Global Payroll – Implementing an Aggregator Model

Lessons Learned

Joe Almodovar, Senior Director Global HRIS, Payroll, and Knowledge Management – AT Kearney

September 2015

Bio………….

Senior Director of Global HRIS, Payroll and Knowledge Management for A.T. Kearney, which is a global management consulting firm located in 40+ countries – 3500+ employees – one billion in sales.

25 + years experience in the HRIS industry as a practitioner and consultant. Some past employers include Kraft Foods, Sears, Unisys, and the Hunter Group (Cedar Crestone/Sierra).

Disclaimer ……..

The information shared today is based on my unique experiences. Some, none, or all of the information may be relevant to you and your environment.

3

Presentation Roadmap Change Drivers

System’s Environment

Vendor Selection

Implementation

Lessons Learned

Q&A

Implementation Jammed Pack with Surprises!!!Lessons Learned

Change Drivers……..• Asia finance Controller believed we needed stronger payroll controls

• Each country payroll was managed by a local vendor with no direct visibility by regional or global management into actual paid gross to net salaries

• There was no integration of the HR system and payroll systems, leaving room for payroll leakage… e.g., ghost employee

• General ledger journal entries were manual and only captured paid gross – again no ability to report on gross to net

• No controls around bank files, room for additional payroll leakage… e.g., changing the account numbers, amounts, etc…

• The entire process required triple data entry: HR system, local vendor system, and the general ledger system

Mandate………• Consolidate payroll vendors and improve payroll controls

• Move from multiple payroll vendors to one, where we can leverage our size and realize cost savings, and improve overall efficiencies

• Review and modify payroll processes to improve controls

• Build integrations for added controls and improved reporting capabilities

• Transition payroll function from finance to HR, which aligns with other regions and to the function which has the best visibility, and generates, the majority of payroll related actions

• We want it now…. Of course

The HRIS Environment

NOMS OPMS XIS MyData

FinData Mart

Other(s)

EMAIL

OtherPeopleSof

t

Custom Java

Front-End

Systems

CRS HRFM ESS PPS MSPS

PS NA Payroll

SuccessfactorLearning

SaaS

TaleoRecruiting

SaaS

HRIS

Integration in Progress

Non-US Payroll Environment

NOMS OPMS XIS MyData

Communicated

Via Separate

Email, Fax,

etc…

No interface

Japan China Singapore Australia Etc…

VendA

VendB

VendC

VendD

VendX

Because the interaction with each vendor was manual the Firm had no visibility to what was actually occurring with each country’s local payroll, and required manual GL entries each month

Each Country

Outsourced

To Different

Payroll vendors

Local A.T. Kearney

Offices

Payroll Aggregator (PA) Model………..

NOMS OPMS XIS MyData Japan China Singapore Australia Other

The PA provides a “single” point of contact for your firm and manages local payroll vendors, including contracts, SLAs,

confidentiality agreements, etc…

Common User Interface (CUI)e.g., Online Portal, Secure Email, etc…

Jap In Hous

e

China Payroll Vend

Sing In

House

RegnCtr

AustPayrollVend

The CUI is the single point of entry for payroll input, registers,

status, GL reports, etc…

The PA will process the

country payroll in-house or

partner with a local payroll

vendor

Local A.T. Kearney

Offices

Payroll Aggregator (PA) Model…..… Phase II..…….

NOMS OPMS XISMyData Japan China Etc…

To add tighter controls, increase efficiencies, and

improve the User Experience we plan to

build integrations between the global HR/Fin

systems and the PA

Common User Interface (CUI)e.g., Online Portal, Secure Email, etc…

Jap In Hous

e

China Payroll Vend

Etc…

PeopleSoftHR

FinanceSystem

HR Trans (Out)Gross to Net (in)

GL SummaryData (in)

Local A.T. Kearney Offices

Vendor Selection• I, along with an Asia HR Director, conducted the vendor selection (geographical

distance challenges)• Used various sources to form the initial list

• Gartner Magic Quadrant• Freddye Silverman’s Caveat Emptor Presentation• Colleague Referrals

