More companies are breaking free of geographic constraints to conduct business both in their own backyard as well as halfway around the world. While the rise of the global economy has created new opportunities for multinational companies, it has also created new challenges for businesses expanding beyond their native shores. One of those challenges is managing a global payroll that is accurate and in compliance with regulations such as Sarbanes-Oxley.

Managing global HR and payroll across a broad spectrum of countries becomes increasingly complex and hard to administer. Beyond being a labor-intensive process, organizations also need to contend with complex calculations and multiple currencies, languages, time zones and systems. In many cases, global payroll is managed with an incumbent HR system that may be an Enterprise Resource Planning (ERP) solution that isn't integrated with the payroll system.

One of the challenges for organizations managing a global payroll is that traditional payroll providers offer limited choices between local in-country payroll and expensive SAP-based platforms. So, whether an organization has grown through growth or acquisition, they are typically left with monitoring and managing separate payroll solutions in every country they operate. This results in multiple disparate databases and processes, making it difficult to have any standardization or system of record across the organization. It also limits collaboration across regions, prohibits real-time visibility, invites room for error, inhibits the ability to comply with various local laws and government regulations, creates challenges for reporting and requires additional vendor management.

However, those challenges might all soon be a thing of the past. There has been a quantum leap in secure and affordable computing technology enabling the introduction of a new model for managing global payroll via Software-as-a-Service (SaaS). A global payroll solution delivered in a SaaS-based environment provides access to one database across multiple geographic locations while offering secure compliance, reduced costs and increased operational efficiencies –- forever redefining and changing the world of global payroll management.

What an SaaS Solution Can Do for You

Forrester Research defines SaaS as a software deployment or delivery model which includes pay-as-you-go licensing, vendor managed hosting, maintenance and application updates, configurations and multi-tenancy. A recent survey conducted by the firm revealed that 46 percent of enterprise class organizations were interested or planning to pilot a SaaS solution. For organizations that need to manage global payroll, a SaaS solution provides the ability to outsource to one provider while standardizing processes, lowering compliance risk, and reducing costs.

Here's what a global HR and payroll system delivered in a SaaS environment can do for you:

• Provide a scalable solution that meets business and country requirements. Whether an organization has two people in Malawi or two hundred workers in Mexico, they still need to have proper payroll functionality and be able to bring those employees in under the corporate umbrella. With major ERP systems like Oracle or SAP, country coverage is often limited or has expensive software license costs associated with it. It is also cost prohibitive to set up or add new employees or territories.

With a SaaS solution, it is subscription-based, so it is simple and cost-effective to add new employees or territories. It also delivers proper payroll function to all areas a company operates in, including obscure, remote locales – regardless of the size of payroll. In addition to being more financially economical, it increases efficiencies due to its easy accessibility and embedded international payroll workflow.

Having a single global solution reduces the need for local in-country administration staff, and frees HR and payroll professionals to work on more strategic initiatives. Combined with embedded workflow, the solution increases transparency, facilitates compliance and standardizes processes across the business.

• Offer a hosted alternative to on-premise products. A SaaS solution does not require any additional hardware, bandwidth or resource requirements. For organizations to reap the rewards of true global payroll, their solution has to be delivered over the Internet securely and in a multi-tenant architecture. A multi-tenant software solution facilitates the ability to seamlessly add new features or countries, and changes made in one jurisdiction are available in real time to all users. Because the vendor is responsible for all maintenance and upgrades, this eliminates the need for expensive patching and maintenance, as is typical with a traditional ERP system.

• Standardize processes and provide access to a single database across multiple geographic locations. Rather than rely on local resources for payroll data, a global payroll solution delivered via SaaS empowers users with 24-7 access via a secure Web browser and greater business intelligence. Having a standardized platform from which the latest data in local languages and currencies can be extracted enables businesses to become more efficient, generate useful reports, control costs and comply with new and changing regulations.

