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SpinifexIT Payroll considerations during an employee central implementation
Part Two: Payroll Considerations During an Employee Central Implementation
Part Two: Payroll Considerations During an Employee Central Implementation 1024 512 SpinifexIT

Download our FREE Considerations for Payroll During an Employee Central Implementation Checklist. Fill out the form below to receive a copy.

PART 2 OF A THREE-PART BLOG SERIES BY DARREN SOUTER

Welcome to the 2nd part of our three-part blog series on Payroll’s journey. The first part of our blog discussed some of the options that you have when selecting a Payroll Solution. Today, we’ll discuss some of the considerations when integrating Payroll to a new environment that is also connected to Employee Central.

As my background is not necessarily focused on implementations, I am going to focus on a few key topics that may come up in a typical implementation and some of the key items to consider. Many of these items come up during discussions I often have with existing customers looking for unbiased advice.

Implementation Partner

As most customers would only ever want to do this once, they are best to rely on the experience of an Implementation Partner who can guide them through this process. As this can be a complex process with not only an Employee Central Implementation but one that involves data migration, integration back to SAP (for Payroll) and potentially changing the Payroll solution, it is worthwhile exploring the implications of such options.  Depending on the scope of your work, you may be fine with a partner that just works with Employee Central, but if there are changes to Payroll, you should seriously consider having a partner who also knows and has implemented SAP Payroll.

It is also important to validate which customers the partner has worked with on past projects and if such projects were deemed a success! I also believe it is worthwhile reference checking the individual consultants who will work on the project, as the last thing you want is a group of inexperienced consultants learning whilst implementing your project. 

Implementation Project Plan

Whilst this may seem obvious, please ensure that you have a realistic plan for the implementation project. This plan should include the work required to perform a full end-to-end implementation and must include many of the tasks that verify that all forms of payroll related processes and tasks continue to operate on go-live to ultimately ensure employees are accurately paid.

Hence as a tip, ensure that adequate time and effort is allowed for the accurate migration of HR data and validation processes. There should also be an allocation to make sure that multiple test payroll parallel runs are executed, bank file checks are conducted, and go-live and post-go-live support tasks are scheduled. These are the type of tasks that must be included in the scope of the project to help ensure a seamless payroll operation.

Implementing Employee Central with Payroll is a complex process, so again we recommend you verify references from your partner to ensure that they have previous experience in both Employee Central and Payroll implementations.

Data Migration To Employee Central

During any Employee Central Implementation, you will have the requirement to migrate the master data from your current SAP On-Premise system into Employee Central.  This is typical of most implementations which have a data conversion scope.

In the case of migrating from SAP HCM however, luckily SAP provides some help with this process.  This is in the form of ABAP reports that can be used for the extraction of the data. When planning an implementation/migration, it is important to understand who specifically is responsible for the data extraction, manipulation, migration and validation of this data. Is this the responsibility of the Implementation Partner, or is this something your internal team / the customer will do?

This stage can often be made more complex if there is a need for remapping existing data and catering for customer specific infotypes/fields.  This often involves additional development or extraction work, as well as significant time for manual manipulation and validation of the data once it is loaded into Employee Central.

NOTE:

Data Replication Back To SAP HCM

When implementing Employee Central with SAP Payroll, there is the need to determine which system is the key system for entering Master data (generally this is Employee Central). However, as the SAP Payroll Solution requires certain data to allow for processing, you need to be able to replicate the Master Data down to the Payroll Solution.

There are a few options here.  SAP provides the SAP Cloud Integration solution with accelerators to speed up the setup of this data transfer.  There are also other solutions such as Boomi. For Employee Central Payroll Customers (ECP), SAP provides a point to point replication program for transferring this data to the ECP environment.  

No matter what solution you may use, you need to ensure this is included in the implementation scope and plan. The replication and testing of this should also be part of the parallel run process as the Master Data will be maintained in Employee Central and then replicated down to the Payroll Environment.

Finally, you should also consider which Payroll related ABAP reports and standard reports will still be used in the payroll system. I recommend that you replicate enough data down to the Payroll Environment to allow for all relevant reporting to continue, and of course, you will need enough data to run all payroll calculations and processes accurately, including the year-end processing and validation of year-end results.

What To Do With ABAP Reports & Interfaces

There are many SAP HCM customers who have customised ABAP reports for a specific company need. In many cases, these have been either developed from scratch to fit a unique reporting requirement, or an SAP report has been copied and modified to access additional data to report against a certain set of HCM reporting requirements. Without these custom ABAP reports, the process of reporting is often performed by manual extraction of data into tools such as MS Excel in order to create the reporting that is required.  The trouble is that this is a manual process.