• Drafted RFP and invited 7 vendors to propose• iipay – Withdrew CloudPay*• NGA – Initial Response Only Pay Asia – Withdrew• Ceridian ADP*• Talent 2*

* Denotes Finalist• After initial demos 3 semi-finalist selected, 2 short list finalist selected after

additional deep-dive demos and onsite visits • Approximately six months from RFP draft to contract signing

Implementation……..• Ten countries over an 8 month period

• Staggered go-lives based on availability of payroll aggregator(PA) or local vendor implementation team, A.T. Kearney local Fin/HR team, and fiscal calendar year – requested draft schedule before contract from vendor

• Two months of payroll parallel testing in each country, except Japan which had three months due to its complex pay and tax regulations

• Each country had a different vendor team who partnered with the local A.T. Kearney country HR/Fin to gather requirements and review test results. Testing nearly exclusively within vendor domain

• Implemented process changes that tightened controls leveraging PA model

Lessons Learned…..• Before you start drafting your RFP and initiating your

vendor selection, process map “each” country’s current payroll process in “detail”…..

• Assumed only core payroll process in each country

CorePayProc

Benefits

Proc

HelpDesk

ApartmentMang

Other

AddedNon-payrollServices

The added non-payroll services greatly complicated the disconnect of the existing payroll provider and the implementation overall

Lessons Learned• Vendor Selection

• Know your long term outsource/aggregator strategy upfront it may impact what vendors you consider

• Don’t limit your vendor search to global household names, consider regional players who may have stronger regional knowledge and operational presence

• Get recent references and also those on second contract renewal

• During initial demo carefully review common user interface used by aggregator

• Take a strong negotiating position during contract/pricing discussions

• SLA – read the fine print carefully, add additional language to if needed

• Insist on knowing the name of the local payroll partner for each country, research the partner, and also try to obtain turnover %

• Can they manage expatriates (shadow payroll), money movement, pay in US$, tax fillings, mass retro calc, etc…?

Lessons Learned• Vendor Selection - cont

• If practical, schedule an onsite visit of the finalist payroll centers – you don’t want a payroll server in a closet

• Request an example of every payslip, GL report, pay registers, etc… (will vary by country) for each location and walk through with each of your offices, don’t rely on your local teams to carefully evaluate each item

• Have vendor share how each payslip is delivered in each county

• Obtain a time and cost estimate for each critical customization upfront, some local vendors may not be able to accommodate

• Have the vendor walk you through in detail their implementation methodology – ensure consistency and thoroughness

• Discuss in detail their ability to support your integration requirements, including timing to and from your ancillary systems

Lessons Learned• Implementation

• Each country represents a unique project with its own project plan, issues list, change management, etc… must be clear to all

• Ensure local team provides current payroll provider with proper termination notice – also be clear about historical pay data strategy, will vendor support?

• Review the requirements template with each country’s implementation team and your local team – need to ensure consistency and clarity

• Establish what the baseline functionality/configuration will be for all countries, then add unique local requirements during meetings

• Attend the requirements meetings between the vendor and your local payroll teams… can be a challenge when conducted in local language

• Have vendor draft a quality requirements document for major customizations, walk all parties through the doc

Lessons Learned• Implementation - cont

• Ensure the vendor and your local teams are clear on payroll cutoff dates and related calendar pay activities – will tweak post go-live

• Testing – vendor will test behind its firewall, establish go/no go criteria and set expectations with your local teams – who pays for added runs?

• Have vendor hand-hold your local teams during first live payroll, to include which reports are critical to approval and close processes

• Walk your local teams through problem escalation process with the vendor. Verify all contact numbers, emails, etc… before go-live

• Don’t hesitate to establish more frequent status calls between the vendor and your team if things start to derail

• Local vendors were more responsive to resolving issues than aggregator

Contact……….

Joe AlmodovarJoe.almodovar@atkearney.com

Thank You for Attending……

Questions?……….