In the previous post we discussed the SAP Payroll control center add-on and the new payroll user experience it delivers. In Feature Pack 3, which has just been delivered, the payroll user experience reaches new levels! This blog explains the new concepts.
In a nutshell: The ultimate aim for the new payroll user experience is to deliver functionality that will allow customers to move away from batch processing and towards a real-time payroll process. In order to do that we have to cut the monolithic payroll process into smaller result oriented processes, which can be executed independent from each other.
These small processes come down to incremental tasks which can be divided within a team of payroll administrators and specialists. When each administrator focuses on the smaller part of the process they specialize in, and these small tasks sum up into a full payroll process, this speeds up the processing time. From now on all stakeholders can be supported with meaningful real-time analytic insights into their payroll to allow faster and more accurate decisions.
Let me take one step back and explain it all in detail.
A typical current payroll process
During a payroll cycle there are certain deadlines that must be met. For example:
- Employees must receive payment
- The pay statement must be delivered
- Tax payments must be submitted
- Financials must be updated
Many of these deadlines are defined by legal regulations or by the organization itself (e.g. posting of payroll data to Financials). Based on these deadlines we can also estimate when a process needs to start in order to complete in time.
The processing time, per process step, is currently highly influenced by batch jobs in which large populations of employees are processed. Running these batch jobs often happens overnight so that the payroll manager or administrator can review the results the following day. If errors are identified they are corrected and this process is repeated.
This all has to happen in a short time-frame and during this time the payroll application blocks the operation of the other processes, in the Employee Central system. As a result, this obstructs day to day routines for the duration of the payroll process. Afterwards a manager reviews and the payroll is signed off for further processing.
What is the new experience delivered in Feature pack 3?
For us the question was: Does it have to be that way? Can we find new ways to significantly reduce payroll processing time? Ultimately: Can we move away from “batch thinking” to something like “real time”, “online”, “interactive”, “on demand”, obviously taking into account the internal and external deadlines, including sign-off steps.
In Feature Pack 3 we released a new way to process payroll. It breaks down the rigorous payroll process into small incremental processes. The basic idea behind this is simple: do all the verification of master data and payroll data anytime throughout the payroll period. This means that payroll administrators can start at the first day after the previous payroll is closed. Also, in order to minimize the effort for the payroll administrator, it needs to be ‘exception based’. This means that data quality can be verified whenever there’s a change in the data, also outside of the traditional payroll control record phases.
The way that potential issues are pointed out, and the configuration, is based on validation rules which have been delivered in previous releases.
Delivering insight into the payroll results earlier in the process?
In addition to continuous validation of master data accuracy, we also deliver new ways to validate payroll results. These will predict if the payroll results will turn out correct. It is based on storing simulated results in order to run validations (policies). The payroll simulations can run anytime and as early in the process as you need the insight. This brings us to the point of real insights into expected data quality and accuracy.
The outcome of these policies (exception based error processing) is distributed by the payroll manager to the team of administrators and specialists. They are only notified by the payroll application when they have to do perform a task (e.g. fix a problem if master data is missing or if the calculation for an earnings type is incorrect or out of tolerance, etc.). In all other cases they will not be notified. This improves the efficiency and may reduce the amount of internal alignment meetings and touch points, which allow the specialists to spend more time on their tasks.
How is the specialist alerted to any issues with the payroll policies ?
If the policies uncover potential issues with master data, or simulated results, those employees will be flagged and the responsible specialists will be automatically alerted by the system. They receive detailed information about the problem and how to fix it. This will happen throughout the payroll period.
This means that the payroll process (controlled by the control record) is decoupled and data is continuously validated. In addition, specialists and payroll managers will get real-time insights into their payroll process.
How might this work in my organization?
The key element, in the new way of processing and monitoring, are the policies that group the validations of the payroll related data. Policies can be structured in a way to feed issues on tax data to the dedicated tax experts, another team looks after the garnishments, a team that looks at payroll overall, etc. These policies can be agnostic of payroll areas or they can be filtered based on certain organizational parameters (like payroll areas, personnel areas, cost centers, org units, etc). Per the policy a frequency can be configured. This controls when the specialists receive their alerts.
