Investing in a new HR and Payroll system. nvesting

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1 Investing in a new HR and Payroll system nvesting R and

2 Investing in a new HR and Payroll system What to do if your HR and/or Payroll systems need updating Investing in a new, or upgrading your existing HR and Payroll system is a decision that will normally require the buy in and authorisation of your Senior Management team. The expense of this investment is normally the main contributory factor for such requests being turned down. To be able to counter these responses, and ensure that you are best prepared, there are a number of areas that should be included in your proposal. It is also imperative that you look at a number of other factors to ensure that your organisation is ready for change prior to starting to put your business case together. Considerations prior to building your business case To reap the rewards of such an investment it is important to think about the implications of introducing new technology into your business. To do this you must look at and understand your organisation s strategy and objectives and how the business is looking to change and develop in the future. It is relatively easy to establish the time savings that can be made from introducing a more automated system. It is more difficult to quantify or measure the impact of changes to culture, employee relations, retention, motivation and communications. For this reason before starting on any project you must understand your own business, the key areas and issues that you want to address and how a new system can help your business achieve and support its long term aims and objectives. As HR and Payroll systems do not make change happen on their own it is also important to look at how they align with your own HR strategy, IT strategy and overall business strategy. Gaining buy in from key stakeholders will be instrumental going forward so it is important to establish this as soon as possible. Assessing your HR needs in an organisational context: Your current systems are not fulfilling your requirements Confirm the long term strategy and objectives of the business Decide on the type and level of change required by your organisation in the short, medium and long term Define how the HR and Payroll functions will assist in meeting these objectives Conclude your overall findings by undertaking an initial cost benefit analysis and decide whether to recommend that a formal business case is put together Request information from potential suppliers to include, functionality, ROI, cost, levels of customisation, experience in the market, references etc Align your functionality requirements with the support required from HR and Payroll to ensure the business meets its aims and objectives Identify the current deficiencies in your system and the functionality that you require in your new system

3 Investing in a new HR and Payroll system Why prepare a business case? It is important that a business case is prepared to give other stakeholders and decision makers an overview of current HR and Payroll systems and processes. This will provide you with the opportunity to outline deficiencies in current systems and processes and assess the impact that this has on the wider business. In addition the business case will allow you to demonstrate and present quantifiable benefits and savings from purchasing or upgrading a system which will assist you in securing budget and commitment from your Senior Management team. Key areas to consider when building your business case In addition to the information collated from your assessment you will need to consider the following key areas when putting together your business case: 1. Provide an overview of your current system, its limitations, and how an enhanced system will facilitate the delivery of business aims and objectives. 2. How additional software functionality will improve HR and Payroll activity and effectiveness and assist the organisation in delivering its aims and objectives. 3. The effect a new or upgraded system will have on areas such as employee communication, motivation, engagement, retention and organisational culture. 4. How a new system will impact on the processes and roles of HR, Payroll, Line Managers and the organisation as a whole. 5. Address the short term impact of implementing a new system on your team and any other identified barriers to gaining approval from the Senior Management team. How to justify your business case Financial benefits At first glance it may appear difficult to justify the financial spend of investing in a new system. It is in fact quite easy to quantify the savings that can be made to the business. For example: 1. By automating routine processes it improves the efficiency of your staff by removing the need for manual processing, form filling and completing and manipulating spread sheets. Not only is productivity improved but it releases your HR and Payroll professionals to spend more time on strategic activities that will make a real difference to the business. 2. By reinvesting the time saved from automating processes your team can impact dramatically on HR s and Payroll s ability to deliver savings that directly affect the bottom line by: a. Reducing turnover by establishing areas for improvement and putting measures in place that can reduce levels and thus recruitment costs. b. Reducing absence levels by reviewing and improving current processes can impact significantly on increasing productivity levels and dramatically reduce the costs of overtime and temporary staff to cover employee absences. c. Having an integrated HR and Payroll system can save vast amounts of time not having to re-key information such as absences, part-month adjustments, reconciling of data to HR information, bulk entry uploads etc. Examples of the financial benefits can be seen on the Sage Return on Investment documents (see appendix 1). 6. Demonstrate the benefits of upgrading your current systems and provide return on investment calculations to justify the expenditure. It is important that throughout the process you regularly communicate and involve all key users/stakeholders.

