Take Advantage of Underutilized Functionality to Streamline Payroll Processes

Panelist: Mike Timm, Integrated Consulting Group
Date: Tuesday, July 24

For companies, payroll is a necessary task that needs to be done accurately, yet efficiently, so it doesn’t add unnecessary costs and lower ROI. It’s important to ensure that your payroll integration and configuration processes take full advantage of the payroll functionality available at your fingertips.

Read the transcript of the Q&A with Mike Timm of Integrated Consulting Group to get answers on how to take advantage of underutilized functionality that you currently have installed. Mike shared tips and best practices to automate and streamline your SAP payroll processes and improve your return on investment.

Matthew Shea: Hello, and welcome to today’s SAPinsider live Q&A.

I am excited to be joined by Mike Timm, Managing Partner at Integrated Consulting Group, for a discussion on underutilized functionality to streamline payroll processes.

Mike Timm’s 22-year career in the information technology industry includes positions in accounting, information technology, and human resources. As an SAP Certified Consultant, Mike has led a variety of projects with an emphasis in human resources, payroll, time management, support, and outsourcing. Mike has been actively involved and recognized in his field as a conference speaker at SAP HR and SAP Financials conferences in Europe and the United States since 2003.

Mike will be presenting at the HR Payroll Seminar, which will be held in Chicago November 7-8, 2018, and in Orlando November 27-28, 2018.

Mike Timm: I’m glad to be here and have always enjoyed the discussions during the live Q&A. Let’s continue that tradition.

Comment From Xavier: What type of functionality have you seen companies not utilize that would make the overall payroll process more efficient?

Mike Timm: Process models, third-party remittance, and month-end accrual always seem like areas that can either be implemented or improved upon. I’d also put them in that order of importance and return on investment (ROI) turnaround.

Comment From Lucas: Does adding unused functionality cost the customer?

Mike Timm: Implementing unused functionality that SAP provides doesn’t cost the customer licensing or software maintenance fees. The labor effort to implement the functionality is where cost is introduced and needs to be offset by a business case and quick ROI.

Comment From Frank M: Is there a limitation on how many employees I can handle? Our total population is 800,000.

Mike Timm: SAP is running payroll for implementations of more than 1 million employees. I haven’t seen a specific limit stated by SAP and would expect any limitations to be solely due on system sizing and setup.

Comment From Kurt: What payroll functionality can I use to automate payroll?

Mike Timm: Process models usually provide the quickest ROI due to the automation and reduction in manual errors, either performing steps in the wrong order or forgetting a step.

Third-party remittance is another area where ROI can be easily justified. I’ve been amazed at the number of companies that build manual processes or custom reports to do what third-party remittance functionality can do.

Comment From Hank: What functionality can be added to help a customer transition from SAP on-premise to SAP SuccessFactors Employee Central Payroll?

Mike Timm: This doesn’t fit what functionality can be added exactly, but moving away from custom- developed objects to a standard SAP system will be an easier roadmap to SAP SuccessFactors Employee Central Payroll. Even if you aren’t planning to move to Employee Central Payroll in the near future, moving to an SAP standard system will reduce support efforts.

Payroll Control Center is another area that can be implemented on-premise to make the transition to Employee Central Payroll. Functionality and end-user processes are very similar, making the transition much easier for your business users.

Comment From JUDY R: We have already implemented process models and streamlined third-party remittance. How does the Payroll Control Center provide more streamlining capability?

Mike Timm: The Payroll Control Center allows what a process model doesn’t — pre-payroll audits with workflow capability. Instead of running reports or waiting for payroll to [find an? produce an?] error, the Payroll Control Center can continually monitor master data, payroll runs, and other processes and provide feedback. The Payroll Control Center runs payrolls and can check for abnormalities or errors between our regularly scheduled runs.

Comment From Stacey: We have looked at using process models, but we also are required to use a third-party scheduler utility. We have been unable to set the process models up to handle payroll and subsequent activities via the third-party software. We have been told that there are manual decisions that are required when choosing areas such as Payroll Area or Payroll Period that prevent scheduling. Do you have any suggestions?

Mike Timm: You can schedule process models. When scheduling a payroll process model, you will be asked which payroll area you want to process. If it is a regular payroll for which you are running the process model, it will look at the control record to determine the period for the payroll area you select.

Comment From Eva: Could you expand on your previous answer about payroll audits? We are simulating payroll every day to catch errors and warnings. What audits does the Payroll Control Center run that do not involve running pay?

Mike Timm: The Payroll Control Center comes with many audits and also allows you to add custom or third-party reporting tools to the audits. These audits are then scheduled to run at a specified interval to catch issues. Audits aren’t just pre-payroll audits, though. The Payroll Control Center runs and creates payroll results that can be reported from. Once issues are identified, workflow can be used to assign the issues for resolution. The outstanding issues can be monitored easily from the dashboard.

Comment From Cyndi G: How long does it take to implement Payroll Control Center?

Mike Timm: The typical consultant answer is, “It depends.”

If you take the approach of using the SAP-delivered solution, you should be able to have the Payroll Control Center up and running in your development system in less than two weeks. This assumes that your system is at all the required software levels.

