Archive for June, 2012
Before an HR or Payroll system implementation can begin, a number of important activities must already be underway or drawing to a close. This post briefly looks at the following:
- The decommissioning of the existing system
- The procurement of a new system
- The opportunity for a business process review
- Other important ‘up front’ success factors.
Decommissioning The Current System
The decommissioning of the current HR and Payroll system can be considered a project in itself. This project should include:
- A review of the current system’s strengths and weaknesses
- An analysis of how the system’s weaknesses may be addressed by a new system
- Consultation with champions of the current system, if there are any, to ensure buy-in for system change (i.e. the initial stages of change management)
- A cost/benefit justification for moving from the current system; and
- Decisions on which current system data should be deleted, which should be archived and which data should be cleansed for loading onto the new system. It is best practice within system transitions for the new system be populated only with data that has been checked for accuracy, coherence and integrity. It is also crucial for the implementation of the new system that close attention is given to – and time allowed for – the data mapping process.
The analytical outputs from the decommissioning exercise will feed into the procurement process for the new system and into the initiation and planning stages of the implementation project.
The decommissioning of the current system may be dealt with as a subproject of the implementation project, but it should nevertheless be undertaken rigorously, with the activities described above commenced well in advance of acquiring the new system.
The procurement project will have outputs of central importance to the implementation project. These outputs should include:
- The initial business case for the system transition, which may feed from the decommissioning exercise
- A Schedule Of Work or detailed definition of the requirements which the new system and its supplier must meet
- A contract which includes:
- Delivery targets
- Implementation timescales
- The supplier’s detailed confirmation of the extent to which they can meet each individual requirement in the SOW
- A supplier-incentivising payment profile
- Penalties for supplier non-performance
- Insurance against subcontractor non-performance
- Defined implementation consultancy and support
- Defined system and DBA training
- A detailed Support SLA including escalation points
- System performance guarantees
- An agreed change control procedure
- A supplier/client conflict resolution strategy
- The purchased software, hardware, database environments, comms, services and implementation support.
It is essential, in addition to the organisation’s procurement team and representatives from IT, that both senior and junior HR and Payroll users are engaged in the selection process. Representation should also be sought from other important stakeholders, such as Finance, Audit and the employees themselves.
Business Process Review
An opportunity which should not be missed when taking on a new HR and Payroll system is that of reviewing the efficacy and cost-effectiveness of the business processes being supported by the system. The business process review should cover:
- Document and data flows
- Authorisation processes
- The practices, codes and calculations used in areas such as absence recording
- System-related HR processes and procedures in general
- Departmental boundaries and responsibilities – and whether these should be modified in light of the capabilities of the new system
- The data required by the organisation and who should have access to that data
- The standardisation of data formats and codifications throughout the organisation; and
- Whether all the reports currently generated are needed and what new reports might be required.
Other Important Success Factors
Other precursors to a successful HR and Payroll system implementation include:
- Commitment to system change by management at an executive level
- A recognition of the size and complexity of the forthcoming project. HR and Payroll implementations can range in duration from four months for a small company with straightforward pay and employment conditions to nine months for companies with employee numbers in the low thousands… through to twenty-four months for very large organisations taking a phased implementation approach
- Detailed, up front project evaluation and planning
- A financial commitment recognising the many factors of a system change of this sort, inclusive of:
Hardware, software and comms
Time taken from HR, Payroll and Finance staff for initial consultations through to testing and parallel running; and
Temporary productivity reduction whilst familiarity is gained with the new processes and system.
For an extended discussion of the key features of successful HR and Payroll implementations, please see the document ‘Best Practice for HR and Payroll System Implementations’ on this blog.
Implementing a new HR and Payroll system does not begin when system access is first provided to the project team – or even with the signing of the contract for the new system. A rigorous procurement exercise must first take place, and this should be supported by analysis of the reasons for change, the production of a compelling business case, the production of a comprehensive requirements document and some anticipatory change management.
Undertake these activities and your implementation should get off to a running start.
© Luke Andreski 2012. All rights reserved
Comments and feedback welcome!
