What Are the Key Considerations Behind the Use of the Employee Central Payroll Global Template?

  • by Stephane Routhier, Solution Architect, EPI-USE America
  • November 6, 2017
Review these considerations for using a global template for implementing Employee Central Payroll. Various decisions may positively or negatively affect your payroll implementation.
Key Concept

Because the business environment is leading corporations to perform mergers and acquisitions, many global corporations are performing global Employee Central Payroll implementations. Adopting a global template can help an SAP SuccessFactors Employee Central Payroll implementation at various levels: costs, efficiency, and global operability. Global entities have multiple local entities with different business realities. A global temple must provide what they need to operate and to manage changes with their employees. They need to be consulted and feel included as part of an implementation process. Payroll is country specific and it is critical to reflect those requirements for correct use of a global template.

You work for a company with business units distributed among different locations. Your corporation plans to standardize the way you are conducting business processes across those various entities and wants to take advantage of the Employee Central Payroll implementation to harmonize processes across your organization. 

This is the moment when the term global template starts to be mentioned in your preparation meetings. A global template implies the adoption of a common shared model, covering not only the system itself but also the business processes, design standards, common master data definitions, the supporting (and reusable) testing and training material, the governance processes, the roll-out methodology, and more. The template should be the complete package, not just the system. 

Why Opt to Use a Global Template for a Payroll Implementation

As with any other choice, you need to ask yourself what the added values of this decision are. From my personal point of view, the results of using a global template for a payroll implementation could be the following:

1. Reduce implementation, upgrade, and maintenance costs. Imagine that one person owns five identical cars and a second person owns five entirely different cars. The key advantage for the owner of the five identical cars is the ability to have replacement components and still have a lower components inventory.

2. Standardize and harmonize processes

3. Facilitate corporate reporting

4. Help to manage deviations from the original plan and cost impacts 

At the end, a global template creates a project guide providing everyone involved in it with the what, how, who, and when. The next section includes tips and considerations to help your corporation to succeed with its global Employee Central Payroll implementation and global template.

Business Process Owner and Change Agent

Identifying the right resources within your organization to own each functional area that your global project affects is crucial. Those resources play a critical role by protecting the integrity of the template reinforced by a strong governance approach. Their influence should be sought whenever the template design is significantly challenged. Those resources need to have the right skillset to play this role. They must know the business and their specific functional area to be a change agent and guide the business transformation through the defined change processes. 

Prioritize and Harmonize Processes, Providers, and Technologies

I recommend that you proactively try to have all your business entities adopt common processes, service providers, and technologies. This exercise really helps your organization to obtain quick benefits at the cost level and to adopt a real global approach. It simplifies the support, the reporting, and other global activities.

Processes

A key activity for adopting a global template for an Employee Central Payroll implementation is to define the future state of your processes. One of the most common errors I see in the industry is the corporate office forcing many of its business units to adopt predefined processes without having consulted them. This action often causes global template rework during deployment and the units are prevented from conducting business as usual. Clearly, some business unit specifications will be discovered in detail as part of the localization to satisfy specific requirements due to union, legal, or industry specifications. You need to find the balance between standardization and local business requirements. 

If your intent is to have a central support structure, it is easier to adopt this structure when you have standardized and harmonized processes. Otherwise, the efforts for supporting an organization where processes are unique across each business unit are very difficult. Standardization and harmonization provide more flexibility to your organization as your employees can be relocated within your organization without going through a big learning curve.

Providers

Before doing any Employee Central Payroll activities, the timing is good to reduce the number of your vendors to reduce your costs, integration points, and transactions to manage. The following service providers are the easiest to harmonize: benefits, savings, stock options, and banking. Reducing the number of providers that you interact with can support your effort to standardize and harmonize your processes. In each of those areas, many service providers offer global services to facilitate this process.

Technologies

I recommend that you analyze the technologies used across your corporation to support global processes and identify the potential synergies. Using common technologies reduces your training, licensing, and maintenance costs. I too often see organizations using various middleware solutions to allow solution integration, thus increasing the architecture complexity. You should always adopt the same technologies when possible to support similar processes. To make the right decisions, your organization should hire knowledgeable resources internally, work closely with an experienced integrator, or both. You do not want to realize in a later phase that you have not adopted the most suitable approach for your organization in consideration of costs and resources use.

Design Without Reinventing

The design is the foundation of your future payroll solution. You want to ensure that you have envisioned something that is feasible, meets your business and legal requirements, and is realistic considering your budget and resources. Who wants to have the wrong solution in place that would not be embraced by all business entities?

ASAP Methodology

SAP has worked with a variety of corporations to represent all industries and population sizes. It has built the core SAP SuccessFactors Employee Central Payroll solution based on leading practices by industry to fully meet their business requirements: ASAP methodology.

