HR/Payroll System - GLA Strategic Options
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1 Appendix 1 HR/Payroll System - GLA Strategic Options Arnab Banerjee 9/2/2010 Review the partially drafted HR/Payroll systems requirement document and advise on the suitability of Tier 2 vendors to meet the requirements in the document. Advise on the feasibility of functional delegation to LFEPA(The London Fire and Emergency Planning Authority) and LDA(London Development Agency)
2 Table of Contents Executive Summary:... 3 Scope of Work:... 3 Method of Execution... 3 Findings & Recommendation:... 4 Review of the HR system statement of requirement... 4 Suitability of Tier 2 vendors to meet the requirements in the document... 6 Feasibility of functional delegation to LFEPA (The London Fire and Emergency Planning Authority) and LDA (London Development Agency)... 7 LFEPA (The London Fire and Emergency Planning Authority)... 7 LDA (London Development Agency)... 9 Recommendation:... 11
3 Executive Summary: Greater London Authority (GLA) is a strategic authority with a London wide role to design a better future for the capital. The Mayor and the London Assembly are elected and the staff of the GLA are a permanent body that provides continuity in the ongoing development and delivery of strategies for London. Together GLA has about 500 employees (staff and assembly members). Their current HR & Payroll system - ResourceLink, from Northgate Arinso, expires in September A strategic decision on the Payroll system needs to be taken by September Scope of Work: GLA commissioned Deloitte for advice on the strategic options for the HR/Payroll contract. The terms of reference of the engagement are: Review and comment on the partially drafted HR/Payroll systems requirement document Advise on the suitability of Tier 2 vendors to meet the requirements in the document Advise on the feasibility of functional delegation to LFEPA(The London Fire and Emergency Planning Authority) and LDA(London Development Agency) Method of Execution Arnab Banerjee, a manager with Deloitte s Enterprise Application practice, conducted a series of discussions with various stakeholders in GLA, LFEPA and LDA from 25 th August to 1 st September to understand existing HR & Payroll systems and services to advice on available strategic options. Following is the list of people whose views were taken to prepare this report: David Gallie, Assistant Director of Finance, GLA Frances Nguene, Chief Accountant, Financial Services, GLA Juliet Carter, Head of HR, GLA Patrick Alleyne, HR Operations, GLA Anna Tapp, HR, LFEPA Michael Vallis, Exchequer Services Manager, LFEPA Frederico Maia, Head of HR Operations, LDA
4 Findings & Recommendation: Review of the HR system statement of requirement The HR requirement document is a comprehensive list of requirements. Given the larger environment of cost pressures and efficiencies, an exercise to prioritise the requirements is needed. The prioritising can be based on the following parameters: Mandatory any current functionality supported by today s systems the loss of which will severely impair operation and strategic insight Highly desirable any functionality providing business critical improvements over today s systems. Desirable everything else. Based on discussion and a demonstration of the current HR system, the requirement may be prioritised as follows: Functionality Mandatory Highly Desirable Desirable Process Payroll Employee Records Organisation and Structure Establishment structure including linking personnel to Posts Absence Employee Self Service (Payslips, P60, Bank and address information) Training Database Learning System Recruitment Performance
5 The HR system statement of requirement does not specify the payroll requirement in the same degree of detail. A sample Payroll systems requirement document has been provided to Frances Nguene to specify the payroll requirements in greater detail. Some GLA specific requirements have been already identified. These needs to be included in the statement of systems requirement: Payroll Set up Payroll Processing Reporting Payroll Service Multiple Pay groups Multiple Payroll Runs Reports for NFI purposes Dealing with HMRC queries Processing of payroll changes Overtime, changes to bank details, etc., Payment and Payslip generation in multiple currency LPFA reports YTD and monthly reports on gross pay, deductions, pay elements and activity data at employee, cost centre levels Responding to ad hoc requests to calculate net pay Provide data for Civil service pension purposes Account for untaken leave on 31 st March
6 Suitability of Tier 2 vendors to meet the requirements in the document SAP, Oracle and Peoplesoft will be able to meet all the requirements. However, given their cost and time required for implementation, it will be difficult to develop a business case for any of these tier 1 vendors given that GLA s employee base is only around with a growth projection of circa 800 in the next few years. A number of Tier 2 vendors have the ability to meet the systems requirements of GLA. Below is a list of some of the market offerings in HR/Payroll systems: Systems Core HR Recruitment Learning Performance Absence Payroll Self Service Reporting Accero (LFEPA) ResourceLink (GLA) itrent (LDA) Chris21 Carval Cascade E-Payfact In the event of external tendering it is recommended that GLA looks at Tier 2 vendors also as most will have functionality to meet its requirements.
7 Feasibility of functional delegation to LFEPA (The London Fire and Emergency Planning Authority) and LDA (London Development Agency) LFEPA (The London Fire and Emergency Planning Authority) LFEPA uses Accero Cyborg HR & Payroll system to process the payroll of its 7000 employees System Core HR Recruitment Learning Performance Absence Payroll Self Service Reporting Accero Cyborg (LFEPA) Advantages of delegating GLA s HR & Payroll function to LFEPA: Evolved payroll functionality already processing payroll for more than LFEPA 7000 employees. Standard Functionality robust enough to accommodate most of GLA s payroll and core HR requirements with some degree of customisation Most of the payroll reports required by GLA already pre defined for LFEPA use. Also reports readily available to targeted end users to execute themselves. Self service already available for employees to view payslips and P60s. Employees can amend bank details and address through self service Will be possible for GLA to use LFEPA s bespoke solutions for Absences/Attendance management. Using Accero Cyborg s Absences/Attendance management functionality will also be an option for GLA. Use of LFEPA s existing infrastructure(hardware, network, software upgrades/patches and employees for payroll services representing a shared service mode of delivery Minimal involvement of GLA s resources in initial migration to LFEPA system and maintenance and service provision thereafter Disadvantages of delegating GLA s HR & Payroll function to LFEPA: Greater level of control on the level of service provided by a contracted third party than on an internal organisation. This can be mitigated by good governance, existence of a service level agreement and monitoring.