Luckily, with most of the options (if you are keeping SAP Payroll), you can choose to take your ABAP with you.  Whether you are staying on-premise, moving to ECP, moving to a hosted SAP Payroll option, or even moving to many of the outsourced services, there are still options around having ABAP functionality.  This may mean that the reports will work without modifications, or in some cases, they may require rework as data may be held differently in SAP, or may now be held in Employee Central.

NOTE:

PRO TIP:

These are some of the questions I’ve been asking customers for the last 15 years when working with them with regards to streamlining and automating reporting.  The need for custom reporting is often essential in SAP Payroll when you start to look at streamlining reporting and interfaces, but it doesn’t need to be done through hard coded ABAP.

This overall process is why I have seen many Payroll Teams over the years spend nearly 50% of their overall time in report production as the process of building ABAP reports is not straightforward and most customers resort to doing these processes manually with many extracts out of SAP HCM and Payroll and into tools such as MS Excel to produce such reports.

Over the years, I have observed that the scope of reports that were identified and delivered during the implementation end up being a subset as compared to, say, 12 months after post go-live. Often, customers will have 20-30 reports initially on go-live and will have doubled within 6 months later. Some customers have even reached 200+ reports after 12 months.

Luckily, SpinifexIT’s Easy Reporter is a perfect alternative here.  It is a solution that sits within your SAP System and comes with many pre-delivered reports and gives you the flexibility to be able to create customer specific reporting processes without the need for technical resources.  The HCM/Payroll Team can use this solution to create the reports, interfaces and extracts as they require directly in a production environment. Easy Reporter can actually be used in all of the Payroll Options that were identified in the first blog.

Finally, if you decide you still require the existing reports or interfaces, then you should verify that the data is fully available in the same system.  One good example I have seen with several customers is that they may choose not to replicate the Organisational Structures from Employee Central. This then means that the reports that display this type of information may no longer be relevant.

Documents – Smart Forms, HR Forms, Adobe Forms

In a similar way to the reporting decision, many customers have also created custom functionality to produce forms and letters to easily distribute information to the employees, management and external parties.  These are often done through custom programs and SAP functionality such as Smartforms, HR Forms or AdobeForms.

In many cases, this includes forms such as

  • Pay Review Letters
  • Total Reward Statements
  • Employment Contracts
  • Staff Welcome Packs
  • Local Legislative Forms

One of the challenges is that the data for these documents might need to come from both the SAP Payroll system as well as the Employee Central Environment.  In most cases, these documents need to be reproduced and accessed from within the Employee Central Environment.

Luckily SAP does have the ability to create custom documents.  These can be created by your administrator in your environment through Employee Central Document Generation. This allows you to create text based documents with field data retrieved for the employee from the Employee Central Fields.

PRO TIP:

Often, custom HR documents can be complex, and for these documents, an alternative option may be required.  If this is the case, SpinifexIT offers an integrated extension solution to Employee Central, known as Strato. Strato allows you to control the full formatting of the document with the ability to insert graphics, logos, format the text to duplicate the customer requirements.  In addition, through Strato, you can embed sections into the document based on conditional logic. Decisions such as the employees’ Company Code, Employment Type, Gender etc… can all be included in a document to allow you to easily create any document that is required. Total Reward Statements and Employee Contracts are two such examples of complex documents we have seen across our customer base.

Custom Functionality

Many customers have built custom functionality into their SAP system.  In most cases, this is an opportunity to review and remove a lot of this functionality as part of the new implementation.  In the new cloud world, whilst custom functionality can be created, it is created within Employee Central and it can be limited to simpler screens through the SuccessFactors MetaData Framework (MDF) functionality.  The more complex functionality can be created through the SAP Cloud Platform. It would be worthwhile to look for ways to achieve what you require within the standard system, but if this is not possible, it would be best to look for a specific vendor that provides what you want.  It would be suggested that if these options do not provide what you require then custom functionality would be an option.

SAP HCM Considerations

As this if often a good time to consider other changes, it might be worth digging a bit deeper into what your current On-Premise Solution is being used for. Many customers use Time Evaluation for two key purposes. The first is to interpret the time input (such as attendances) and to determine output (Wagetypes) based on the business rules such as when an employee should receive higher payments (overtime), or when an employee might get a meal allowance.  This might be a good time to review this process (including how you get these times into the system) and look at a Time and Attendance Solution. It is not advisable for customers who are migrating to Employee Central Payroll to use the standard Time Evaluation solution.

