Wednesday, February 8, 2012

Payroll and ERP Selection - How it Fits

Technology's great! When you started your business it was a simple (and cheap) decision to begin running your accounting and invoicing with Quickbooks. Intuit does lots of neat things and is responsive to it's small business base. One of those things that Intuit does is provide payroll services. Note this is a "service" not "functionality". As a service Intuit prepares checks, direct deposits, calculate taxes, etc., but some of the work is still left up to the user, such as filing and paying taxes.

The problem is that your business isn't small any more. You have some complex issues to address such as managing your inventory and supply chain, quickly and efficiently processing orders for your customers, tracking your cash flow - maybe you even have manufacturing or production issues to address. Quickbooks is no longer able to keep up with the complexity, size and speed of your business.

A key step in a business management solution (ERP) selection process is to prepare a needs analysis. I often see "payroll" classified as a critical need. Don't get me wrong paying your employees is definitely a top priority, but it really shouldn't be part of the selection criteria. The "service" part of payroll is far more important than the "functionality" piece. 

Payroll service is a very competitive market (ADP and Paycheck being the current leaders) producing low prices and good services. Your payroll provider will be able to handle every aspect of your payroll needs, including giving your employees access to their own information (Pay stubs, W-2's, etc.) over the web.

The data provided from you payroll provider can be easily (even automated) imported into virtually every current technology enterprise class accounting and business management solution. The result is you get the best of both worlds; competent comprehensive payroll services and a complete picture of your payroll costs reflected in your enterprise solution.

Developing a needs analysis is an important step in the ERP selection process. In general, the Intuit/Quickbooks payroll model isn't replicated in the enterprise class solutions for the reasons outlined above. You should take this into consideration when developing your ERP selection criteria.

Since our customers and prospects still want an integrated approach to payroll, we partnered with ADP - the leading payroll provider, to deliver the payroll functionality to xTuple. So we can now answer "Yes, xTuple does payroll". Using ADP's web portal you can have all the payroll functionality you require (direct deposits, employee website, tax payments, reports, etc.) and the results are automatically reflected in your xTuple general ledger.

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