In South Africa, most companies are tech-enabled, with the vast majority using desktop applications to manage their payroll. However, many organisations are embracing cloud computing technologies due to the cost savings offered, and the speed and agility at which services can be procured.
This is according to Sandra Crous, MD of PaySpace, who adds that, as businesses move along their cloud journeys, they need to ask themselves whether they understand the true cost of cloud versus on-premises solutions.
“Today’s competitive landscape has been put under tremendous pressure by the Covid-19 pandemic, and organisations – from small and medium sized enterprises to corporate giants – are racing to provide easy, secure and accessible payroll solutions. Cloud payroll is paving the way forward.”
Scalability and ease-of-use are critical to saving money and remaining agile. This means that rigorous research should be conducted before making any cloud versus on-premises comparison.
Crous says that security used to be a compelling reason for organisations to go the on-premises route. “This is no longer the case. In fact, good cloud providers have the best security tools and measures in place to ensure your data is encrypted and protected at all times, helping companies achieve continuous compliance with data protection regulations. There are no monitoring costs, and organisations do not have to invest in best-of-breed security solutions, which mean huge cost savings for the business.”
Concurrently, Crous says, improved efficiency is a major factor and cost saving distinction between on-premises and cloud options. “Cloud offers integrated automatic data back-ups and recovery which come standard with any good provider. They will also maintain software and hardware updates, ensuring their customers always have the latest technology at their disposal.”
However, a key point when it comes to measuring the cost of cloud vs. on-premises payroll solutions is that cloud providers work on a software-as-a-service (SaaS) basis – charging a pay-as-you-go or per-user basis – meaning that the cost involved is significantly reduced, Crous explains. “It is truly based on consumption. A true cloud product is single-instance and multi-tenant. You pay for what you use, and can scale up or down instantly as needed. This flexibility and scalability enables organisations to react instantly to changing staff counts and technology requirements.”
Often when software is installed on a company’s servers and parameter changes are needed, or new earnings or deductions need to be added, or another payroll brought in, the company will need someone to configure that for them. “With cloud you simply add the extra employees, as the software has been pre-configured with everything in advance–overtime, medical aid, and more. Everything is ready to use, and all legislative changes are applied instantly.”
Any capital expenditure (CAPEX) is practically non-existent too, as there is no investment in hardware needed, nor any physical infrastructure to host servers. This cost is further reduced as there is no need to hire additional IT staff to maintain the infrastructure, enabling resources to be redirected to core business activities, she explains.
It is almost impossible to do a like-for-like costing, says Crous. “When customers buy an annual licence fee for a payroll product, elements including legislation costs, system feature enhancements, and maintenance of the software need to be included. “With true cloud, all of that, plus scalability and redundancy, is already there. This is before you’ve looked at elements such as the company’s appetite for risk.”
She cites ransomware as an example. “With cloud, this is no longer a threat. What is the true cost of no longer having this risk? Sure, companies have cyber insurance to help with this scourge, but this isn’t 100%, nor does it guarantee you will be able to be up and running instantly with no data damaged or loss.”
The flexibility and scalability of true cloud enable companies to instantly react to changing customers, markets, and technology requirements. “It’s easy to work out the exact cost. It’s your payslip fee, times your number of employees. You pay as you use, on a monthly basis, which makes it easier from a cashflow point of view. There are no large upfront contract fees, and no hefty outlays for equipment.”
The benefit of cloud, says Crous, is that if you look beyond the technology, particularly in a payroll environment where there are ongoing legislative and tax changes, the fact that these are dealt with immediately means the customer is always compliant and up to date. “The freedom this provides is immense. You can run your payroll from anywhere and it can be done flexibly. The benefits go beyond rands and cents.”