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Purchasing a payroll system is like buying your next phone. Allow me to explain. Phone choices abound in the market, but which one should you buy. Our instinct will tell us that even if we want the latest and greatest, it’s still governed by our budget. We then consider the cost. We often times confuse cost for price. Though both speak of the valuation of a product or service, but they are not the same. A “price” is the monetary equivalent of a product or service at a particular time: now. “Cost” is the underlying value of a product or service over time: during time of use. Going back to my phone analogy, buying, let’s say, an US$800 phone, and during time of ownership you spent an additional US$200 to upgrade or repair it, then you arrive at two distinct values. The price of US$800 and the cost of US$1,000.

This is the same when you are buying a payroll software. You see, we need to understand the cost better than the price. Now, before I go on to this in more detail. Let me tell you a little bit about payroll.

Payroll is one of the tedious, but essential process of a business. Its repetitive, often complex and governed by certain regulations, both from the government and the company itself. So take time in understanding your basic needs, know the questions to ask and research what other companies are requiring. Doing these things will manage your expectation.

Do the following:

Sit down with your payroll master.

You need to understand the pain points of your payroll processors. For some companies, this is done by the HR, others by the Accounting department. Have a heart-to-heart talk with them. Empathize with them and know how they process your payroll. You’ll be surprised by how manual (read: Excel) your payroll system is.

Evaluate the need

Do you really need to automate your payroll? Does the number of employees warrant  a software system? I would recommend that you try to consider automating your payroll when you exceed processing fifty employees.

Anticipate Change Management

When you roll out a payroll system, you must understand that roles will change, positions may be redundant and that processes will be streamlined. Never expect that your current process, (with the same processors) will be the same. The main point of any automation is improved efficiency, while lowering cost. You then need to plan for the proper re-assignment of employee roles or increasing productivity by assigning other value-based tasks.

Create your team

There is no “I” in “team”. Get your user champions in place. Have representatives from concerned departments (human resources, accounting/finance, IT) and orient the members with their respective responsibilities. This will also come in handy during implementation.

Book a demo

Ask the payroll software vendor to go to your office and present the system to you. Its best when you have actual human contact. You can ask all the questions you want and validate your expectation based on the system presentation.

Know your enemy

Do not be overwhelmed by the promises made by the sales person. They are only promises. “The proof of the pudding is in the eating”, as they say; so try the pudding. Don’t say “Yes” yet. Try out the system with your team. You should be able to experience if it is easy to use and be able simulate your processed data. Your enemy here is not the sales person, but yourself. Your complacency, to be precise. This is a long process and most clients tend to ignore this and not do their due diligence. Wouldn’t you like to be able to play with the latest iPhone for a week before you buy it? Have the same enthusiasm, and it will pay its dividends.

Ask the right questions

If you have specific process requirements, (e.g. employee with higher tenure get more leave credits) ask if the system can duplicate it. Will it be a customization or merely a configuration?

A “customization” entail changing of codes to effect the desired function. This may be additional cost for you; so ponder on it. A “configuration” is a function selection in which you are able to set a process by indicating definable parameters in the system. It already exists, and you only need to turn it “on”.

Ask what are the steps in the implementation and how long will it be. This will help you understand how to prepare for it and the time you and your team will need to be in the project.

Know the cost and not the price

The “cost” of a payroll automation project would be:

1. Recurring and/or fixed costs,

2. Hardware requirements,

3. After market maintenance costs,

4. Customization pricing and

5. Incidentals

Number “1” is crucial. You would need to know if you want to pay for a software license or be under a subscription program.

If your vendor sells licenses for their payroll system, then you will be able to buy one and use it for a defined period. The cash outlay would be bigger but the cost overtime will be lower. Under a subscription model, you usually pay on a monthly basis for each employee you process for payroll. Which is better? That depends on a lot of factors. We will do a separate article for that.

These are but a few of the related information for a project like this. But if you are able to optimize your cost for a payroll system that would be a fit to your business operations then you will begin to reap the benefits of your labor.  Book a demo with us and we’ll help tailor fit our payroll system to your business needs!

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