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12/10/2015
1
Payroll Systems: Finding the Right Fit for your
BusinessA 10‐step guide to system selection and implementation.
10 Steps to Successfully Selecting and Implementing a New System
1. Select a project committee
2. Evaluate and document your current processes
3. Define new system requirements
4. Identify your options
5. Request for Proposal and Demonstrations
6. Select a system
7. Prepare for implementation
8. Convert data and test
9. Document
10. Implement
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Step 1. Select a Project Committee: Identify project stakeholders
• Payroll• HR• AP• Accounting• Senior Management
• Tax• Risk Management
• IT• Budget
WHO IS THE PROJECT LEAD?
Step 1. Select a Project Committee: What is our objective?
• Scope
• Time
• Resources
• Calculations
• Reports
• Integrated or Interfacing
• Training
• Future needs
• Support
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2.Evaluate & Document Your Processes: Current Situation AnalysisCURRENT SITUATION ANALYSIS
• What do we like? What is working that must continue? What is the CAUSE of our current issues/limitations?
• Is your current documentation sufficient? Do you have documentation for all current processes?
• Map out the current flow of information – inbound, outbound
• Identify current reports
• Identify custom processes
2.Evaluate & Document Your Processes:Consider Options for the New System
NEW SYSTEM
• What are our pain points? Is there new technology that can alleviate our current issues?
• Create a wish list – what would be ideal?
• What type of security and roles are needed?
• What type of system?
• Red flags?
• What is the budget?
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3. Define New System Requirements: Terminology• Integrated
• IHRMS
• Integrated Human Resources Management
• Combines payroll, hr, benefits
• HCM
• Human Capital Management
• Interfacing
• Multiple systems and sources must communicate
• This can be through file transfer, import/export, manual entry, etc.
• This can be needed in conjunction with an integrated system
3. Define New System Requirements: System Basics• Payroll processing
• Reporting – canned & ad‐hoc
• Check and direct deposit printing
• Retirement interface
• Garnishments
• Time & Attendance
• Compensation management
• Global database reporting
• Talent acquisition and management
• Learning and development
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3. Define New System Requirements: Special Processes• Report scheduling
• Multiple pay groups
• Carrier feeds
• Third party payments/ACH
• Self Service app
• Time & Attendance web application
• Time & Attendance geo‐fencing
• Custom processes
• Special accumulators
3. Define New System Requirements: Interfaces – Inbound and/or Outbound• Labor
• Bank/ACH
• Time and Attendance
• Accounts Payable
• General Ledger
• Benefits
• SSA
• State Unemployment
• Federal and state withholding tax
• Child Support
• Reporting
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4. Identify Your Options:System Selection• Research vendors and evaluate products
• Would you like to stay with your current vendor and upgrade or change to a new product?
• Would you like to move to a completely new vendor?
• Beware of FRAUD!
• http://www.justice.gov/usao‐md/pr/payroll‐service‐company‐owners‐indicted‐theft‐over‐25‐million‐set‐aside‐clients‐pay
• http://www.baltimoresun.com/news/maryland/harford/belair/ph‐ag‐accupay‐0301‐20130228‐story.html
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4. Identify Your Options:Types of Systems – Service Provider• Service Provider, SaaS (Software as a Service), Business Process Outsourcing
• Independent company owns the hardware/software and processes for a fee
• Levels of service can be chosen based on client needs and expertise
4. Identify Your Options:Types of Systems – Service Provider
• ASP – Application Service Provider: Provider owns software and it resides on vendor’s servers
• Client access through web• Single tenancy
• SaaS – Software as a Service• Similar to ASP
• Multi‐tenancy
CLOUD TECHNOLOGY – data is accessed through the internetNo need to install servers/hardware/software
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4. Identify Your Options:Types of Systems – Service Provider
• Client generally pays cost per employee per payment plus costs for additional services
• Data can be sent to provider or entered into their system – service provider collects and processes data
• Provider sends back reports, checks, direct deposit advices, etc.
4. Identify Your Options:Types of Systems – Service Provider
• Business Process Outsourcing• End to end process is outsourced, including staff
• Professional Employer Organization• Employees are hired by the PEO and paid by the PEO
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4. Identify Your Options:Types of Systems – Service Provider
Advantage Disadvantage
Provider maintains data and handles processesLack of control of security of data (request
documentation from provider!)