How do managers keep central insight?
Managers and supervisors can centrally monitor the alerts, which are distributed to the specialists. Managers or supervisors have full control over the process and insight into the process through (new) dedicated KPIs. These can be customized according to unique requirements and will provide the real time information that improves the quality and speed in which decisions are made.
Overview of the new payroll processing experience
The main structure is very simple. The following image shows the 3 steps of a payroll in the future:
- Monitoring KPI’s: Simulated results are prepared and payroll validations scan master data and simulated results. These automatically distribute potential issues (exceptions) to specialists
- Running the payroll: This almost becomes an administrative step because all validations have been taken care of in the first step. This step is obviously crucial for the follow up.
- Follow up processes: In this step communication with external parties is executed, posting to finance, etc.
Before the monitoring starts the simulated results and the master data validations have to be prepared. When the monitoring starts the administrators and specialists are informed via alerts (that have been created in the preparation phase) and managers will monitor the progress. Before the “monitoring phase” they assign the policy results to processors and throughout the monitoring phase they have access to important (free to define) KPIs to ensure all policy errors are being resolved. This is a graphical representation:
Is the control record still needed?
Short answer is: Yes, but it will change. Payroll errors identified during a productive payroll run, which do require master data changes, can be corrected without the need to change to payroll record to “Released for Correction“. By assigning identified errors to specialists they get a temporary authorization to execute the master data changes, although the control record is still in the “Released for Payroll” status.
What does the new payroll process look like?
The process can be broken down in 2 phases. The monitoring part, in which the specialists work on resolving potential issues, and the overarching work, which is executed by the payroll managers. E.g. executing the actual payroll run. For both phases the following screenshots provide more info.
Let’s start with the new screens for the payroll manager, to get a complete overview of payroll processes within their area of responsibility. The following screenshot shows the new process overview:
This screen is the entry point for the payroll process manager. It provides a complete process overview and it displays all processes at a glance (e.g. progress of each process, information on payroll data quality issues, etc.). It also allows for context sensitive actions (e.g. navigate to the current active step, start upcoming processes, etc.)
This screen replaces the calendar view that was delivered in Feature pack 1.
Running the actual payroll
When clicking into a payroll process the following screenshot shows how a payroll process runs. Steps like “Opening the payroll” are now happening automatically, to reduce the number of clicks for the payroll manager. See the image below:
As you can see, the information on a screen is reduced to only relevant content. Details are also available via the hyperlink. This opens up the following screen:
These details include:
- Error Overview (e.g. list of employees rejected in payroll and reason for rejection);
- Program Details (e.g. list of parallel payroll jobs executed, their status and the ability to display the result spool list);
- Contacts and their contact details, which are able to support the payroll process manager for this particular step.
Here is an example of the contacts page:
One additional benefit of the Feature Pack 3 release is the automated process execution. This means that process steps can be executed automatically, without further user interaction. This significantly reduces the time which a payroll manager has to spend on running the individual payroll steps.
When clicking into a monitoring process (e.g. Payroll Data Validation: Monthly Payroll for Salaried Employees, Headquarter H1) the following screen opens:
You are free to define the KPI’s during implementation and they provide insight to the payroll manager about the quality of the payroll process. The payroll policies indicate that there are 23 potential issues which need to be analyzed and fixed before the productive payroll can run. The payroll manager can drill down further to find out which issues are in queue, or to analyze the potential issues and change the processors who work on these issues:
During the monitoring process, the monitoring step provides up-to-date information on payroll data quality. Payroll data quality issues are shown and are either automatically or manually assigned to processors (via “Edit”).
What are the benefits?
- Improved efficiency: Steps can be executed automatically, without manual intervention
- Improved accuracy: Create a validation rule library to achieve an increase in data quality
- Real-time Insight: KPI’s enable full access and monitoring of the payroll process
- Automation: Enabling payroll managers to automate the process steps and delegate the resolution of the policy alerts
- Reduce Risk: Partners, such as Accenture and Ernst & Young, are creating Audit & Compliance tools that are integrated into Employee Central Payroll