Use a Global Payroll Strategy to Leverage the SAP Payroll System

  • by Satish Badgi, HCM Consultant
  • December 28, 2011
Companies that implement SAP payroll systems often find themselves challenged with defining global strategies and solutions for issues that can arise during an implementation. This case study, based on numerous implementations, outlines options and approaches you can take to meet those challenges.
Key Concept

The definition of global payroll can differ depending on the context. Global payroll is a framework that leverages SAP functionality and tools while creating an organization’s payroll strategy. Global payroll does not necessarily mean a single-instance SAP payroll system or a payroll run globally from a single location. Global payroll strategy can consist of SAP country payroll, SAP international payroll, or outsourced payroll. It also means that the organization has thought through its business processes and standardizations in the payroll area on a global scale. At the same time, global payroll teams still require a strategy for a global implementation, standardized business processes, and a feasible global payroll strategy. There are different approaches to these issues depending on the size of the organization, the countries in which the company operates, and the organization’s overall HR IT framework. To address issues pertaining to a global payroll implementation, you need a global payroll framework consisting of standard global processes, data definitions, and global libraries.

What is a global payroll? How do you define it? To help you answers these questions, I use several different scenarios for implementing global payroll:

  • One single in-house SAP payroll system-based global strategy solution. This scenario is a system in which all applicable countries run on a single instance of the SAP ERP HCM platform (employee master data, Personnel Administration [PA], and Organization Structures). Payroll operations and support are local, country based, or region based, but the platform is a single global platform.
  • One single outsourced vendor-based global payroll solution. This scenario is similar to the first one except that it is outsourced to a single global vendor.
  • Regional outsourced payroll solutions. This scenario has multiple vendors or solutions across different regions — for example, Asia, Europe, and the US.
  • Large country payroll solutions. An organization has a large employee population in countries that have a business case to implement an in-house SAP payroll system. In certain countries for this organization, the payroll could be outsourced to external service providers. The external service providers may or may not have SAP payroll solutions and are interfaced with the organization’s SAP ERP HCM system.
  • Individual country-based payroll solutions. These individual country payrolls could fall into one of the following categories (the size of the country as well as the organization’s HR IT strategy also factor in making this decision): SAP country payroll, SAP international payroll, or outsourced payroll.
  • In addition to these different strategies and approaches, the other elements you have to take into account when discussing global payroll solutions are: 
    1. The type of HR or employee master data systems being used. Is it a single SAP ERP HCM instance or are there multiple systems worldwide?
    1. The support structure of the organization for IT applications as well as for HR users
  • The system landscape and IT strategy for the following applications (that have to integrate with payroll systems): time clocking and time management; benefits administration; finance (general ledger and accounts payable); reporting, analytics, and data warehousing; and year-end processes (tax documents and compliance reporting).
Note  In this article, I use a case study to analyze global payroll solutions. In my related HR Expert article, "System Tips for a Global SAP Payroll Strategy,"I focus on SAP ERP HCM payroll functionality and discuss the system-specific solutions you can implement to meet global challenges.

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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