HR and Payroll systems are required by all types of employing organisation to support the administration of employees, the payment of employees, the management of employee data and the provision of management information. This need is met in the UK by database and software providers such as SAP, Oracle, Ceridian, NorthgateArinso, Unit4, MidlandHR and many others, offering web and server-based, in-house, partially managed or outsourced solutions.
Over time organisations outgrow the systems they use (or which are used on their behalf) and the transition to a new system becomes essential. Transitions are also compelled by statutory change, software end-of-life, business reorganisation, company buy-outs, technological advance and changes in management focus or direction.
As a result a continuous demand exists in all market sectors for the decommissioning of current HR and Payroll systems and the implementation of new ones.
This document seeks to identify best practice for such implementations, and in doing so I cover the following areas:
- The implementation project life cycle
- The project team
- Project initiation and planning
- Core HR and Payroll system implementation activities
- Best practice project management
- Key features of successful implementations; and
- Similar types of implementation
Initially I focus on in-house implementations, where a project manager and project team work in the host organisation to implement the new system, and the system supplier provides system expertise in the form of consultancy. I will discuss the implementation as if it is one of a combined HR and Payroll system. These considerations will also apply to the implementation of HR and Payroll modules within an ERP solution.
The Implementation Project Life Cycle
In PRINCE2 and PMBOK the definition of a project life cycle is very similar:
- Initiate the project
- Undertake a detailed fact finding and planning exercise
- Execute the stages or phases of the project
- Formally close each stage or phase (signing off against predefined success criteria and taking forward lessons learned)
- Project closure
Both methodologies give a detailed breakdown of how each of these life cycle elements must be executed and controlled to minimise the risks of schedule slippage, cost overspend and unsatisfactory deliverables. The project management activities that bracket the delivery phases of the project – objectives definition, scoping, requirements gathering, planning, learning lessons, performance measurement and project administration – are all about ensuring that organisations get right the fundamental, deliverable-based core of the project.
Given the range of deliverables required from HR and Payroll implementations, it is crucial that a structured approach along the above lines is adopted.
The Project Team
A project board or committee should include executive-level representation, senior HR and Payroll management, an IT manager or director, and a nominated project sponsor. It may also include a senior supplier representative, an employee representative and representatives from affected departments such as Audit, Finance, Training and Recruitment. The latter group may not need to attend all Project Board meetings (or all parts of each meeting).
The project team should include:
- The project manager
- A senior HR officer or manager, empowered to make system set-up and HR process decisions on behalf of the organisation (avoiding ‘decision making by committee’)
- A senior Payroll officer or manager, empowered to make system set-up and Payroll process decisions on behalf of the organisation
- Experts in the process areas affected by the implementation
- Hands-on team members to undertake non-strategic work
- A representative from IT; and
- A supplier- or third party-provided consultant with prior knowledge of the system and its implementation.
Depending on the size of the project, the team may also at some point include:
- Business process re-engineering expertise
- Experts in documenting the use of the system
- Additional external consultancy
- Dedicated resource for project communications
- Dedicated Business Intelligence resource; and
- Super-users participating in pilot and parallel running.
Key recommendations in regard to the project team are:
- That the core team members are dedicated full time to the project
- That supplementary resources are assigned to the project on the basis of agreed time allocations
- That the team includes representation from all areas within which the system will be implemented
- That, prior to or at the commencement of the project, the project team are trained in how to work together as a team on this kind of project
- That at least some of the project team members are able to continue working with the system after project completion, perhaps in a system support capacity, thus benefitting the organisation with the expertise gained during the project
- That a project area or project HQ is provided for the duration of the project, where the project team will be based.
Initiation And Planning
As a minimum, project initiation must include the creation and signing-off at an executive level of a Project Initiation Document, a Project Charter or a Project Brief, on the lines defined within PRINCE2 and PMBOK. The project initiation should also include detailed stakeholder analysis and the allocation of resource for the initiation and planning stages of the project.
As a minimum the project planning stage should generate strategies for controlling the cost, the timing, the quality of outputs and the risks of the project, and provide detailed plans for project execution, communications and control.
Phasing, both in functional terms (e.g. initial roll-out of core HR plus Payroll, then Training or Recruitment, then Employee Self Service) and in terms of business area or geographical location, is generally recommended for HR and Payroll implementation projects. It is also advisable within large implementations to undertake initial pilot runs, over and above the parallel running, even within a functional or business area.