Leveraging available tools can save you time and help you avoid known project pitfalls. ASAP methodology contains a comprehensive description of deliverables and associated tasks, thus connecting the project management view with subject matter expert needs. It delivers revised content in all the traditional areas needed for efficient project teams—project management, solution management, organizational change management, training, blueprinting, configuration, testing, cutover planning and execution, and others.

SAP Industry Solutions

SAP has focused on 25 main industries to provide them with specific solutions meeting their business needs. Those industries are included within six large families:

  • Energy and natural resources
  • Discrete industries
  • Financial services
  • Service industries
  • Consumer industries
  • Public services

Based on your industry, SAP has delivered specific human capital management functionalities. Listed below are some industries that have delivered human resources functionalities:

  • Professional services. This industry has a heavy focus on managing talents. This industry solution has a strong human capital management component to support the organization to manage talents, core human resources, time and attendance, payroll, workforce planning, and human capital analytics.
  • Sports and entertainment. The sports and entertainment industry has to manage specific human aspects. They include managing the teams and their performances, planning their training, players’ fitness, performance, scouting, and team or player analytics.

If they are available for your industry, industry solutions can be used as accelerators to ensure you meet your project timeline.

Build Your Global Template with Respect for Your Global Organization

You need to be sensitive to all entities in your organization when you build your global template. You cannot ignore any of them. Too often organizations minimize the impacts the global template could have on some countries. For example, a company had 1,000 employees in the United States and only 100 in Canada. It anticipated the complexity would be less in Canada due to volume. What it did not consider is that all the US employees were in one location and the employees in Canada were dispersed in all the provinces. The complexity associated with legal requirements was a lot higher in Canada, but that was overlooked in the building of the global template.  

I see too many organizations repeating these very common errors:

  1. They do not perform discovery sessions with all entities or countries to determine the common processes and required deviations. Every business entity has its history, its way of doing things, and its expectations. It is critical to take the necessary time in the initial phase of the project to understand them. The future state of your payroll solution cannot overlook these common processes and then try to dictate how business should be conducted. These processes have specific business requirements and even more important legal aspects with which they need to be compliant. It is critical for all the business entities to feel you understand the business context in which they operate. If they have the impression that the people in charge of their future payroll platform do not understand their needs, it will be very difficult to get them on board. Each entity needs to feel that the proposed global template is considering its specific business and local legal requirements for data, reporting, and processing.
  2. They build the global template based on one entity and force the other ones to adopt it. I sometimes see head offices trying to have their business entities adopt a global template that has been designed around the head office reality. This approach causes many costs and delays as nobody appreciates being forced to adopt changes that they do not feel are benefiting them. It is not a leading practice to seem to have a hidden agenda and to not have the entities at some point have input into their future payroll solution.
  3. They do not analyze in detail the existing legacy solutions to manage the changes across the organization properly. Understanding what you are replacing is critical. You need to put in place processes to discover from each legal entity the following:

Technical landscape:

  • Inventory your employees’ technical skills that can contribute to the project, which will help to determine the impact level on change management and the technical solution selection.
  • Find out what existing technologies and components you can leverage. This information can help to reduce project costs. 

Existing functionalities:

  • What should you deliver to match the current payroll capacities? You need to ensure all business and legal requirements are met.
  • What are the gaps that you will have to address such as requirements that are not met by Employee Central Payroll? You can discover some custom development requirements that could impact your timeline and costs.

Data structures:

  • What data exists? Some required data will not be in your legacy solutions and will require additional work.
  • What are the payroll data structures? This information will enable you to size the effort of the data transformation.
  • How will you convert the current data? Include the effort level of transformation in your project plan. Plan the project approach to transform the payroll data.

Database used:

  • What is the database type? Some payroll solutions use proprietary databases, thereby making the conversion very complex. It is important for you to understand the nature of the data to be able to plan accordingly
  • How easy is it to extract the data from the legacy solutions? Some databases increase the complexity of data extraction. You need some time to run reports that require very complex data manipulations and validations to perform data conversion.

Security and data privacy:

  • What are the organization’s security policies? Some organizations based on their nature or industry have very strict rules that can impact the approach and process selected.
  • What are the security standards implemented? Some security protocols could make payroll data manipulations more complex, and it is crucial to know them ahead of time.

Payroll data history:

  • How far back can you go for payroll data in each legacy solution? You must know how many years of payroll data exist per business entity. Some business entities could have changed their payroll solution within the period covering the required payroll history. It could impact the approach. Some data could have been archived, limiting your capacity to extract it. 