If you want to go beyond the SAP-delivered solution, and most companies do, look at a third-party reporting vendor. Most have added Payroll Control Center functionality that can be used on-premise and then in SAP SuccessFactors Employee Central Payroll. Using the third-party vendors will reduce your time to go-live compared with the time it would take with custom development.

Comment From Debbie R: Our payroll is on premise. Can Payroll Control Center still be used?

Mike Timm: Yes, Payroll Control Center is an add-on you can use on-premise. SAP provides a rapid delivery option, and the last time I looked, it had 34 delivered audits.

Comment From Janet B: To use the add-on, are there any services that need to be activated? What is needed to add to the IMG, assuming there are IMG activities?

Mike Timm: Payroll Control Center IMG nodes are added during the implementation of the Enhancement Package process. If you want to read some very good guides on how to get Payroll Control Center up and running quickly, Imran Sajid has several blog posts and has presented at several conferences on the process.

Comment From Cyndi G: What are the business benefits for implementing the Payroll Control Center?

Mike Timm: The benefits can vary from customer to customer. If you haven’t implemented process models and are constantly having fires to put out, Payroll Control Center may be a very good candidate. You can use the Payroll Control Center to identify issues earlier in the payroll process, more easily monitor issue resolution, and automate steps.

Comment From Sharon: Is there hard data that has been documented to show a reduction in the time for running payroll when Payroll Control Center is enabled?

Mike Timm: There are some white papers on Payroll Control Center that have been published discussing how specific customers have seen good improvement in processes.

Comment From Odia: Which functionalities can we use to better analyze the Support Packages installation processes?

Mike Timm: SAP provides some basic tasks to follow for Support Package process installation. However, the basics do not typically make the payroll professional very comfortable.

There are third-party reporting tools that you can use to help the process. I know of one where we can run payroll, download a report, rerun payroll after the Support Packages are added, and compare the new payroll results against the downloaded report. We see exactly what has changed.

Otherwise, using good repeatable test scripts is your best option.

Comment From James: Can you explain the benefits of third-party remittance in more detail?

Mike Timm: Third-party remittances allow us to link wage types in payroll to vendors in accounts payable. When we run payroll with a third-party remittance, the process postings are made to vendors based on the links we set up. Depending on authorizations, we can see line items posted to the vendor and tie back to specific employee payrolls.

The third-party remittance process also tags payroll results as being processed. This feature makes reconciliations easier because we can identify payroll results that may not have been posted to a vendor.

Comment From Stacey: How does declustering play into the Payroll Control Center? I have heard about how much we can or should be declustered and whether it is useful to do so and maintain historical results. What is your recommendation on this?

Mike Timm: Declustered payroll results are where Payroll Control Center is running the payrolls throughout the payroll process. Not all payroll results need to remain declustered; declustering is required for only those we want to be able to run comparisons against. This can vary between SAP customers a fair amount.

At a minimum, you’ll want the previous payroll results to remain declustered so that your current payroll can be compared. Most likely, you’ll want to have a month’s worth of declustered payroll results to compare against.

Comment From Eva: What types of delivered audit reports come with the Payroll Control Center? For example, will it audit typical HR master data issues, such as missing IT0007? Also, when we create customized audit reports, do we create them based on typical payroll error messages, or certain wage types that appear (for example, claim wage types)?

Mike Timm: Whether you use the delivered audit report, use a third-party audit report, or create custom audits for Payroll Control Center, you can check if specific infotypes exist or have valid data.

Without Payroll Control Center, I consider these pre-payroll audits because we are trying to catch what we can early.

When you introduce Payroll Control Center, you can now start auditing actual payroll results by looking at errors generated, wage types with variances, claim wage types, and so on.

If I run a regular weekly payroll every Monday, starting Tuesday with Payroll Control Center I can begin checking payroll results that will have a final run the following Monday.

Without Payroll Control Center, I can run pre-audits to find missing or inconsistent data along with payroll simulations. However, I can’t report on the output of the payroll simulations, so there is no validation of downstream processes such as posting to accounting.

Comment From Sharon: What could cause difficulties with deploying standard Payroll Control Center? Does the payroll schema, user exists, personnel calculation rules (PCRs), or other components of the payroll schema challenge deployment of Payroll Control Center?

Mike Timm: Unless you have a very customized environment, you shouldn’t have an issue with schema, rules, or other components. In my 21 years of experience, I can’t think of one customer that may have had an issue implementing Payroll Control Center due to those objects.

Comment From Ericka: Which functionalities are underutilized during the year-end process?

Mike Timm: Most of the time reconciliations are the biggest issue with year-end processing. I’ve found that using monthly reconciliations between payroll, Financial Accounting (FI), tax reporter, and a third-party vendor (if you are using one) is the best way to gain a comfort level.

Processes also have to be weighed. It is easy to throw in a new wage type or two to get the payroll personnel what they need for the payroll period, but we also need to understand the impact on postings and taxes to make sure the configuration is done properly from the beginning.

Also be very aware of IT0221 records and what the different subtypes actually do. Consider how using subtype TCRT or ADJT or YANA will affect what you are trying to accomplish and what it does to tax reporter.