchronized. Accordingly, the inclusion of integrated payroll should reduce the need for interface management as well as improved reporting capability across a consistent set of payroll and HR related data.

Achieving consistency of local country compliance and support

Compliance is always a potential issue in HR and payroll, and it is critical that compliance is achieved across both systems. However separate HR and payroll SaaS systems may lack consistent compliance to local legislation in some countries and due diligence may identify that work-arounds are needed in individual countries to support data privacy, e.g. in July 2014 The Russian parliament has passed a law to require internet companies to store the personal data of Russia users inside the country’s borders. Accordingly, it is important that the SaaS supplier(s) possess local knowledge, preferably in-country, of compliance across both HR and payroll.

At the same time, cloud technologies may offer many languages and roles (e.g. manager, HR administrator and employee). However, the depth of language support may vary from country-to-country and buyers need to check, for example, if the language for all the fields are translated and whether for example the role of HR administrator or manager is supported in all the languages offered. In some instances language capability may just be deployed in support of employee self service. Similarly, organizations that are already live in a particular country with the product might just have a “business English requirement” for employees and not have requested full language capability. So consistent language capability across HR and payroll is again an important consideration.

Moving to unit-based pricing across HR and payroll

Ideally organizations are looking for greater commercial agility using consistent transaction based pricing rather than the subscription based licenses that HR SaaS providers may offer. Again this might be easier to co-ordinate with a single contract for supply of HR SaaS and payroll services.

Overall, a cloud based HR SaaS provider who is also responsible for delivering the payroll can help meet some of these challenges. Where the vendor owns the HR product roadmap as well as the payroll roadmap they may be able to bring a longer term and closer alignment between HR and payroll, potentially resulting in richer reporting, data consistency and improved compliance.