You may already have a time and attendance system though, but even if you do, you should confirm with your implementation partner whether this is integrated with Employee Central and/or part of the new payroll solution.

Another area is the Leave Quotas.  Employee Central has a Time Off module that can replace the existing SAP Leave Quotas functionality. You should ensure and validate that this module covers your business rules and requirements, and if it is being considered part of the scope of the implementation.

Lastly, if you already have an Employee Self Service or Manager Self Service portal, you should verify which functionality is still required and whether it is duplicated within Employee Central.  Often, many reports are being executed by the manager and a validation process should be conducted to verify what reports must still remain and be available. If your organisation may no longer sit in SAP, you should consider how these reports will operate after migrating to Employee Central. 

Parallel Runs

As part of all Payroll Implementations, there is the need to validate that the Payroll is running and calculating correctly before going live on the Payroll.  This generally involves a comparison of the same results from the legacy HR and Payroll system to the new system. In most cases, this involves multiple runs. The reason for multiple runs is that there is the need to validate the results flowing from pay period to pay period.

Things to consider here include:

  • Having at least 2 parallel payroll runs
  • Preferably one run going over month end
  • Parallel run for each payroll area (Monthly, Fortnightly, Weekly)
  • Validation of Payroll Results including Current Pay, Tax, Deductions, Overtime, Year to Date Figures, Leave Accrual and Finance Postings.

Pro tip:

It is also important to run these as real-life scenarios.  I’ve seen customers who have just entered the basic data for a pay, but not triggered retrospective pay re-calculations.  This has caused issues after go-live. It is much simpler to fix these issues prior to go-live, so I would recommend you try to keep your parallel runs as close as possible to real life scenarios.

You should ensure the project plan allows for enough time to perform these parallel runs, as well as allow for time to fix any issues. During this period, it’s often a challenging time as your payroll team will most likely be responsible for checking most of the results, and at the same time, they still will often need to perform their day to day role.  Hence, if possible, provide additional resources for this period of the project.

Process Changes

With Employee Central, there is going to be a large number of processes that your organisation has been doing for many years that are now going to change.  This means that there is going to be a lot of internal changes to your organisation. Whilst a system like Employee Central is much more intuitive than the previous SAP Solution, there is still going to be some changes and you should allow time for items such as updating manuals and procedures, retaining staff, changing roles, and communicating the new process among many other things. 

Go Live

It is important to plan the timing of your Go live. There is likely going to be some time required for data migration from your existing production system and switching to new processes. Many previous SAP Implementations aligned this to the start of the Financial Year (depending on your region), so that items such as Year End Reporting in the new system may not be so critical.

You should make sure that there are no other critical projects the same time you Go live, and you should make sure key staff are available and not away on planned vacation or other activities around this time.

There should also be a plan for supporting the new environment for at least the first 4 weeks after Go live.  This is often when any unexpected issues may come up and you want to be able to leverage your partners’ expertise during this period.

Finally, you should start to think about post Go live and how best to support this.  As SuccessFactors has quarterly releases, it is important to at least understand what is in these releases and what impact this may have on your system and processes.  In most cases, there should be no impact, but there is always new functionality becoming available, and your partner could advise you on what they would recommend you implement.

Summary

The implementation of Employee Central along with Payroll is a large initiative, so planning this is important.  You have a lot of expenses associated with internal resources, consultants, partners, SAP as well as other 3rd parties.  Even if you decide to leave Payroll On-Premise and just implement Employee Central, most of these items should still be considered in the scope as there will be some impact.

It is important to understand this entire process and take advantage of learnings of other customers who have been through this process. 

To help further, the above information is summarised into a checklist that you could use when planning out your migration.You may use the form above to download a copy for yourself. 

If you have any questions or if you’d like to share some of your implementation experiences, please don’t hesitate to comment on my post or e-mail us at [email protected]. I’ll respond to your questions and comments any chance I get.


consideration for payroll during cloud migration
Part One: Considerations for Payroll during Cloud Migration
Part One: Considerations for Payroll during Cloud Migration 1024 512 SpinifexIT

A THREE-PART BLOG SERIES BY DARREN SOUTER

Over the last 10+ years, I have watched with keen interest many different announcements from SAP.  Many of these ended up with little momentum, but the purchase of SuccessFactors by SAP was something quite different.  From the outset, momentum was already there with many existing customers using parts (i.e. modules) of the SuccessFactors Solution.  More recently with the continued investment in SuccessFactors Employee Central, this momentum has further increased with many more existing On-Premise customers looking to move to the Cloud.