Flexibility for business needs Filing/deposit errors
Training and Support Can’t manage unique client needs
Compliance No control over system breakdowns
Networking, User Groups
Client can use multiple providers if needed
Low cost, no additional staff
4. Identify Your Options:Types of Systems – In‐house
• On‐site system and hardware
• Employer can design and control
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4. Identify Your Options:Types of Systems – In‐house
Advantage Disadvantage
Control Need ample, secure space
Convenience Higher costs – hardware/software
Security Additional staff
Scheduling flexibilityIneffective use of all technology options
(Off the shelf)
Tailored applications Sound disaster recovery plan
Wrong computer, incompatible
4. Identify Your Options:Types of Systems – Best of Both Worlds!
• If you need a combination of in‐house and service provider, there are options available
• Example: You may want in‐house software but outsource tax payments and filings
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4. Identify Your Options:Types of Systems ‐ Comparison• First bullet point here
• Second bullet point here
• Third bullet point here
System Advantage Disadvantage
Service Provider – Full ServiceProvider maintains data and
handles processesLack of control of data
Service Provider ‐ Various Flexibility for business needsInterfaces will be required to
sync systems and data
In‐HouseCan be customized for each
businessCostly – business must
maintain data
Combined In‐House and Service Provider
Allows for use of various technologies
Additional interfaces, additional staff
5. Requests for Proposal & Demo:RFP• Asks for bids from vendors
• Prospective client provides Y/N questions or detailed questions
• Provide background and purpose
• Specific company information
• Total number of earnings & deductions
• HR integration needs
• Level of implementation support
• Implementation goal
• Terms and conditions
• Vendor instructions regarding how to respond
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5. Requests for Proposal & Demo:RFP• Receive proposals from vendors and narrow to 2‐4 options
• Request demonstrations – on and off site
• TRUST BUT VERIFY
• Check references. Then check again.
5. Requests for Proposal & Demo:Demonstration• Ask for as many demonstrations as needed to make yourself comfortable.
• Ensure that the product works as you intend, particularly if you are concerned about custom processes.
• If they say the system has integrated recruiting, onboarding, time, hr and payroll: SEE IT! If the system is capable, it should be easily demonstrated.
• If you are asking that a vendor show you a custom process, this may be more difficult. If you choose this vendor on their commitment to a custom process, ensure that you get this commitment in writing.
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5. Requests for Proposal & Demo:Demonstration• Can they provide a sample project plan or statement of work?
• How many parallel tests will be conducted?
• How is training structured?
• Is there a sandbox environment for testing and training?
5. Requests for Proposal & Demo:Demonstration• What type of resources are available: training manuals, guides, videos…
• How does the reporting tool work? How are custom reports created?
• What self service and workflow options are available to employees?
• How is the system backed up?
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6. Select a System:Regroup with project team• Meet as a group to identify the following
• Discuss and vote on your system of choice
• Implementation timeline
• Will an outside consultant be needed?
• Training plan
6. Select a System:Regroup with project team• Meet as a group to identify the following
• Data mapping
• Testing
• System edits
• Gap analysis
• Employee self service training and rollout
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7. Prepare for Implementation:Accept the proposal and begin planning• Attend the project kick off meeting with the vendor
• This should include all parties and will be the baseline for preparation of future meetings.
• How often? Who will be involved?
7. Prepare for Implementation:Accept the proposal and begin planning• Attend the project kick off meeting with the vendor
• What information do we need to provide? In what format? How quickly?
• Begin to block off calendars for all upcoming events: data collection, testing, training, first live processing
• Set the anticipated Go‐Live date
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7. Prepare for Implementation:System Admin Training• Enroll in training for the new vendor.
• What classes are offered and when/where?
• Who will attend?
7. Prepare for Implementation:Data transfer and mapping
• What services do they have to allow secure transfer of data?
• Do you want to restructure as you set up the new system?
• Will you be changing your org structure for divisions and departments?
• Do you have changes to your GL accounts?
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7. Prepare for Implementation:Data transfer and mapping
• Identify these and identify changes BEFORE you begin setting up the new system.
• These types of configuration settings can often be difficult to change.
• Ensure that your existing data is mapped to the NEW data structure.
7. Prepare for Implementation:Make it a TEAM EFFORT!• Determine how employee functions will be rolled out
• How will employees be trained?
