The pros and cons of SaaS payroll solutions

The pros and cons of SaaS payroll solutions

Posted Jan 22, 2016 by 

The automation of payroll has led to a more efficient and accurate process of payroll management that saves businesses time and money. Now, Software as a Service (SaaS) brings all of the benefits of cloud computing to the mix, complementing the existing features of automated payroll systems.

SaaS represents the next fast-growing wave of cloud-based business solutions; according to a recent Gartner report, human capital management (HCM) software continues to grow at two to three times the pace of on-premises solutions, according to an article on Payrolllab.com.

SaaS is a delivery model in which online services are hosted and managed in a service provider’s data centre, paid for on a subscription basis and easily accessed via an internet browser. According to Zdnet.com, Salesforce’s hosted customer relationship management (CRM) service, launched in 2000, is widely regarded as the “poster child” for SaaS.

Salesforce’s CRM service didn’t exactly reinvent the wheel in terms of features and capabilities. What was different about it was that Salesforce took on the financial burden of hosting software, providing free upgrades and maintaining all of the hardware, all of which can quickly add up to a pretty hefty sum in the long run. This article on Surepayroll.com aptly described it as the “democratisation” of CRM.

But, as with any type of new software, SaaS payroll solutions are not perfect. Business owners and HR managers should weigh the advantages and disadvantages to make an informed decision on what is best for their organisation.

PROS
1. Cost-effective option

Adding software solutions to a company can be expensive – from buying software, installing it and regularly maintaining it, to training employees on how to use it. With SaaS, it’s a package deal; business owners merely pay a basic monthly or yearly fee.

 2. No prior knowledge or experience needed

Using a SaaS payroll solution is very straightforward- it usually means logging onto a secure website and entering employees’ payroll data, ensuring all information is correct, then approving it.  benefits SMEs and business owners who have to process payroll themselves.

 3. Easy setup

As with many cloud-based applications, SaaS payroll solutions require little to no setup once you have subscribed to the service. Furthermore, the basic fee you pay usually covers technical support whenever it’s needed.

 4. Secure

Security is a key selling point of SaaS payroll solutions. There’s no chance of losing data as servers are off-site and backed up constantly. However, the easy access for anyone with an internet connection does raise a few questions; but more on that later.

CONS
1. Accountability

With increased dependence on cloud-based solutions in today’s world, there is tough competition out there, and not all of these companies may be able to stay afloat. The SaaS payroll provider has full responsibility for the client’s payroll data, and as Payrolllab.com points out “Provisions must be made to ensure access in the event of vendor company failure.”

2. Security and privacy

Regardless how “safe” the service is marketed to be, issues such as application security, identity and access management, authentication, encryption and data classification are of real concern, especially in today’s world. However, service providers are constantly improving security, and Cloud is still considered one of the safest platforms.

 3. Quality of service

All SaaS payroll solutions are customisable but only up to a point, and there is a possibility that your needs as a client may not be addressed. It is essential that there is a clear understanding of the capabilities of any solution. Before implementing a system, always do a thorough consideration of the complexity of integrating it with existing systems and applications.

Despite the potential pitfalls, SaaS payroll can be highly beneficial to the functionality and operational efficiency of your business. As the Surepayroll notes, “You’ll save roughly half the cost of traditional payroll software, and never fret about up-to-date tax tables or outdated hardware like you would using payroll software”.

Being able to take all of the guesswork out of the payroll process, with peace of mind that your data is secure may be intangible for some, but valuable for all indeed.