4 Investing in a new HR and Payroll system Non-financial benefits Non-financial benefits have an equally important role in ensuring that organisation profits are maintained. For example: 1. By re-investing time and reviewing strategic areas such as recruitment and retention, absence management, talent management can mean that problems can be identified, addressed and improvements made. These measures can have organisational wide benefits such as improving morale, motivation, retention, productivity etc. And finally Adopting a strategic approach to your business case will allow you to demonstrate organisational wide benefits rather than just the impact a new system will have on your team. By adopting this approach it is more likely to result in your project gaining approval. Should you require any assistance when putting your Business Case together please do not hesitate to contact one our HR and Payroll specialists who will be more than happy to assist you. 2. Having a more automated and branded system including areas such as self-service, online payslips and online expense management can go a long way to reinforcing the culture of the organisation. For example moving to a more user inclusive system can aid recruitment and retention and the types of innovative behaviours you seek from your staff by reinforcing and embracing technology, innovation and efficiency. 3. Implementing a new system will also give your team the opportunity to check and cleanse data ensuring that it is accurate and up to date. Not only will these benefits be recognised across the organisation, within the HR and Payroll teams, morale and motivation will increase as less time is taken up with repetitive administrative tasks and the team will be able to spend more time on projects with a strategic focus and delivering improvements using their specialist knowledge.

5 Appendix 1 Potential Savings (Payroll) Time savings attributable to moving from stand alone to an integrated system updates per week updates per month (Weekly) (Monthly) Single entry (no double entry from HR into Payroll) savings Permanent data changes (salary, payments, deductions, starters and leaver information) / Benefit / Absence Statutory payments - SMP, SAP, Paternity Statutory and company Sick Pay input (SSP and CSP) Part-month adjustments flexible working (hours and salary) / unpaid leave Reconciliation of permanent data to HR. Enter time taken to check in current system Overtime / variable data (bonus / allowances etc) input - saving made by bulk entry (upload) Total hours per week/month saved Total hours per week saved (average) Total hours per month saved Equivalent FTE 0.36 Annual savings Enter average salary of Payroll Team 28, Annual FTE saving x Average Salary 10, Annual time saved by integrating system (hours) 640 Using saved time on strategic activities can generate bottom line savings & improved performance thus impacting on business objectives Please note these figures are provided by way of an example only of possible future savings based on a statistical analysis and are not guaranteed. Any reliance you place on the content of this document is entirely at your own risk.

6 Potential Savings (HR) - Based on Organisation with 250 employees Time savings attributable to purchasing new personnel system with workflow changes per week changes per month (Weekly) (Monthly) Workflow Savings Automated Basic Reporting WEEKLY standard reports (leavers, starters, absence, probation etc) MONTHLY standard reports (FTE, headcount, cost center, bradford factor, etc) System chasing Automated reminders to Managers / Staff (notification of new starters, leavers, probationary dates, reminders for information etc) Monitoring of Attendance Process Total hours per week/month saved Automated Calculation Savings Manual Calculations (Annual Leave, Part year, Part time, Bradford Factor etc) Total hours per week/month saved Overall total hours per week saved (average) 8.00 Overall total hours per month saved Equivalent FTE 0.22 Annual savings Enter Average annual salary of HR team 28, Annual FTE saving x Average Salary 6, Annual time saved by automating system (Hours) 387 Using saved time on strategic activities can generate bottom line savings & improved performance thus impacting on business objectives Please note these figures are provided by way of an example only of possible future savings based on a statistical analysis and are not guaranteed. Any reliance you place on the content of this document is entirely at your own risk.

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