HCM Integrations: What to Look for When Selecting a New Payroll Provider

November 2, 2021
4 mins read
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Navigating the vendor selection process and choosing the right global payroll partner is daunting. It’s vital that you select the provider that meets your needs and future ambitions. Afterall, who you select will significantly impact the success of the initial project and the smooth day-to-day operations.

In this blog, we take a look at the most common market issues and offer guidance around what to look for when evaluating potential vendors.

HCM Integration capability

Based on recent research by Immedis and the Global Payroll Association, it’s clear that improvement in the area of integration capability is necessary. Although two-thirds of respondents have a cloud-based Human Capital Management (HCM) system deployed in their organization, less than 15% report seamless integration between their payroll and HCM solutions. There are clear drawbacks that come with a lack of integration. Among other challenges, it means additional work to ensure that data accuracy in both systems. Worryingly, it also opens the possibility of error and data breaches during the necessary manual interventions.

There are various reasons for this lack of integration from the technology stack in place, how dated systems are, and historical internal practices – all of which need to be reviewed. As part of evaluations, it’s important to look at the integration capability and certifications of payroll partners in place and under evaluation. Depending on your needs, this may mean integration with a Tier-1 or Tier-2 Human Capital Management (HCM) solution. If the right questions are asked and you know what to look for, you can achieve seamless integration.

With that in mind, let’s look at key technical aspects that you’ll need.

A technical understanding

A key component you’ll hear about a lot in relation to integration are APIs, or application programming interfaces. Put simply, they enable systems to send information back and forth and lay down the rules for what data can be accessed and moved between platforms while ensuring it is completed securely. It’s important that you know the system you are integrating from, the system you are integrating to, and the information points that need to sync. As you progress in the evaluation process, we recommend having an internal technical resource who can advise with the initial assessment and provide ongoing project support.

Please note, not all APIs are created equally. The quality of provider APIs is reflected in their ability to gain Tier-1 certification and will impact whether or not integration with a Tier-2 solution is possible.

Tier-1 HCMs and payroll provider certification

The majority of players in the Tier-1 HCM space have some level of certification program for various partnerships, including global payroll partners, in place.

What does this mean? To gain certification, providers need to meet rigorous criteria and go through an extensive process, working closely with the HCM provider, to ensure that the capability to connect and transfer data between the two systems is achieved and done so in a scalable way.

If you have a Tier-1 HCM in place, it’s vital that you ask whether or not the payroll provider is certified, on the road to certification, and understand where this sits on their roadmap to address if not currently in progress. If you’re told that there isn’t a certification process with any of these larger Tier-1 HCM’s and a non-scalable, customized build is needed to connect the systems, it’s probably time to do some further research. The majority of larger HCM organizations have dedicated web pages or portals in place where you can search for existing certified global payroll partners. This means that you can actively look at providers who can meet your integration needs. We also suggest working with your HCM provider to recommend different partner options.

Tier-2 HCMs

If you have a Tier-2 HCM in place, it may not always be possible to evaluate a vendor based on certifications. This is where a review of the payroll provider’s API framework should be undertaken.

But again, by speaking to your HCM vendor, they should offer insights into what payroll vendors they might already have integrations with. You may also find that payroll providers are actively building specific integrations for a number Tier-2 providers that they see frequently, so it’s always worth asking the question if an ‘off-the-shelf’ integration capability exists.

Assessing API capabilities

Typically, you’ll need to look at a provider’s API framework to determine the future quality of the integration. This API framework will provide the basis for these Tier-2 HCMs, and other third-party applications, to link into the payroll system selected to send and receive transactional or core data sets.

Consider the following:

  • The set of APIs that are made available to satisfy common real-time integration requirements. This is where you’ll need to understand what information is currently stored in your HCM that is required for payroll. This might include data such as core HR information (Name, address, etc.), salary amount, bank details, joiners/leavers…to name a few. Once you see what’s available versus the data you need integrated, then you can begin conversations surrounding any gaps that need to be addressed.
  • How the relevant API layer will be accessed to ensure a secure connection.
  • You’ll also need to look at the way data will be transferred and discuss with providers to ensure they can meet your needs. This will include looking at the volume of information being transferred, the frequency of synchronization, and the nature of any data changes between payrolls.

As mentioned, it’s worth having an internal technical resource who can bring a deeper level of understanding to the overall process and project.

Main areas to check out

The advantages of an integration which include the phenomenal level of automation it can introduce and the dramatic reduction in manual effort are evident. However, to realize these benefits, the quality and capability of an integration are critical.

Organizations must:

  • Develop a base-level technical understanding, particularly around knowing what systems need to connect and the data points that are a necessity for payroll.
  • Ask about certifications if you have a Tier-1 HCM in place and utilize HCM resources to find a list of certified payroll partners. In the case of both Tier-1 and Tier-2 HCM’s, ask for recommendations on providers to include in your evaluation process.
  • Bring in technical support personnel early in the evaluation process so they can probe a little deeper into certain areas and offer their guidance, advice, and support.
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