A single system also delivers clear insight and overview to manage internal processes, ensures control procedures are consistent across the business and helps overcome language barriers and time zone restrictions.

• Perform multiple tax calculations in one platform. Companies that operate across multiple locales with separate payroll solutions run the increased risk of failing to comply with legislative changes. The payroll rules vary in each country, and sometimes by each state in the U.S., and are constantly changing. However, in a SaaS solution, if the tax laws changed in Italy, the code base would only need to be changed once, and then that change would be available in real time to all globally located users.

Being able to perform multiple tax calculations in one platform is not only beneficial for disclosure and compliance purposes, but information that is collected through the system can be analyzed to minimize the risk of unforeseen liabilities.

• Secure compliance with regulations such as Sarbanes-Oxley. A global payroll solution that is delivered in a SaaS environment will have an integrated international payroll workflow. This provides every single touch point in the payroll pay period and produces the necessary gross to net, payment and general ledger file reports at the end of the pay cycle for instant Sarbanes-Oxley compliance. Beyond clear oversight of compliance costs – and therefore the ability to reduce budget overruns – the enterprise has a single point of governance control and is able to prove globally that payrolls are legitimate and that payments are accurate and authorized properly.

In addition to the benefit of having only one vendor to manage, a global payroll solution delivered on a SaaS platform simplifies payroll administration, provides real-time information, eliminates the need for expensive software licenses, reduces costs associated with employing payroll specialists at the local level, and secures compliance with local laws and government regulations such as Sarbanes-Oxley.

Success from the Start

Software-as-a-Service is the optimal platform for global payroll because it eases the management process and cuts costs and saves time. It's important to pick the right technology, but equally important to have well-defined business processes. Take the time to establish the framework to define the business' current and desired state and put some change management processes in place.

When choosing a global payroll solution, it should be Internet-based and architected as a true multi-tenant solution. A multi-tenant, on-demand model scales to meet the business needs and ensures the system is up-to-date without the hassle of upgrades or use of IT resources. Because it is based on consumption, it doesn't require upfront capital costs and resource investments.

A SaaS-based solution with international payroll workflow allows checking and authorization of payroll data from anywhere in the world, with complete automation of the Treasury Function and full workflow audit trail, and is also Sarbanes Oxley compliant. Users can gain a snapshot of payroll by country, in any currency, online in real-time. This promotes global, regional and local treasury with full control and visibility worldwide on all payment transactions.

Global payroll that features true multiple country gross-to-net capability, not merely aggregation, is also possible in a SaaS environment. For example, organizations running multiple payrolls have different gross-to-net processes in each country they operate. These different payroll processes produce different outputs and in different formats, making it challenging to gain a consolidated view of payroll data for reporting and cost control.

When gross-to-net is performed on one database, organizations are then able to conduct analysis and reporting on a single body of detailed payroll data for the entire organization and gain valuable business intelligence. Through standardization, it then becomes a powerful planning tool as well.

In addition to streamlining and standardizing payroll processes across multiple regions, working with a single provider for global HR and payroll also alleviates the need for managing a multitude of vendors. With one contract and one solution globally, organizations gain further efficiencies in managing the payroll process.

As organizations continue their global expansion, working with multiple providers no longer makes sense. Through a single provider, organizations can reduce administrative overhead, standardize their processes, keep up to date with changing country and local regulations, secure compliance and fluidly react to fluctuating market conditions. It's a changing world and a Software-as-a-Service solution is bringing the change multinational organizations need to effectively support their global payroll function.

Karen Paterson is the CEO of Patersons HR and Payroll, a leading global HR and payroll software and services business, delivering expert solutions to clients in more than 160 countries. Forming the company in 1996 to solve a gap in the market, Patersons HR and Payroll's secure Internet-based software as a service is multi-currency and multi-lingual (covering over 30 languages), features an easy-to-use interface, supports fast implementation times and facilitates integration with existing systems. More information and contact details can be accessed at www.patersons.net.

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