However, for most of these customers, SAP Payroll is a huge consideration because of the close integration and dependency  to the existing SAP HCM Solution. SAP’s recent announcement which extends Payroll’s lifetime ‘til 2030 provided more options for existing customers. I’ve documented some reactions and possible effect of this extension on my blog a few weeks ago. Like most customers, we’re also hoping to hear more news about what this solution will contain, and what SAP’s plans are for the Next Generation Payroll solution.

The good news is that the current SAP Payroll is an extremely powerful  and flexible solution and that most of the customers have various options available for their Payroll and how it could be  deployed into the future.

I’m making a blog series for customers and organisations who are in this position. We’re breaking it into several parts to cover off the following key topics:

  • What are my options when moving to Employee Central?
  • Considerations During the Implementation of your new Payroll Solution with Employee Central – What functional use cases and technical areas should I be aware of?
  • Streamlining Further Payroll Operational Processes in your new integrated Payroll Environment

We will look at all the solutions that SAP provide and cover off some of the technical changes such as HANA declustered tables and many more areas.

Before I talk about these things, I’d like introduce myself.

I started working at SAP as part of the team that built the Australian Country Payroll solution. Since then, I’ve been involved in designing and building out our SpinifexIT integrated software solutions for SAP HCM/Payroll with the ultimate aim of providing capability in the hands of Payroll and HR professionals that exposes value in their work and efficiency in their payroll and HR operational business processes and the management of such processes….whether that be in the automation of reporting that exposes insights on the accuracy of employees payroll, the automation of recruiting letters and employment contracts for new hires, tools to accelerate testing in payroll upgrades, solutions to help address complex payroll enquiries, the automation of interfaces with third parties who require payroll and banking information, or delivering embedded custom payroll or HR functionality using our solutions to address a specific customer need…. These are just a few examples of the capability I am passionate about providing to such professionals, because in my eyes, Payroll and HR Professionals are unsung superheroes who work tirelessly for the care of the employee and the employee lifecycle process!

Right now,  I am proud to say that we have  over 800 installations in over 40 countries of our solutions adding values to Payroll and HR professionals everyday, this is just what we do, this is my passion!

Ok so lets now talk a little about SAP Payroll and SuccessFactors. Over the last few years, I closely followed announcements from SAP. This includes SuccessFactors, HANA, Payroll Control Center and HR Renewal. I have also worked with many customers to help them navigate in understanding these solutions and what it means to them.

Hence, it makes sense for me to blog about SAP Payroll and share my views and some best practices we’ve witnessed through our implementation and customer engagement. I’ll keep this blog general and make reference where appropriate to our SpinifexIT solutions and content since our customers found significant value in leveraging the solution in different areas of the SAP Payroll and HR Operational lifecycle.

Start following me or our SpinifexIT LinkedIn page so you don’t miss any updates about this topic.

Let’s get started.

HR & Payroll – Migration Options for Customers

As SAP has often stated, customers can start anywhere and go everywhere.  This is no different in the HCM area, and there are many options available to customers.  Some of the key current options available to customers are listed below

  • Migrate to Employee Central and leave Payroll On-Premise
  • Migrate to Employee Central and also migrate Payroll to Employee Central Payroll
  • Migrate to Employee Central and migrate Payroll to a Hosted option
  • Migrate to Employee Central and move payroll to a 3rd party outsourcer such as ADP, NGA or other Payroll services providers
  • Customers can do nothing right now – Stay on Premise and utilise tools like HR Renewal

As you would see, there are a lot of options available for the Payroll Business.  Each of these have different migration paths with different complexities.  The clear message from SAP however, is that the future of the Employee Master Data is within Employee Central (In the cloud).

This, in my discussions with many customers and partners, is an important part of the future landscape of SAP and likely one that most customers will take over the coming years.  The good news is that there is still time to plan this properly and schedule this into your future plans. The transition is a project that should be planned out carefully, as it is not just a migration, but a business transformation and you should look to review internal HCM business processes during this migration.

In terms of Payroll, there are a number of options available.

Migrate to Employee Central and Keep Payroll On Premise

One of the simplest options is to keep Payroll On-Premise and move the HR Functions into Employee Central.

We have already seen many customers take this approach, as it still allows for the future proofing of the business with Employee Central but maintaining the existing Payroll Rules thats are already in place.

This option doesn’t mean that you cannot take advantage of some of the new functionality, inside of SAP including the Payroll Control Center, which allows you to setup your payroll as a process that can be run from a browser view or directly from Employee Central.