8 ResouceLink( GLA s current system and itrent (LDA s current s system provide better user interface/experience. Possibility that any GLA specific requirements will impact existing set up for LFEPA and may not be accommodated Control of the system will be with LFEPA IT and not with GLA HR super users as it is now Accero Cyborg is not as user friendly and easy to configure/customise as ResourceLink (GLA s present system) or itrent(lda s system) Fragmented IT landscape. Accero Cyborg is the leading core HR and payroll system but a lot of other systems are in place for other applications Attendance, Absence, learning etc Turnaround time for new reports, screen enhancement/modifications will be greater Indicative Cost estimate An initial indicative estimate to set up system to enable online viewing of payslips and core reporting such as General Ledger interface and basic pay details would be in the region of This could rise depending on any changes needed to the LFEPA core system based on special GLA requirements. To provide a payroll service for 500 staff would be in region of annually. This indicative cost estimate is based on providing payroll service only at this stage and do not include HR functions like recruitment and training. The indicative start up costs may also vary if a GLA specific datamart needs to be established so that GLA users can develop their own reports. There may also be some additional costs to undertake security testing, again depending on requirements.
9 LDA (London Development Agency) LDA uses itrent a web based integrated HR and Payroll system from MidlandHR to process payroll for about 500 employees Systems Core HR Recruitment Learning Performance Absence Payroll Self Service Reporting itrent (LDA) Advantages of delegating GLA s HR & Payroll function to LDA: Evolved HR and Payroll functionality already in use by LDA which will cater to most of GLA s requirements both in HR and payroll with minimal customisation Fully web based, user friendly and easy to configure and customise Self service applications already in use Payslips, P60s, employees changing address and bank details Workflow enabled manager and employee self service functionality in use for Absence management Similar way of working with HR super users making most of the system changes Disadvantages of delegating GLA s HR & Payroll function to LDA: LDA as an organisation has a limited life and will be merging with GLA from Its contractual validity with MidlandHR is not clear. It is not clear if GLA can take over ownership of the present contract with LDA. Due to the limited life of LDA and possibility of loss of employees skilled in the operation of the existing HR and payroll services, the transition to GLA will be pose problems. GLA users will have to take ownership of itrent and will have to develop the same level of expertise as LDA HR users have now. This will take time and also impact the level of service in the short to medium term. GLA will have to carry the hardware/software costs and cost of employees needed t o support the system. It may be necessary to bring on board LDA employees specifically for this purpose contributing to greater overhead costs.
10 Payroll service is provided by LDA employees and functional delegation will for GLA will mean additional fixed cost of 1-2 FTE(s) to provide the same level of service. Indicative Cost estimate* Indicative initial cost to set up system is estimated to be between and To provide a payroll service for 500 staff would be in region of and annually. This estimate will vary depending on the nature and level of services. *The figures above are based on pro-rated implementation (medium complexity) and maintenance costs of a fully managed payroll service for other organisations.
11 Recommendation: Given the similar functionality on offer and anticipated cost savings, the option of exploring the possibility of migrating to a common HR/Payroll systems platform with LDA or functional delegation to LFEPA should be considered. A brief comparison between the two options is provided below - Organisation(HR/Payroll system and service) Indicative initial set up cost( ) Indicative Annual Maintenance Cost( ) Similarity/Degree of fit with Payroll functionality Similarity/Degree of fit with core HR functionality Transitioning Arrangement User Experience LFEPA (Accero-Cyborg) High Medium Clear cut (Shared service type operations with its associated cost benefits) + LDA (itrent from MidlandHR) High High Complex; ultimately leading to ownership of system with associated fixed costs (LDA/GLA employees to support the system, provide payroll services hardware/software costs) ++ A very detailed mapping of GLA s functionality and data elements with available/implemented functionality and data elements in LDA/LFEPA s systems needs to be carried out. Governance and ways of working in a common platform/shared service kind of environment needs to be agreed. SLAs need to be agreed between GLA and the LDA/LFEPA. Comparative Cost of Ownership A comparison of the indicative cost of ownership** for the functional delegation option with owning a Tier 2 HR/Payroll software is provided below:
12 Functional Delegation to LFEPA Functional Delegation to LDA GLA owned system *** Indicative cost of implementation/initial set up( ) to GLA Indicative cost of Annual Maintenance( ) to GLA Circa Hardware Cost for GLA Not Applicable Yes, transfer of LDA s existing technical infrastructure Yes Software Cost(Upgrades/Legal patches) for GLA Not Applicable Yes Yes Full Time Equivalent (FTE) cost of staff to implement transition/implementation of new system for GLA 1 for one to two months 1 for one to two months 1 for three to six months Full Time Equivalent (FTE) cost of staff to maintain system and provide payroll services for GLA.25(to liaison with LFEPA) **The indicative cost comparison is based on Deloitte s experience with similar products and organisations and on interviews with LFEPA and LDA staff and will vary depending on the degree of customising that will be agreed to fit GLA requirements. The following assumptions have been made: Use of core HR and Payroll only concurrent user licences & Self service for 500 Users Fully managed payroll services *** The figures are indicative and will vary depending on the software selected. The indicative figures are provided based on our experience with best of breed products for organisation of a similar nature and size for HR & Payroll.
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