The Payroll Pasa Doble: How to Be Sure You're Taking the Right "Steps"
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By Micah Fairchild
A Proven Three Step Approach to Payroll Software Selection Projects
Yes, I am referencing Dancing with the Stars (though I'm relatively certain that the Pasa Doble existed before the show). Before you go judging me though, hear me out because I think the analogy is a pretty good one. You see the Pasa Doble is a fast-paced dance style with very specific steps and it's about as close to the International Standard dance as you can get. Likewise, the selection process for payroll software vendors is often: a) immediate, need-driven and fast; b) successfully completed by following specific steps; and c) about as close to standard business practice as you can get (i.e. every business has some kind of payroll). Unlike the judges on Dancing with the Stars though, we want to see you get the steps of the Payroll "dance" right. Following in the lines of Gartner's selection methodology, there are three specific analysis "steps" that need to be learned in order for your payroll selection process to be successful: 1) Organizational "demand" analysis; 2) Vendor "supply" analysis; and 3) Final cost analysis.
Step 1: Organizational "Demand" Analysis
Putting your best foot forward in the Payroll dance means conducting a thorough assessment of what your organization's goals are and what your organization needs from the payroll software vendor before any discussion happens with the vendor. For example,
Are you looking to cut costs or curb administrative bloat?
Are you struggling with regulatory compliance in a particular area?
Are you trying to standardize your policies or make processes easier?
Whatever your organization's goals, coming into any payroll vendor selection process with a clear understanding that there is no one-size-fits-all policy is critical. If adequate assessment isn't done in aligning payroll software needs with the strategic direction of the organization, you're unlikely to get what you need from a payroll solution. Keith Rodgers of Webster-Buchanan Research recommends that, "In the vendor selection cycle, we suggest [companies] take a step backward, review some of their assumptions, and refine their strategy or business case."
Step 2: Vendor "Supply" analysis
Once you've gotten a clear picture of where your organization is heading, it's time to assess exactly what it is that each vendor is going to bring to the dance floor. You want to know: a) if the payroll solution itself accommodates specific objectives and b) if the payroll vendor is viable. The Gartner Measurement methodology puts it another way, citing "product functionality, technical architecture, investment (that is, cost), vendor service quality, vendor viability and vendor vision" as the key criteria for software vendor assessment. Essentially, you should be evaluating whether the payroll vendor can satisfy the efficient, effective delivery of both the strategic and tactical business requirements you outlined in Step 1.
Of course, once you've deployed the payroll solution, you don't necessarily want to be left at the dance alone. As such, upgrades, enhancements, and service packs are just some of the service and support elements that should be considered when evaluating vendors. So be sure to ask:
Does the vendor maintain dedicated help desk personnel covering all working hours?
Is support provided directly from the vendor or does it pass through partnership networks?
Is consulting assistance provided directly from the payroll vendor?
Does the vendor provide training for performance tuning, application development, applications integration, data modeling and database administration?
Step 3: Final Cost Analysis
Before your dreams of implementing your newly selected payroll system fully take over, you need to buckle down and learn how to work out the delicate financial details with your vendor-of-choice. Remember that setting up any payroll system can be both time-consuming and expensive, so make sure to do your homework (especially your math).
According to Gartner's "investment criterion" the costs that go along with the deployment of payroll solutions typically involve:
Software licensing costs;
Deployment and implementation costs, including system integration and software customization;
Annual maintenance costs;
End-user training costs; and
Third-party system integrator fees.
Financial agreements that accompany solutions should be put under the microscope, mainly because, according to Gartner's measurement team, "frequently, enterprises do not require the entire package of licenses and should purchase only those that are necessary". Purchasing more software than is needed is a historical problem, and leads to 'shelfware'. 3 and 5 year cycles are standard for payment contracts, but be sure to consider whether growth or future purchases may take place within the cycle. If so, then negotiate discounts before the contract is inked.
Get Done Tonight!
Payroll solutions that are efficient, effective, and cost-optimized have become mission-critical, and organizations simply cannot afford patience to any system that lacks those needed functionalities. By striving for the strategic due diligence provided in the above steps, you're well on your way to selecting and implementing a payroll solution that has all the right moves for your company.
Following the advice of Gartner's selection methodology, there are three specific analysis "steps" that need to be learned in order for your payroll selection process to be successful: 1) Organizational "demand" analysis; 2) Vendor "supply" analysis; and 3) Final cost analysis.