Outsourcing of Payroll in an SAP Environment: Part 1 — Evaluation

  • by Satish Badgi, HCM Consultant
  • January 16, 2008
Prepare for evaluating options surrounding payroll outsourcing in the SAP environment. Payroll outsourcing involves evaluation as well as implementation. Evaluate several payroll factors to determine which approach is most suitable for your organization.
Key Concept

Payroll outsourcing in an SAP environment can follow a methodology that goes far beyond a typical in-house payroll implementation. The methodology is divided broadly into two stages: evaluation and implementation. Every organization is unique and requires different business considerations to properly outsource its payroll. The evaluation stage is especially important for US payroll, due to its complexity. A strong evaluation is advisable to prevent implementation pitfalls and to ensure that you appropriately take all payroll aspects into account.

Payroll outsourcing in SAP Human Capital Management (HCM) implementations can take different forms and shapes. Users can outsource different aspects of the payroll process, from check printing and tax filing to full net payroll. You can divide payroll outsourcing into two major aspects. The first aspect is the business case and evaluation, which is covered in part one of this series, and the second is implementation and operational challenges, which I’ll cover in part two (Figure 1).


Figure 1
Lifecycle of payroll outsourcing


Satish Badgi

Satish Badgi has been helping clients implement SAP ERP HCM and payroll for more than 15 years. He has been involved with large full-scale SAP ERP HCM and payroll implementations using the breadth and depth of SAP modules. Satish works for a large management and systems integration consulting firm and handles global payroll for clients. He has published two books on SAP payroll, Configuring US Benefits with SAP and Practical SAP US Payroll.

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