Integrated HR & Payroll systems explained – Guide to understanding features, costs and choosing a provider

Last checked and updated on 24 April 2022

If you’re in charge of HR & Payroll for your company, then you know that it can be a daunting task to keep up with all the different systems out there. It can be hard to figure out which system is right for your business – and even harder to find the best price.

In this article, we will break down all the different types of HR & Payroll systems, as well as the leading providers and their pros and cons. We’ll also do a pricing comparison so that you can find the best deal for your business!

What is an HR & Payroll system?

An HR & Payroll system is a software or tool that helps businesses manage their employee data, including payroll, time tracking, benefits, and compliance. There are many different types of HR & payroll systems on the market, each with its own set of features and benefits.

Is it the same as an HCM system?
No, an HR & Payroll system is not the same as an HCM system. An HCM system is a broader category of software that includes HR, payroll, and other tools such as talent management and learning management.

HR

Human resource management (HRM) is the process of managing people in organisations. HR includes the administration of employee benefits, performance management, and training and development.

Payroll

Payroll is the process of paying employees for their work. This includes calculating wages, withholding taxes and other deductions, and issuing payslips.

What are the business benefits of having a combined HR and payroll system in place?

There are many benefits to having a combined HR and payroll system, including:

  • Reduced administrative costs
  • Improved compliance with employment regulations
  • Streamlined processes for onboarding new employees
  • Better data visibility for making strategic decisions about your workforce

What are the different types of HR & Payroll systems?

The three main types of HR & payroll systems are on-premise, cloud-based, and hybrid.

On-Premise HR & Payroll Systems

On-premise HR & payroll systems are installed and managed on your company’s own servers. This type of system offers the greatest degree of control and flexibility, but it also requires a larger upfront investment and more IT resources to maintain.

On-premise systems are typically best suited to large businesses with complex HR and payroll needs, as well as the IT resources to support the system.

Cloud-Based HR & Payroll Systems

Cloud-based HR & payroll systems are hosted by the provider and accessed via the internet. This type of system is typically more affordable than an on-premise system, and it’s easier to set up and scale. However, you’ll have less control over your data with a cloud-based system.

The biggest advantage is that you can access your data from anywhere in the world. The biggest disadvantage is that you are reliant on the internet connection. If your internet goes down, so does your HR and payroll system!

Hybrid HR & Payroll Systems

Hybrid HR & payroll systems are a mix of on-premise and cloud-based components. This type of system gives you the best of both worlds, providing flexibility and control while also being easier to set up and manage than an on-premise system.

Hybrid systems are typically best suited to businesses of all sizes that have complex HR and payroll needs.

What type of system is best for my business?

The type of system that’s best for your business will depend on a number of factors, including:

  • The size of your business
  • The complexity of your HR and payroll needs
  • Your IT resources and capabilities
  • Your budget

If you’re not sure which type of system is right for your business, we recommend speaking to a specialist who can assess your specific needs and make a recommendation.

Are there any good alternatives to using a combined HR & Payroll system?

If you’re not ready to invest in a combined HR & payroll system, there are a few alternatives that can help you manage your employee data:

An HCM systemAn HCM system is a broader category of software that includes HR, payroll, and other tools such as talent management and learning management
A payroll systemA payroll system can help you automate the process of paying your employees
An HR systemAn HR system can help you manage employee data, benefits, and performance
A talent management systemA talent management system can help you recruit, hire, and onboard new employees.

How does an HR & Payroll system help with compliance?

A combined HR & payroll system can help you stay compliant with employment regulations by:

Tracking employee data: All of your employee data will be stored in one place, making it easy to track and manage.

Calculating taxes and deductions: The system can calculate taxes and deductions based on the information you input, ensuring that you withhold the correct amount from your employees’ paychecks.

Generating reports: The system can generate reports on a variety of compliance-related topics, such as employee hours worked and vacation days taken.

Popular HR & Payroll systems compared

What are the leading HR & payroll systems?

