A New Paradigm for SAP SuccessFactors Payroll

One of the curious things in life is that what might appear to be simple, is really more complex than it seems. We can look at the recruiting process, for example: We need to fill a position so we tell HR, they post some ads and work with recruiters to get us a list of candidates, we interview them and hire one. Those in HR know the process is much more detailed and complex than that, but if you’re not the process owner then you don’t really ever get an appreciation for those details and complexity. The same goes for my favorite function – payroll. Most of us look at our bank statement – or get a notification of deposits – and if the pay is about what we expect then we move along. Maybe from time to time we look at our pay statement to see some details on deductions or taxes. Pretty simple.

But then, payroll isn’t so simple. From collecting all the data needed to pay someone, doing the calculations, distributing the results and reporting to banks, accounting and regulatory agencies there are plenty of things that can go wrong. For one employee. Now, in large companies multiply that by, say, 50,000 people getting paid weekly, every two weeks, semi-monthly or monthly. Maybe there are 50 elements of pay in an average person’s pay statement, and pretty soon we need to get 50 to 100 million or more things right every year to successfully deliver payroll to employees, banks, accounting, agencies and so on. And those in payroll know, there’s even more to it than that. Not so simple, right?

So it was with that background that I read Mike Ettling’s comments to Diginomica about “Self Service Payroll:”

We’re thinking about the whole payroll paradigm, which says, ‘Why do you, perhaps, need a payroll department? Why can’t you pay yourself?’ for example.

Why can’t I decide, ‘Hey, I need to get paid, I need some pay this fortnight,’ just click the button and pay myself, trigger my pay ...

These are ideas which are being whiteboarded at the moment.

I’m glad he’s getting creative and rethinking the ‘whole payroll paradigm.’ But this self-service idea of employees paying themselves doesn’t sound so fruitful to me. I know! We’re brainstorming here Steve, don’t evaluate the ideas, but withhold judgment until we get all the options out there! Well my INTJ mind has already evaluated this and determined it’s better to offer personal finance classes to employees than to offer self-service payroll. Let’s move along to what SAP SuccessFactors can do to shift the payroll paradigm. I’ve thought about that already too – you’re welcome.

First, payroll has to be reliable. Don’t deliver software updates that break it. Seriously. I love SAP’s payroll, but even after my almost 25 years working with it, I still don’t trust their updates, notes, and support packs. Customers spend too much time regression testing their systems and reporting (and as often, working around) bugs that could have and should have been caught with basic regression testing done at SAP before it was released. This is a problem that has followed SAP for years, and if the paradigm is going to be re-thought then start here.

Second, payroll systems ought to be simple to configure for simple cases while also having enough sophistication to handle complex customer requirements. My customers always hear from me that one of the most important keys to a good payroll is keeping it simple. I drive simplification in every payroll project, but sometimes we can’t avoid some complexity. SAP’s payroll does a pretty good job at this already, as long as no one has hacked it up by configuring or customizing outside the SAP payroll framework. And that still happens too often (by consultants who never have to live with their mistakes because they move on before they see the impacts in a productive system).

Third, payroll should be easy to use both for employees and for payroll administrators. Maybe the new payroll paradigm will include design-thinking and a hefty dose of empathy for employees and administrators. I hope so. I know SAP’s fairly-new Payroll Control Center aims to ease payroll administration and it’s a good start. But there are so many other things that need to be addressed. I have a set of customizations and configuration that get applied for each new customer to make the system easier to use and administer, because everyone eventually requests that functionality to fill in SAP’s gaps. But it’s all within the existing SAP Payroll framework, which desperately needs to be retooled with ease-of-use in mind.

Fourth, consider all the weaknesses and bolt-ons in the current SAP Payroll system when creating that new paradigm. Concurrent Employment should be built in from the beginning, as well as easily supporting multiple rates of pay per employee. Make payroll adjustments easier to carry out. Deliver some packaged integration for interfacing to various providers. And document the system. I’m sure others have much more to fill this bucket.

Even given all four of these efforts, customers have the responsibility to simplify and streamline their own processes. The best payroll system in the world will still be compromised if a company holds on to complexity. Remember – payroll doesn’t provide any strategic advantage to your company, so make it reliable, efficient and flexible so that it doesn’t get in the way.

Back to self-service payroll. We could build a service that automatically pays a mid-period advance to an employee, on demand, via Fiori. I don’t think it’s that difficult to do with the current SAP payroll software. So build it and deliver it if you want, SAP SuccessFactors. But also keep the four points above in mind because they will deliver a payroll system that really does set a new paradigm: reliable, capable, easy to use and full-featured.