What's the difference between unified and integrated payroll systems?
The terms unified payroll and integrated payroll are often used synonymously. However, it’s critical for payroll professionals to understand what differences are between unified and integrated payroll systems within an organization and how they can significantly impact payroll.
Some quick definitions
First, let's define the terms we just mentioned so we're all on the same page:
- Unified: Human capital management (HCM) solutions that were developed by one vendor and have a single employee record, database, and codebase that provide all payroll, tax filing services, HR, and workforce management capabilities in one solution.
- Integrated: Human capital management (HCM) solutions that may have been developed by multiple vendors or acquired modules that have multiple employee records, databases, and codebases to provide payroll, tax filing services, HR, and workforce management capabilities. Often these separate modules are connected by APIs, flat file transfers, and other methods of transferring data.
Here's a quick visual:
Now that we understand these terms, let’s review four critical differences between them and how they impact payroll.
1. Consistent, easy user experience
User experience may not be a priority for payroll or other administrators, but payroll delivered with a great user experience is critical to making it easy for employees to update their information or for managers to edit and approve timecards without having to call you for help and, most importantly, it helps employees complete their time cards correctly – which are two of the top three roadblocks to more efficient and accurate payroll.
In an integrated payroll system, because different modules may have a different codebase, the user experience can vary between areas or even between different types of payroll activities. For instance, the menu may be in a different location or have a different structure. Or certain tabs or buttons may have different names. This can all get confusing quickly and lead to more work for payroll professionals when employees make mistakes because of these differences.
In a unified payroll system, there is a consistent user experience across all areas, as well as across different devices, so it’s easy for users – especially employees and managers – to know where they are and how to do something, like approve timecards.
2. Comprehensive reporting
Reporting and analytics capabilities are critical to payroll. Without easy access to detailed reports, payroll professionals can spend hours or days digging for the right data, merging multiple spreadsheets, or correcting inconsistencies between reports. In fact, in a recent study conducted by the American Payroll Association, over 50% of payroll professionals cited that reporting in their current system was difficult.
A unified payroll system gives users the power to create customized reports in minutes, rather than hours or days. Because all payroll, HR, workforce management, and talent data is accessible in one place, payroll teams don’t need to worry about pulling a report from the timekeeping or leave system, then pulling a payroll report, and then combining them with other services to merge and analyze.
In an integrated system, some data points may be available in the payroll system, while other important data points may be available in separate timekeeping or HR systems. This means reporting across different areas can be difficult and lack the comprehensive data points that payroll needs to review and audit pay cycles, quarter end, and year end data easily.
3. Reducing errors
Reducing errors is always a top priority for payroll professionals, so a system that delivers a consistent, accurate, and compliant payroll every time is critical. And how a system ensures data integrity significantly impacts its ability to reduce payroll errors.
A unified payroll system has a unified database that is simpler to set up and manage. Once an employee is added to the system, makes an update to their information, or clocks in or out, payroll is automatically updated – ensuring that payroll always has the most accurate data. In fact, a recent study by Aptitude Research found that having payroll and timekeeping in a single, unified solution reduces the potential for errors that can result in noncompliance fines and a lower employer reputation.
In an integrated system, data needs to be transferred between modules, so there is a chance that data will be missing or arrive to the next module with errors. This means that payroll teams may need to sift through transferred data to correct errors or manually re-entering missing data.
4. Payroll efficiency
In addition to reducing errors, efficiency is another top priority for payroll. And in order for payroll to gain the most efficiency from a system, they need to automate as many of their processes as possible.
In a unified system, the data in the system updates in real time. This ensures reports, timecards, employee records, and other important resources are always up to date – even in the middle of a payroll cycle. This means that payroll is continuously calculated and updated, which enables payroll to review and audit pay data at any time during the pay cycle.
On the other hand, in an integrated system the data in the system must wait to sync across modules. In some integrated systems, there are delays from the time a change is made to when it is reflected in your payroll data. In other integrated systems, payroll needs to manually sync the data into other modules when changes have been made, or worse – users need to manually reenter the data in multiple places.
Conclusion: Time to take action
Now that you understand the key differences between unified and integrated payroll services, it's time to figure out if you need to make a change. What can you look for to determine if a service is unified or integrated? Here are some tips:
- Multiple tabs open when accessing different areas, such as HR, timekeeping, and payroll
- Employees need to download multiple mobile apps to access different capabilities
- Some pieces of data can't be accessed in certain areas
- Different colors, fonts, or terms are used in different modules
When payroll teams are looking to replace their current system, most prefer to go the unified route – however, because as I mentioned the terms "unified" and "integrated" are often used synonymously, it's critical to understand the differences between unified and integrated payroll systems and services to help you better assess potential payroll vendors. Learn more about how to navigate and select the right services for your organization in our comprehensive buyer’s guide.