Payroll

A step-by-step guide to payroll migration

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by Aitor Vinos

Expert Q&A: Aitor Vinos, VP Digital HR Services at NGA Human Resources Provides a Step-by-Step Guide to Payroll Migration

There has been a lot of discussion online recently about how to best deal with SAP HCM payroll when moving HR to the Cloud. As with all business process change scenarios, we believe there can never be a one-size-fits-all migration path, for the obvious reason that no two businesses will ever be the same.

When moving from on premise SAP HCM to the cloud, Employee Central is the trusted path for core HR, while multiple routes exist for payroll, between Employee Central Payroll, SAP SuccessFactors Managed Payroll, and BPO-style Managed Payroll.

The former and the latter require re-implementation, while the SAP SuccessFactors Managed Payroll ‘cloudify’ option offers the fastest and least complex route to value.

As Mary Sidlauskas, HR Solution Management, Employee Central Payroll at SAP Labs wrote in her recent blog, Why, What, and Who of Managed Payroll:

“There are a lot of options available to meet your payroll needs. It’s important to first determine your company’s IT strategy and then determine what is the best direction for your company. Payroll is not a one-size-fit-all solution, and neither is the deployment strategy.”

In this blog post, I set about providing a step-by-step guide to payroll migration, to provide you with the knowledge and insight needed to make an informed decision on a payroll-as-a-service scenario.

Step 1 – Complete Due Diligence

Before any migration process can begin, a complete due diligence overview of your payroll environment is essential. This provides an end-to-end view of the current payroll infrastructure and marks the path for the best migration approach.

Payroll migration is far more than a “process” or “exercise”. It requires a proven methodology. At NGA HR, we have fine-tuned our payroll migration methodology based on our years of experience of migrating complex SAP HCM payroll solutions for hundreds of organizations around the world.

Q: What does this migration methodology look like?
We have mapped the migration stages into the NGA HR methodology below. This approach is comprehensive and factors in all the processes, forms and documents needed to make ensure a high efficiently and effective migration.

Our methodology has been perfected to the point where we’re now able to migrate a customer’s payroll processes from on premise to managed payroll-as-a-service within 16 weeks.

Q: What Does the Due Diligence Process Reveal?
The exercise begins with a deep dive into the SAP HCM system landscape. This highlights exactly what the technical and functional requirements are.

The technical components including the HCM system landscape, hosting, disaster recovery and interface setup, are logged. Functional items including company information, structure, module set-up, collective labor agreements, transaction volumes, and system documentation to assess client readiness, are reviewed.

When the due diligence is completed, the transition methodology is updated and presented along with their transition planning roadmap.

Step 2 – Lift & Shift

The term ‘lift & shift’ rather simplifies the transition process. This is actually the point at which the SAP ERP system is migrated to the cloud. This requires considerably more expertise than a standard application “lift” into the cloud.

For ease of explanation, it is a two-step process:
1) Lift: a dedicated customer SAP ERP landscape (Dev, Test and Prod) is built.
2) Shift: the existing SAP ERP system configuration is copied using SAP standard and supported procedures.

In the simplest terms, your existing deployment is moved without the need to rebuild or change any configuration and customizations to recreate the exact same client environment.

All interfaces are rerouted as part of this process and all work happens at the infrastructure level, meaning the SAP HCM application configuration itself is untouched. It is this that ensures a successful Lift & Shift from an application perspective.

It is also an option to combine the migration with database upgrades if required, for example to SAP HANA. A rigorous test strategy must be part of the process,
1. to ensure that the managed system replicates exactly the OnPremise payroll interface, and
2. to confirm that all interfaces from payroll to internal systems operate as expected, including interfaces to finance systems, and to external parties, such as insurance and benefits providers.

Step 3 – Plan and Resource Project Team

A tightly aligned project team is vital, and requires specialists from provider and client organizations.

The size and component roles of the team will depend on the outcome of the due diligence, and subsequent migration outline. The majority of staff will be focused on infrastructure operations, with functional people for the regression testing and UAT purposes, as required.

Q: How many resources internally would be needed for the transition?
This very much depends on the size of the project, and of the knowledge and expertise of the available internal resources.

Typically, the initial team will comprise of SAP HCM support and maintenance staff, plus SAP HCM Payroll leads, to provide system information.

At this point, HR and payroll administrators document functional process steps, and infrastructure and security experts are needed to help lay out the current set-up. System copies are then created to ensure that network routes are set up correctly. Ultimately, we involve all of them in testing the new environment.

Q: How much will this initial configuration, programming and data transition cost?
The transition fee is a fixed fee. This will be agreed once the set-up and complexity of the client environment including interfaces, has been determined.

Step 4 – Testing

All systems and regression testing is managed for the customer, but user acceptance testing is typically completed by the customer prior to the final go-live phase.

Step 5 – Assured Go-Live

There is no room for failure in payroll!

The smartness of the transition methodology is that it ensures complete end-to-end visibility of the migration, thus providing everyone with the confidence that every element is completed, to the highest standard, and that the go-live will be successful.

Step 6 – Hyper-care

Once the payroll migration is completed, there is a period of hyper-care. Throughout, we work together with the client to ensure that any questions or concerns are answered and resolved fast, with minimal, if any, impact on users.

What next?

You are now live, and your managed payroll solution is working well. To maintain this performance, ongoing maintenance of you managed payroll is essential.

In my next blog, I provide a step-by-step guide to the ongoing maintenance of managed payroll, beyond design and deployment.