• Communicate to employees
• Communicate to other teams
• Promotional items
• Get the group on board early – train and motivate!
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7. Prepare for Implementation:Employee Self Service• Check, W2, 1095‐C
• E‐consent
• Policy documents
• Training
• Workflow
• Employee access at computer, kiosk, workstations
7. Prepare for Implementation:Admin Security
• Work with vendor to provide access to various roles
• Discuss when access will be given
• Determine if there is a test database to use for system practice
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8. Convert and Test Data:Provide company and employee info
• Provide all information in the vendor’s required format
• Ask to see data as it is loaded. Verify that your expectations are being met.
• Discuss system edits and validations
8. Convert and Test Data:Provide company and employee info
• Review and audit ALL data
• One missed row can lead to employee data mapping issues
• If you are converting mid‐year, you will need to verify that the employee QYD/YTD detail has been posted properly.
• If there are variances, your W2s from the new provider will not match your prior quarter filings
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8. Convert and Test Data:Test
• Try to break the system – TEST EVERYTHING
• New Hires
• Terminations
• Timekeeping
• Table‐driven deductions (Life, AD&D, etc.)
• Verify the system edits you’ve requested
This is the FUN part!
8. Convert and Test Data:Test
• Test workflow processes
• Parallel test AT LEAST one pay cycle. • Complete a full gross to net check of each employee or a pilot group.
• Identify and research variances.
• Which system is correct, old or new?
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9. Document the New System:Prepare and test documentation
• As testing is progressing, document the new system• Map old processes to new processes. Document and test the new procedures
• Does the provider have canned or customized documentation to provide to you?
• Build confidentiality statements for the new system
9. Document the New System:Prepare and test documentation
• Not a policy document – these are strictly PROCESSES
• Post documentation online where it is accessible to all users
• Maintain the documentation – Keep docs up to date with new internal processes, system enhancements, etc.
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10. Implement:Approve implementation and begin live
• Once testing is complete and you are satisfied with the results, provide implementation approval and move forward with your first live processing
• Notify your old vendor that you will not longer need their services. They should provide a termination form so that you can indicate how they should handle filings
This is the SCARY part!
10. Implement:Approve implementation and begin live• Enter and audit employee data
• Review first live output – compare to final payroll from the old system. What are the variances and why?
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10. Implement:Validate controls• Controls
• Zero pay flag
• Terminated with pay
• Excessive OT
• Excess hours or dollars
• Child Support/Garnishment
• Batch controls
• Correction processes
• Balancing/reconciliation
10. Implement:Security• Audit trail
• Segregation of duties
• Rotation of jobs
• Phantom employee check
• May not be possible in small dept.
• Physical plant issues (in‐house)
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10. Implement:Disaster Recovery• What will happen if there is an event that prevents you from being in the office?
• What processes CAN NOT be managed remotely?
• What can we do to get to 100% direct deposit/pay card?
10. Implement:Post‐implementation review• Any unforeseen issues?
• Are any adjustments needed to ensure we are using the system to its fullest capabilities?
• What are our statistics for employee login? Is additional training needed?
• Is our documentation complete? Do we have sufficient instructions for new hires?
• Have we balanced and reconciled QTD & YTD?
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Step 11. CELEBRATE!
• You did it! Celebrate with your team and company. You deserve it
Alternatives to Conversion
• System upgrade
• Migration
• Other products with your current vendor
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Payroll Systems: Recap
1. Select a project committee
Stakeholders
Project leader
Meetings
2. Evaluate and document your current processes
CSA
Wish List
Security
3. Define new system requirements
Integration
Interfaces
Levels of service
4. Identify your options
Trust but VERIFY!
Service provider
In‐House
Vendors
5. Request for Proposal and Demonstrations
2‐4 Vendors
See it!
Training tools
Self Service
REFERENCES!
Payroll Systems: Recap
6. Select a system
Vote
Discuss
Reservations?
7. Prepare for implementation
Kick off
Data mapping
Training
Communicate
8. Convert data and test
Review
Parallel test
Process test
System edits
QTD/YTD
9. Document
Map old/new
Admin docs
Employee docs
10. Implement
Train all staff
Compare live
Post review
CELEBRATE!
1. Implement
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Thank you!
• Questions?
• Contact information• Katie Horvat
• 301‐816‐6621 (w)
• 301‐919‐6818 (m)