Payroll integration is a business advantage. How do you make it happen?

Business silos serve their purpose, but their effectiveness pales in comparison to the results achieved through connected operations. This insight can revolutionize not only payroll processes but also employee relationships. What should companies understand about integrating payroll or other operations?

The Case for Integration:

In Charles Duhigg’s acclaimed book “The Power of Habit,” he shares the story of Tony Dungy, the first African-American head coach to win the Super Bowl in American Football. Dungy’s success rested on a fundamental principle: incessant practice until team plays became automatic reactions. A team that reacts without conscious thought outpaces one that deliberates. The more integrated the team, the higher its performance.

Organizations can be likened to sports teams. While they rely on individual skills and talents, isolated players with significant delays between them hinder success. These isolated segments are often referred to as ‘silos.’ Silos aren’t inherently negative; like skilled players, they provide a conducive environment for people and processes to thrive. However, excessive isolation diminishes their effectiveness.

According to Warren van Wyk, Director at PaySpace, “Silos are crucial but have their limitations. While eliminating silos may seem appealing, it’s often the wrong approach. Integration, by connecting silos through specialized channels, proves far more effective. This concept is not only applicable in business but also excels in modern technology.”

Today’s digital landscape thrives on integration, commonly referred to as the ‘API economy.’ APIs (application programming interfaces) serve as the bridge between two systems, translating instructions seamlessly. For instance, instead of multiple applications housing copies of the same database, they can access information from a central database via its API, reducing duplication and enhancing clarity.

Integration, alongside the cloud and broadband internet, forms the backbone of the modern digital economy. When businesses integrate their core systems, they unlock substantial benefits.

Payroll that works for everyone

Payroll systems offer a practical example of this dynamic. Payroll is typically isolated. Though it might share some connections with other business systems, such as HR and finance, the information is often added manually and usually by a handful of people who crunch payroll runs at monthly intervals.

This is labour-intensive, prone to errors, opens opportunities for fraud, and stops payroll from becoming a living part of the organisation. Yet payroll is crucial to every company. Miss a salary run or miscalculate remuneration, and you quickly have angry employees. Isolated payrolls also drag down the speed of leave applications and are often marginalised in financial discussions.

“An isolated payroll system is not a benefit,” says van Wyk. “Even if it works, I can guarantee it is still inefficient and lacks visibility. Many CFOs and other finance professionals have a very hands-off relationship with payroll, which doesn’t make sense as it’s often their biggest and most complicated expenditure. But the reason they end up there is because it’s easy for payroll to fall into a silo rut.”

Getting payroll integration right

Integration overcomes the silos and marginalised operations in a business. It can be a complicated journey but with great benefits. Smooth the transition with these tips:

Look for an HR, finance or ERP platform that offers payroll integration options. Outdated and legacy software struggles with integration, while new-generation cloud-native platforms are natural. These platforms can partner with other modern software, such as cloud-native and multi-tenant payroll platforms with native API capabilities.

Embrace APIs. Some providers work around integration shortcomings by using flat files or other tricks. However, an API approach is the only truly effective and long-term way to invest in integration for payroll or any other business area.

Involve the system’s users. The departments and people who use those systems are crucial to helping plan and design the relevant processes and data. Manage integration through collaboration, not dictation.

Take stock of in-house skills. Larger enterprises with substantial IT skills may have some of what they need for integration projects. Using these skills will help reduce project costs and improve delivery times. But integration is specialised—don’t make the mistake of thinking in-house technologies can do it all. They will need complementing partner skills and experience.

Explore Integration Platform as a Service (iPaas) Tools. These toolsets enable you to rapidly build powerful applications, data and API integrations from a single interface in minutes using a low code integration platform. This could result in substantial savings if you have the in-house technical skills that are not necessarily specialised back-end sleepers.

Vet your integration partner. An integration partner brings experience and skills to the table. They should be able to demonstrate their project history and provide reference sites. Select partners that do their homework, especially towards understanding the specific systems you want to integrate.

Go cloud-native. Genuine cloud-native systems support integration, digital workflow design, and business process management. The best sign of a cloud-native system is a single-instance, multi-tenant platform, meaning one cloud software serves multiple customers. This model powers SalesForce, Slack, Microsoft 365, and other cloud-era giants. Cloud-native software is more affordable, faster to integrate, and future-proof.

Not sure where to start? Contact specialists such as PaySpace to discuss your payroll integration options, and start making this crucial business silo a team player in your enterprise.