Many customers are also implementing SAP HANA as part of their overall ERP landscape.  This has a large advantage with the Payroll Control Center as well, as the Payroll Control Center writes to new Payroll Declustered Tables that can be optimised for SAP HANA queries.  These can result in very fast validation checks to ensure your payroll is correct and accurate.

During this process, one of the larger pieces of work is the integration between Employee Central and the Payroll System. As most data now is maintained via Employee Central, you now need the Payroll Relevant Data to be migrated to SAP.  This includes most core Payroll Information, but some customers who have existing processes are also continuing to migrate data such as Organisational Structures and other more general employee data.  It really is important to consider what your goal is here in terms of information that comes out of the Payroll System and what processes are to be migrated over to SuccessFactors.

Migrate to Employee Central and move Payroll to Employee Central Payroll (ECP)

In many cases, the customer is looking to completely remove infrastructure and cost that sits within their business while moving to a full cloud solution.  In this case, one of the better integrated options is the SAP Employee Central Payroll Solution. This is a hosted solution that SAP Provides on a subscription model.

With Employee Central Payroll, this is treated as a new Implementation. The advantage of this approach is that many customers over the years have built up manually intensive practices, have complex payroll processes and in many cases use old versions of SAP Solutions, have infrastructure capability that is coming close to end of life. It is an opportunity to revisit their entire implementation and redo this process.

PRO:

You can still move transports from your old system to the new system. Custom configuration can still be migrated into the new solution to speed up your implementation, with few exceptions.

PRO:

The integration is much more tightly controlled.  The ECP solution does not require you to configure the SAP Cloud Integration. Instead, it uses integration processes that are built within the SAP ECP system.

CON:

Some functionality such as Time Evaluation and other Non-Payroll type functionality are not supposed to be used within the Employee Central Payroll Environment.

Several SAP Partners also offer a multi tenanted option here (This means that multiple customers can use the same hardware in the same SAP system), which has the benefits of the SAP ECP environment. However, it is also tied to some partner solutions that allow for faster implementation with accelerators.  This does still require an implementation (Like the Employee Central Payroll Option), but it does allow for some savings if you can leverage off some of the pre-defined options such as country configuration.

Migrate to Employee Central and move Payroll to Hosted Solution

If you are not looking to rebuild a lot of your payroll processes, but would like to retire your hardware and infrastructure, another option may be to use a Hosted Payroll Service Solution. This is an option if your goal is to move all infrastructure out of your current environment, and to essentially keep your Payroll System as it currently is today.

I have not heard from any customers who may have taken this up, but this option is discussed in more detail in various blogs.  One which questions this option for mid to large sized businesses is as follows. Jarret Pazahanick explains why in his blog.

Migrate to EC and move Payroll to 3rd Party such as ADP, NGA

If your goal is to completely transform your business processes, a further option may be to move to a Managed Service Payroll (Still using SAP Payroll as the engine to deliver payroll). Whilst this option is also a reimplementation of your payroll, you can do it with a partner and adopt a lot of their own pre-defined configuration for the individual countries you run payroll for.

Whilst on one hand, this option could be seen as being similar to moving to the ECP Solution, this actually has many more options including just provision of a hosted payroll solution right through to the complete outsourcing of the Payroll to the provider.

Do nothing and continue to use the current SAP HCM System

STAY ON-PREMISE

The last option is to actually do nothing and just follow the migration path SAP will offer to its customers.  SAP have now given a migration path (Planned from 2023) to move to a S4/HANA sidecar solution. This will allow a quick migration to a similar SAP environment, keep your HR and Payroll Solution (Except for Recruitment and Learning).

Of course, in 12 years, the innovation in the cloud will be far more than the existing on-premise system. You might find this dated and this may eventually force the move to Employee Central.

To Sum It Up…

There does seem to be a momentum gathering with more customers putting in plans to migrate their core HCM into Employee Central and the other SuccessFactors Modules.  SAP’s focus has been on developing into the cloud. Luckily, this has also had flow on effect back to the On-Premise solutions with applications such as the Payroll Control Center being available to use within the Cloud or On-Premise.

The decision now comes back to more of a business need. Consider these:

  • Do you want to re-implement your SAP Payroll?
  • How much Business Transformation would you want to do in one go?
  • Do you want to continue managing your own payroll?

The choice is yours and you are spoilt for choices.  It is worth really considering the options available rather than just waiting for the inevitable.

In our next part, we will talk more about the implementation and some of the considerations with focus more on the Payroll.