Should you upgrade your legacy payroll system?
“If it isn’t broken, don’t fix it” is a philosophy that has no place in business. If too many businesspeople believed in that thinking, we wouldn’t have half the innovations we currently enjoy.
The prevalence of legacy payroll systems is a perfect example of why we need to constantly interrogate and improve the way we do business. Doing things the same way you always have can cost you time, money and the capacity to adjust to market changes.
Let’s take a closer look at how this plays out with legacy payroll systems.
The high price of sticking to the status quo
According to a survey conducted by Kronos and the American Payroll Association, 30% of respondents said that they were still using systems that are more than 10 years old. Worse still, almost 50% of them said their systems lack key reporting and performance tracking features.
Let’s break down how this can affect a business today.
Firstly, there’s the issue of lost time. Legacy payroll systems rely on outdated methodologies that involve hard copy files and spreadsheets. The amount of time that legacy systems waste because of manual data entry is time that payroll and HR managers can put to better use. There’s also the possibility of costly human errors which can lead to missed salaries, incorrect tax calculations and several other undesirable consequences you can easily avoid.
Secondly, legacy payroll systems can be a nightmare to maintain. As the systems age, the resources available to support their maintenance become more scarce. Specialised technicians might retire or move on to other career pursuits or service providers might pivot to more modern technologies and sunset their older stacks. A lot can happen in 10 years which could make the upkeep of your legacy system prohibitively expensive.
Lastly, you have to consider compliance. Most modern payroll systems are built with the latest compliance legislation in mind and they also make accommodations for future legislation. Legacy payroll systems, on the other hand, will once again require a hefty investment to customise them and bring them up to code.
Modern payroll systems have already been around for years, which means they’ve been tried, tested and perfected for businesses of all sizes. They offer several undeniable advantages over legacy payroll systems, including:
Lower operational costs. Modern payroll systems are easy to set up which means they don’t incur costs for legacy requirements such as server infrastructure. They’re also much easier to learn and are usually cost-effective to maintain.
Sophisticated integrations. Most modern payroll systems (especially cloud-based ones) can integrate with almost any other business application available today. This makes customisation more achievable even for small businesses that can’t afford to pay for it.
Invaluable analytics. The way data is stored and processed in modern payroll systems allows them to collect meaningful and comprehensive insights into your business so you can make smarter decisions.
Automation. From onboarding to tax calculations, everything works automatically with modern payroll systems which means HR staff have more time to work on employee engagement.
Built-in compliance. You never have to worry about paying to keep up with evolving legislation because your payroll system will be designed with complete compliance as an objective.
Reduced mistakes. Less manual entry means that there is a reduced chance of costly errors.
Data security. Data is not stored on-site as with legacy systems; it’s backed up in at least two locations so you can always recover your data and protect it from any breaches.
When should you upgrade?
Yesterday. Seriously, the urgency of moving away from legacy payroll systems can not be overstated. The longer you wait to make the upgrade, the longer your business goes without the benefits listed above. Let’s recap what’s at stake: your business is haemorrhaging money because of wasted time, avoidable errors, exorbitant maintenance and potential compliance penalties. That shouldn’t be something any business leader is comfortable with.
But we can help. R&A specialises in helping businesses find cutting-edge financial management solutions that meet the needs of the modern marketplace. We can help you ditch the status quo and discover what innovation can do for your business processes. Get in touch with us so we can introduce you to the wonders of 21st-century payroll.
