Monthly Measures: The rise of cloud computing in payroll

This metric is important because it shows the level of knowledge and acceptance payroll leaders have as it relates to cloud capabilities in the payroll environment.

Why it is important

Almost 40 per cent of payroll leaders indicate they have a minimal amount of knowledge regarding cloud technology and more than 50 per cent have no plans to implement cloud technology in payroll over the next two to three years. However, those that have an awareness of cloud technology in the payroll environment have big expectations for its capabilities. In fact, 56 per cent of those companies believe cloud technology will offer additional flexibility, insight and control.

What is more important is the majority of companies, that have high expectations for cloud technology, are those currently processing payroll on ERP systems.

Strategic implications

As companies continue to streamline and automate the payroll administration process, there is a big push to better leverage technology. For those companies processing payroll in-house, mostly using an ERP system, technology costs have proven to be very expensive due to customisations, upgrades, maintenance and support costs. In addition, system features and functionality become outdated

With regard to those companies that use service bureaus to deliver payroll, they too are stuck with the same technology platform until they decide to implement another solution. In this scenario, since most service bureaus are constantly creating new more advanced technology solutions, legacy customers do not have the ability to take advantage of newer solutions without incurring additional technology and implementation costs.

Cloud providers have skillfully introduced themselves as agile and flexible solutions that offer the latest technology, features and functionality to all clients on a continuous basis. They promise lower technology costs and less dependency on internal IT resources.

Globally, they offer strong integration capabilities that have the ability to leverage local in country solution providers while consolidating and creating common data elements in the cloud. Time will tell how effective and impactful cloud technology will be in payroll, but right now there are high expectations for cloud technology.

Contributed by Felicia Cheek, GT2P advisory programme director at The Hackett Group