How To Build a Business Case For Changing Your Payroll System to... · To get a per payslip cost, take annual cost and divide by number of payslips produced per year. Once you have

How To Build a Business CaseFor Changing Your Payroll System

Table of contents

Situation Analysis 4

Appetite for Change 8

The Trinity of Tangibility 10

Further Considerations 22

Bringing It Together 26

Based on a Frontier Software webinar with Tracy Angwin, CEO of Australian Payroll Association

Copyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com2

Status QuoThe first consideration when starting to build a business case for a new payroll solution is the consequences of not getting a new payroll solution.

No-one wants to be the organisation that makes news headlines for all the wrong reasons – not paying staff accurately and on time, fraud or poor payroll implementation.

When cast against the backdrop of what can go wrong and the potential impact on company reputation, the importance of developing and presenting a winning business case for a new payroll solution becomes evident and paramount.

Copyright (c) 2017 Frontier Software. All rights reserved. How to build a business case for changing payroll systemswww.frontiersoftware.com 3

Situation AnalysisCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com4

Before you imagine the future, you must have a clear understanding of the present. To understand your current solution you can benchmark it so that you have something to compare future state options to.

Measuring the total cost of the payroll function is the first step. Apart from providing an estimation of the cost to produce a single payslip, it equips you with a base financial point for your business. When it comes to building your business case and measuring ROI, it is an essential step.



When deriving a cost-per-payslip per employee, you will need to consider direct costs such as salaries and software licences, together with less obvious costs, such as infrastructure requirements, training, recruitment fees, stationery and travel costs.

To get a per payslip cost, take annual cost and divide by number of payslips produced per year. Once you have a cost-per-payslip figure, it’s time to see how it stacks up against the market. Using comparative analyses, such as the Australian Payroll Benchmarking Survey, you will be able to compare with similar businesses. Visit www.austpayroll.com.au for more details.


Appetite for ChangeCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com8

You will also need to consider appetite for risk in your Business Case. Typically, organisations with a low appetite for risk will be less concerned about the costs. Financial institutions are generally more risk averse and will put the compliance and efficacy of their payroll before cost considerations.

Businesses in industries that are focused on cost control may be prepared to forgo comparative measures in exchange for a lower cost per payslip.

Only you can assess the appetite of your organisation and how that might translate into decisions around compliance and cost.


The Trinity of TangibilityCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com10

Based on Tracy Angwin’s book, “Profit from Payroll”, there are three considerations in a business case for new payroll solutions.

These are:

• People

• Processes

• Technology


PeopleCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com12

Start with a careful assessment of your team capability. Are they qualified, well trained, good communicators?

Secondly, consider the ratio of team members to payslip produced. The Australian Payroll Association has a benchmark figure to assist you with your comparison. Based on the 2017 Payroll Benchmarking Report, on average, a fortnightly payroll of 1000 employees is managed by 1.82 payroll professionals.

Lastly, be sure that your payroll team is committed to continuous improvement and innovation. Many new payroll technology projects don’t return promised ROI due to lack of “buy-in” from the payroll team.


ProcessesCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com14

Many processes are the enemy of best practice payroll. If your payroll is operating with a number of manual processes, such as paper-based forms or spreadsheets, you will miss payroll efficiencies and the associated reduction in costs.

Payroll best practice includes identifying and, whenever possible, automating processes, to minimise the need for manual calculation and processing by the payroll team.

Even if you can’t achieve complete automation, it is important to make changes where you can and ensure your audit and validation checkpoints are built in.


TechnologyCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com16

A review of current technologies enables you to identify potential ROI, when combined with people and processes.

An analysis of technology should include the following:

• Payroll Office Technology

• Payroll Supporting Technology

• Interaction non payroll staff have with payroll system

• How data and information gets to pay office

• Mobile capability

• Workflow capability

• Required integration to third party systems.



Technology should be used as a platform to not only improve processes and reduce the cost of the payroll function, but also allow payroll

information to flow to areas of an organisation that needs it.


Further ConsiderationsCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com20

Other than the payroll process, there are two further considerations that should be addressed when making the case for a new payroll solution.

They are:

• Potential for payroll fraud, and

• Disaster recovery


Payroll FraudCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com22

Paying fictitious people, skimming cents here and there and continuing to pay terminated employees are all means by which a dishonest payroll person can fraudulently steal from their employer.

An entire e-book on the topic entitled, “How to Mitigate the Risk of Payroll Fraud” is available from Frontier Software and will give you important information and tips around mitigating your risk.


Disaster RecoveryCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com24

Good payroll disaster recovery planning ensures your business is payroll safe in event of a disaster.

A Disaster Recovery discussion in your business case ensures the business has the capacity to pay its employees, irrespective of the event from which recovery is required. This applies whether you manage your payroll in-house or have an outsourced arrangement.

It is important to test your Disaster Recovery plans.


Bringing It TogetherCopyright (c) 2017 Frontier Software. All rights reserved.How to build a business case for changing payroll systems www.frontiersoftware.com26

A compelling business case will quantify, in time and dollar terms, the savings that could be made when compared to how you currently manage your payroll. Done well, you will produce a document that is well researched and worthy of consideration.

1. Gather your facts – understand current state and benchmark it against similar organisations.

2. Configure your options – In-house vs. Outsourced with associated technologies.

3. Re-calculate your benchmarks – show how each option compares to current state.

4. Write your business case, including data gathered in steps above. Show a financial analysis of each option and qualitative advantages and challenges.

5. Recommend a solution and provide reasoning.


The combination of research and financial data will support your Business Case and clearly explain the rationale behind your recommendation. Most importantly, it may support the approval of a payroll solution that could make significant contribution to your bottom line.


TRACY ANGWINAs CEO of Australian Payroll Association, Tracy Angwin has collected many labels and accolades over the past two decades; ‘thought leader’, ‘bestselling author’, ‘media commentator’, ‘keynote speaker’, are just a few of them. Tracy is sought out for her commentary and guidance on all topics payroll, from the challenges of today to tomorrow’s trends.

Tracy sees payroll as a critical function that, when done right, leads to high performing and motivated teams. Her mission is to make sure employers make the same connection.

Tracy’s commitment to industry excellence has led to the creation of nationally accredited Certificate and Diploma payroll qualifications. As part of the Australian Qualifications Framework, she has ensured that new standards of professionalism will be bedded down, industry wide, and that talent will see payroll as an attractive career option. The payback to employers is a guarantee of quality and a dedicated place at the table for payroll professionals.

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How To Build a Business Case For Changing Your Payroll System to... · To get a per payslip cost, take annual cost and divide by number of payslips produced per year. Once you have