Core Implementation Activities
HR and Payroll system implementations will typically include the following activities:
- System, hardware and comms delivery and configuration – preferably with multiple environments allowing for training, testing, trial system configuration and setup, and parallel and live running
- DBA setup, with immediately active backup protocols and the ability to restore or copy environments promptly when required
- Project team training
- System setup: parameters, tables, hierarchies, rates, calculation formulae and rules, menus, security etc
- Development and upload of bespoke software, interfaces and reports
- Data cleansing (assuming data will be migrated from the legacy system)
- Data migration tests
- Iterative testing of system setup, bespoke software, interfaces, reports and system functionality
- Production of user guides and other documentation
- Training for the users who will be involved in acceptance testing, pilot and parallel running
- User Acceptance Testing of end-to-end processes, inclusive of interface testing
- Data migration for parallel and pilot running
- Parallel and pilot running
- Remaining user and manager training
- Phased rollout (by functional and/or business area, with relevant data migrations if applicable)
- Phase closures and the carrying forward of lessons learned
- Project completion
All these activities must be actioned in accordance with the project plan and closely monitored for timeliness, cost, quality and risk. Preventative and corrective actions must be taken when necessary to ensure the project remains on time, on budget and ‘on spec’. Guidance for achieving this will be offered by the adopted project management methodology.
I recommend, where both HR and Payroll systems or modules are being implemented within an organisation, that they are implemented at the same time, in order to gain efficiencies in terms of project workload and cost. Where this is not possible, I recommend that the implementation of the HR system or module takes place first. The reason for this is that the system configuration and setup that is common to the two areas is more complex on the HR side (e.g. organisational hierarchy, employee records, absence recording) and it is easier to utilise a subset of a pre-existing configuration than to build a complex configuration on the back of a simpler one.
Best Practice Project Management
Where a proven methodology is already in place within an organisation then I recommend that this methodology is used for the HR and Payroll system implementation. It is important that the project manager and team use the same ‘language’ as their colleagues, and that the documents, reports and strategy for the project are recognisable and broadly understood.
Where an organisation is not using an in-house methodology I recommend either PMBOK or PRINCE2, with partial adoption of some of the efficiency strategies of Agile.
In addition to a project management methodology, the HR or Payroll implementation will require a protocol for configuration management. This ensures traceability from the initial project objectives through to the final outcomes of the project. Configuration management also ensures that version and change control are rigorously documented throughout the project.
As with the project management methodology, if there is a protocol for configuration management already in place this should be used; otherwise a proven example should be adopted from an external source.
The considerations detailed above clearly apply to best practice project management in general. Activities which the project manager of an HR and Payroll system implementation may wish to additionally emphasise are:
- Stakeholder management
- Project communications (including communicating with employees); and
- Supplier management.
For further guidance in regard to project management best practice, please see ‘A Perfect Plan’, also in this blog.
Other Features Of Successful HR And Payroll System Implementations
The following factors are recognised as contributing to successful HR and Payroll system implementations:
- Clearly defined objectives and success criteria
- The participation and publicised interest in the project of management at an executive level
- Buy-in at all stakeholders levels
- Allocation of responsibility for the implementation to all the departments within which the system is being implemented
- The purchase of sufficient expert consultancy, with an emphasis on skills transfer from consultants to employed staff during the implementation period
- The purchase of sufficient system training
- Sufficient payroll parallel running, for example two monthly payrolls paralleled over six weeks, with weekly and other payrolls being paralleled within this period
- Interfacing the new HR and Payroll system with other systems within the organisation wherever possible to minimise data entry. The new system should become the core repository of employee data. This requirement is potentially met within ERP implementations, offering HR and Payroll modules as part of a larger functional suite
- Developing in-house Business Intelligence expertise for use with the new system, which remains available to the HR and Payroll teams after the implementation project is completed
- Educating project stakeholders to expect a reduction in productivity immediately after system implementation, whilst the new processes bed-in and familiarity with the system is acquired
- Engaging with other organisations which use the new system, and with a system User Group if one exists.
