A dynamic financial landscape, changing workforce expectations, outdated systems and immerging technologies are dramatically reimagining how organizations oversee, safeguard and adapt their payroll strategies. Read on to learn why organizations across sectors are turning to cross-functional software development teams to ideate, design, develop and support evolutive payroll solutions.
Changing workforce dynamics needs payroll management software
According to the Unites Nations Conference on Trade and Development (UNCTAD), digital multinational enterprises (MNEs) are growing at an exponential rate and causing a reappraisal of how cross-border investment is executed. UNCTAD research indicates that last year, the total sales of the top 100 MNEs were almost 160% higher in 2021 than in 2016. In particular, net income increased on a yearly basis by 23%, with a surge in growth of over 60% between 2020 and 2021.
This demonstrates that organizations are increasingly operating in different countries and across borders. While the new revenue streams and increased business opportunities are celebrated, the administrative headaches that come from adhering to divergent regulations, complying with various legal measures and conducting business with different currencies are not. That’s why intuitive, easy-to-use financial management software is in such high demand. The advantages go far beyond seamlessly processing invoices and receipts. Tailor-made financial software development can not only be run from anywhere and at any time, but it also scales with a business’s growth. Moreover, the increased efficiency saves employees’ time and mitigates the monotony that comes from repetitive routines. The result? Higher employee engagement and satisfaction.
Navigating the complexities of multination business is one thing. Adjusting to cultural differences is another, and payroll departments are not immune. Indeed, research from AadmiConsulting demonstrates how various legislative measures, labor practices and cultural expectations impact payroll departments. Take for example Belgium and France, European Union neighbors who both adhere to EU-wide directives and regulations, but which nonetheless have particularities to their payroll processes. In Belgium, employees receive mandatory pay raises, a 13-month salary (applies to temporary employees and contractors) and a holiday bonus along with holiday pay. All these stipulations are applied in multiple countries. In France, a complex pay-slip, open interpretation of gross compensation and a confusing labor code are all potential challenges for payroll professionals.
Elsewhere, China has a different minimum wage for permanent and temporary employees, as the former is based on a monthly system and the latter on an hourly one. Lastly, Japan’s complicated ear-end tax adjustment system, benefit taxation, compensation practices and labor laws can be difficult for foreign companies. Even within one country, laws can vary significantly – Inc.com reports that there are over 10,000 different tax jurisdictions in the US alone, and many regulations are constantly being changed.
To overcome these and other challenges, companies are implementing web-based payroll management systems from trusted partners that automate payroll processes. Between 2020 and 2022, research indicates a 659% growth in automation in finance and accounting departments. While the management of payroll processes will probably not be fully automated, the scope of automation opportunities is vast. Analyzing timekeeping, collecting timesheets, approving overtime remuneration, adjusting salaries according to performance and allocating percentages to be paid to tax authorities are just some of the more popular processes being automated. Additionally, court-demanded garnishment orders and reimbursement can also be executed. Automation strategies also include general record keeping, report generation and the updating of databases.
The benefits of automating payroll processes are clear. Automating tasks saves money and maximizes efficiency as fewer employees are required to administer tasks. These professionals can be redirected to other areas which require critical thinking and empathy. Moreover, limiting the amount of repetitive, monotonous work that skilled payroll experts need to do results in higher employee satisfaction, engagement and retention. As well, payroll automation reduces the possibility of human error, which translates into an improved user experience for employees whose salaries are impacted by payroll departments. However, payroll system providers face a significant challenge because they need to have experts in various areas (integration with other financial systems, data security, scaling) to meet their clients’ needs. Given their limited capacity, they may not be able to handle everything, so they are turning to dedicated development teams that can support them with ideating and developing architecture, building applications and public APIs, as well as executing cloud migration strategies.
Crucial to this effort is creating an ecosystem that enables close collaboration with third-party companies who need to connect directly to certain financial systems. Since an effective digital transformation eliminates data siloes and increases accessibility, while following the strictest of security protocols, the importance of application programming interfaces (APIs) is on the rise.