The basic assumption is that the new payroll solution will benefit every business entity. It is mostly true, but you will have exceptions. You will have business entities that already have state-of-the-art solutions and will lose existing functionalities, at least in the initial payroll solution rollout. This is normal when you harmonize and standardize globally, but it must be managed carefully. When you deploy the new solution, no one should experience operations challenges. Payroll is a functional area in which you cannot experiment.

Build and Test

While you will discover the global requirements in Employee Central Payroll, you will realize the gains are not around the configuration. The leading practices with Employee Central Payroll propose that you use the country-specific configuration tables, schemas, and rules. It is not as if the reusability at this level is very high. You must build the solution for each country within the SAP-defined space. You must test each to ensure it is addressing your business requirements and keeping your employees happy by paying them correctly. 

Remember that SAP technical wage types are different in every country. It means that legal deductions assignments to your earnings and deductions will be very different in each country. This impacts the configuration time required to have the solution in place and the specialists required. SAP has always ensured its solution meets country-specific legal and business requirements. One common data structure and program cannot support all of them. It would be too difficult to manage for customer and implementation partners and would too highly increase the level of complexity of the solution and its management. 

The fact that the solution is country specific impacts your conversion process as each country has variants to support local aspects. As an example, say for country C you need to perform a mid-year conversion. The technical wage types required differ for each country as do the load programs. It means you need to understand the structures that you will have to work with and understand the technical requirements. 

At the end those wage types will be used to support the year-end activities. Based on this scenario, if you are not aware of each legacy solution and how payroll results are saved, you could discover in your project that the legacy solution used by entity B requires a lot more transformation than initially envisioned. It could impact the resources planning and even your capacity to deliver based on your global plan. 

Some examples of country-specific Employee Central Payroll components are:

    • Payroll drivers and schemas. SAP has delivered country-specific payroll engines to meet legal requirements. Within the schema, you will see multiple payroll rules that you could be required to adapt, replace, remove, or supplement to meet your business-specific requirements.
    • Legal deductions. SAP is working closely with each government to ensure it provides the technical wage types to support the legal requirements. The legal deductions require you to have knowledge of the legal context to ensure the wage types are configured correctly. SAP delivers model wage types that should be copied to ensure they are configured correctly to meet country legal requirements.
    • Garnishments. Some countries have specific infotypes to manage garnishments and specific pay calculations. They are normally delivered by SAP so they will not impact your build activities much. Garnishments are managed in an SAP system within two infotypes that are linked together, which can make the conversion process trickier. Often companies decide to perform this conversion manually instead of using an automated load tool. Some organizations have a higher number of employees with garnishments and that could require more effort to convert.
    • Vacation accruals and calculations. Some countries have predelivered calculation engines to perform calculations related to vacations (such as accruals and payouts). It will require your team to perform the country-specific calculations.
    • Payment methods. Some countries pay employees via methods other than using bank transfer or checks. Some employees could be using prepaid credit cards and food vouchers. In some countries, the payment methods have not been standardized across the institutions, and therefore, your implementation team will need to build them.
    • Reporting. SAP delivers reports required to meet your operation’s legal and business requirements, but it also delivers specific reports for timely activities such as year-end activities. Year-end requires your attention considering the solution updates and required configuration. Depending on your go-live date, the year-end configuration is often managed outside of the implementation project. 

You will face dependencies in all Employee Central Payroll country-specific components, so it is very important to understand the discrepancies. It could impact the design of your global template or project timeline.

Deploy

As part of your deployment approach, another key step is to consider the activities specific to every country to ensure the feasibility of the project timeline. The global template will surely accelerate the solution implementation, but you need to ensure the plan is not too aggressive considering other critical payroll activities such as year-end benefits enrollment and bonus and vacation payouts. 

Remember that in the current global business context, organizations have adopted a lean organizational structure and the resource availability to support core payroll operations and projects activities is sometimes very limited and shared among many activities. It can drive the number of full-time employees (FTEs) to be too low to be successful. You need to ensure you have the proper resources to support the project with all the required knowledge, skills, and more importantly, availability. It is a key success factor to your payroll implementation. Payroll resources are used to having an accrued level of stress due to the nature of their job, but you need to be ensure you do not lose them by asking too much in time, effort, and stress.

Stephane Routhier

Stephane is contributing to EPI-USE America market development and acting as a Solution Architect in the North American HCM Practice focused on the selection, planning, design, and delivery of HR solutions across multiple industries. He has more than 20 years of SAP application experience and knowledge of enterprise HCM and payroll processes, trends, issues, and organization design. He acts as an SAP Expert in the payroll area. He has been involved with large full-scale SAP ERP HCM and Payroll implementations using the breadth and depth of SAP modules. Stephane has contributed to the HCM community as a speaker and writer.

 

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You may contact the author at stephane.routhier@epiuse.ca.

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