It is clear from the above that best practice for Payroll and HR system implementations will also apply to the implementation of other, similar systems, such as T&A, Pension, Finance, Recruitment, Training, Document Management and ERP packages. There will of course be changes of emphasis and the business expertise required by the project team will differ with each system or module.
Many of the practices detailed here will also apply to the implementation of partially managed or fully outsourced solutions, with the main difference being that the supplier will have to undertake much of the project work rather than the customer who is receiving the service. With suppliers who regularly undertake outsourced implementations the project will be more of a repeatable ‘process’ and therefore should entail less risk. However, new risk is engendered for the supplier through the supplier’s lack of direct experience of the client organisation’s internal working and the resultant increased need for fact-finding. The outsourced customer also inherits the risk of not being in direct control of the implementation and of not retaining or gaining system and procedural expertise should the outsourcing fail.
In conclusion, best practice within HR and Payroll system implementations mandates a closely planned and managed project with considerable commitment from the involved organisation. A successful project will demonstrate many of the features detailed above and offer the ultimate rewards of greater productivity, greater access to system processes and data, and the improved engagement of staff and employees with the objectives of the organisation.
© Luke Andreski 2012. All rights reserved
Two fundamental principles which underlie project management methodologies such as PMBOK and PRINCE2 are:
Look before you leap
Learn from when you fell.
These principles are elaborated into complex project management ‘envelopes’ surrounding what might be thought of as the delivery activities of the project – the aim being to ensure that these activities are accomplished successfully.
On this basis, I would suggest that the following list details the ideal project management envelope, into which the considerably more detailed delivery elements of any project can be inserted.
Determine project authority and status
Confirm Project Brief
Authorise Project Initiation
Review Project Brief, Bus. Case, Contract, SOW
Identify existing processes and standards
Review political / organisational environment
Stakeholder Interviews and Analysis
Produce stakeholder list
Identify and Coordinate Project Initiation and Planning Resource
Agree Resource Reqs for Initiation and Planning Phase
Develop, Sign-off and Publish Project Charter
Develop project charter
Publish draft project charter
Project charter review
Sign-off project charter
Finalise project charter
Sign-off project charter
Plan project kick-off
Project kick-off meeting
Develop Outline Project Management Plan
Project Requirements – Detailed Definition
Develop, Sign Off and Publish Detailed Scope Document
Develop Detailed Project Scope Document
Review Detailed Project Scope
Sign Off Detailed Project Scope
Publish Detailed Project Scope
Develop Work Breakdown Structure
Develop work Breakdown Dictionary
Develop, Sign-off and Publish Detailed Project Plans
Develop Project Schedule
Develop Project Schedule
Estimate Costs and Confirm Budget
Develop Human Resource Plan
Develop Communications Plan
Develop Project Risk Management Plan
Identify Initial Project Risks
Assess and Prioritise Risks
Develop Risk Response Proposals
Develop Risk Management Plan
Review Project Plans
Sign Off Detailed Project Plan
Publish Detailed Project Plan
Execute Project Phase 1
Establish Team and Infrastructure
Acquire Full Project Team
Set Up Team Infrastructure
Phase 1 Activities and Deliverables
Perform Work Activity 1
Deliver Work Activity 1 Result
Perform Work Activity n
Deliver Work Activity n Result
Phase 1 Monitoring and Control
Monitor / Control Activities 1 – n
Verify Scope of Activities 1 – n
Control Phase 1 Quality
Control Schedule and Costs
Close Phase 1
Lessons Learnt Meeting
Document Lessons Learnt
Update Project Documents
Sign Off Phase 1 / Authorise Phase 2
Execute Project Phases 1 + n
Lessons Learnt Meeting
Document Lessons Learnt
The central purpose of all of this detail is to support the key delivery activities. The supposition of project management methodologies such as PRINCE2 and PMBOK is that phases 1 through 1+n will be delivered successfully – on time, on budget and ‘to spec’ – if a framework along the lines detailed above is rigorously applied. This is something with which I largely agree. However, a further and, I believe, utterly crucial requirement for project success is this: no project will be successful without enthusiasm for change, a powerful commitment to the project objectives, and a concern for the people involved in the project and affected by it.
© Luke Andreski2012. All rights reserved.