Public APIs provide developers with programmatic access to proprietary software applications or web services. Essentially, public APIs enable the smooth communication between various computer programs. According to DevOps digest, 98% of enterprise leaders agree APIs are an essential part of an organization’s digital transformation. Further, over 84% believe it is either “very” or “extremely” important to partner with organizations that provide APIs to collaborate on and build products with. Using APIs makes it easier to integrate various systems and add new functionalities, while reducing the risks of errors since flows are automated.
Updating payroll management software is crucial to maximizing efficiency
As with most solutions, the need to continuously develop software to adapt to changing user expectations and market standards is paramount. That’s why even when a solution goes live, it should not be considered a “finished” product as new features and functionalities will assuredly be added.
Augmenting existing software with components and capabilities should not only reflect an organization’s present needs, but also anticipate emerging opportunities and demonstrate future goals. Research from Gartner reveals the top strategic business priority for CEOs in 2022-2023. While 31% of CEOs cited workforces and 34% tech-related issues, the overwhelming response, at 51%, was growth. But achieving growth is only the first step; maintaining that growth is vital, which is why scalability should be a key component of any growth strategy. Having a team of engineers who can scale and develop software to keep up with business growth ensures short-term gains turn into long-term stability.
Increasingly for many organizations, growth strategies reflect, or are a part of, wider digitalization transformation initiatives. This can be best seen in dollars and cents, with IDC reporting that global investment in digital transformation is expected to increase from $1.8 trillion US dollars in 2022 to $2.8 trillion US dollars in 2025.
Growth and scalability can only be achieved with the right personnel, which in today’s climate, can be difficult to find. Manpower Group research shows that 75% of companies have reported talent shortages and difficulty hiring this year, so even if organizations have identified the payroll solutions they want to implement, they may not have the internal capacity. This helps explain why over 90,000 companies have turned to Procountor software to handle their financial management.
Migrating to the cloud ensures reliability and security
Beyond driving growth, maximizing efficiency and gaining a competitive edge, evolutive payroll management software increases convenience and user accessibility. The most effective way to do that is by migrating existing systems to cloud infrastructures, which deliver numerous benefits.
Take for example Microsoft’s Azure, a private and public cloud computing platform, which hit the market in 2010. Research shows that Azure cloud infrastructure services claimed a 21% market share in Q1 of 2022 and are predicted to achieve 40% growth in Q4 of 2022. One of the big advantages of Microsoft’s platform is that machine learning (ML) based on Azure can predict what may be useful to users. Additionally, teams can use ready-made services provided by cloud providers, including authentication mechanisms and elements of artificial intelligence (AI) like chatbots and ML engines.
Using cloud-based services has also proven to be a credible approach for mitigating cybersecurity threats like data leaks, hacking and human error, while addressing security concerns related to confidentiality and accidental exposure. Investment plays a big part in technological advances, and cloud security is no exception. Reports from Mordor Intelligence indicate that the global cloud security software market, valued at $29.5 billion US dollars in 2020, will increase to $37 billion US dollars by 2026.
Furthermore, employing cloud-based testing automation helps accelerate software testing and release cycles. By generating test environments as needed, this method enables a development team to create, test and release software on an ongoing basis, without having to rely on new infrastructure. Since an increased number of test environments translates into faster testing, testing cycles are significantly reduced, as test cases can be run parallelly instead of sequentially.
Coordinate finances with payroll management software from a proven partner
The challenges and possibilities payroll departments face are immense, but not insurmountable, especially when partnering with an experienced team that creates, engineers and manages financial management software. As such, the payroll software market is forecast to reach nearly $15.4 billion US dollars by 2030, according to Market Research Future. Find out how a dedicated development team from Software Mind is helping a leading Finnish company develop payroll software that makes an impact by watching this video. If you’re interested in learning how our experts can speed up your software delivery processes, fill out the contact form.
About the authorMarek Sysuła
Software Delivery Manager
A Software Delivery Manager with 13 years of experience in IT. In his career he has worked as a software developer, consultant, project manager, team manager. Currently, he manages agile teams that embrace values such as openness, respect, transparency and self-organization. Working with his teams, Marek focuses on motivating and developing people while striving to continuously improve their working environments.