The leading HR & payroll systems are:

  • SAP SuccessFactors
  • Oracle HCM Cloud
  • Workday HCM
  • ADPWorkforce Now
  • Ultimate Software UltiPro
Name of systemProsConsPricing
SAP SuccessFactors✔ Comprehensive suite of HR tools
✔ Can be customized to meet the needs of any business
✔ Scalable and easy to use
✗ Expensive
✗ Requires a high level of IT expertise to maintain and configure
££££
Oracle HCM Cloud✔ User-friendly interface
✔ Robust set of features
✔ Excellent customer support
✗ Limited customisation options
✗ Not as scalable as some other systems
£££
Workday HCM✔ Simple, intuitive interface
✔ Flexible and easy to use
✔ Good value for the price
✗ Limited number of features
✗ Not as well suited for large businesses
££
ADP Workforce Now✔ Affordable
✔ Easy to use
✔ Good customer support
✗ Limited set of features
✗ Not as scalable as some other systems
£
Ultimate Software UltiPro✔ Comprehensive suite of HR tools
✔ Can be customized to meet the needs of any business
✔ Scalable and easy to use
✗ Expensive
✗ Requires a high level of IT expertise to maintain and configure
£££££
Best HR & payroll systems compared

What features to look for in an HR & Payroll system?

The features to look for in an HR & payroll system depend on the size and needs of your business. However, some essential features to look for include:

How to choose an HR & Payroll system for your business?

The first step is to identify your business needs. Do you need a comprehensive HR solution or just a payroll system? How many employees do you have? Will you need to scale up in the future? Once you’ve answered these questions, you can start evaluating the different systems on the market.

When it comes to choosing an HR & payroll system, there’s no one-size-fits-all solution. The best system for your business will depend on your specific needs. However, by understanding the different types of systems on the market, you can make an informed decision that will help your business run more smoothly.

Top 10 questions to ask yourself when choosing an HR & Payroll system

  1. How many employees do you have?
  2. How often do you run payroll?
  3. What types of employee data do you need to track?
  4. Do you need a system that can scale as your business grows?
  5. What is your budget for an HR & payroll system?
  6. What features are most important to you?
  7. Do you need a comprehensive HR solution or just payroll?
  8. What level of IT expertise do you have in-house?
  9. How user-friendly does the system need to be?
  10. What level of customer support do you need?

By asking yourself these questions, you can narrow down your options and find the best HR & payroll system for your business.

How to set your budget for HR & Payroll systems?

The cost of an HR & payroll system will depend on the size of your business and the features you need. However, you should expect to spend at least a few hundred pounds per month on a basic system. If you need a more comprehensive solution, you could end up spending thousands of pounds per month.

When setting your budget for an HR & payroll system, it’s important to consider the long-term costs. Some systems require a upfront payment, while others charge a monthly fee. You should also factor in the cost of training employees to use the system and the ongoing maintenance costs.

To get an idea of how much you’ll need to budget for an HR & payroll system, take a look at the pricing comparison table above.

Are there any hidden costs to watch out for?
When evaluating the cost of an HR & payroll system, be sure to look for any hidden costs. Some systems charge extra for features like time and attendance tracking or performance management. Others may have a higher monthly fee if you have a large number of employees.

To avoid any surprises, be sure to read the fine print and ask questions about any hidden costs before signing a contract.

What is the return on investment (ROI) for HR & Payroll systems?

The ROI for HR & payroll systems varies depending on the system you choose and the needs of your business. However, most businesses will see a positive ROI within the first year of using the system.

Conclusion

An HR & payroll system is a vital tool for any business, large or small. By understanding the different types of systems on the market, you can make an informed decision about which one is right for your business. Once you’ve selected a system, be sure to set aside enough money in your budget to cover the upfront cost and ongoing maintenance.

Now that you have a better understanding of HR & payroll systems, you can start shopping around for the right solution for your business.

Frequently asked questions

What is the difference between an HR system and a payroll system?

An HR system is a tool that helps businesses manage employee data, while a payroll system is a tool that helps businesses process employee pay.

How much does an average HR & payroll system cost?

The cost of an HR & payroll system will depend on the size of your business and the features you need. However, you should expect to spend at least a few hundred pounds per month on a basic system.

What is the ROI for HR & payroll systems?

The ROI for HR & payroll systems varies depending on the system you choose and the needs of your business. However, most businesses will see a positive ROI within the first year of using the system.

Are there any hidden costs to watch out for?

When evaluating the cost of an HR & payroll system, be sure to look for any hidden costs. Some systems charge extra for features like time and attendance tracking or performance management. Others may have a higher monthly fee if you have a large number of employees.

How do I set my budget for an HR & payroll system?

The cost of an HR & payroll system will depend on the size of your business and the features you need. However, you should expect to spend at least a few hundred pounds per month on a basic system. If you need a more comprehensive solution, you could end up spending thousands of pounds per month. When setting your budget for an HR & payroll system, it’s important to consider the long-term costs. Some systems require an upfront payment, while others charge a monthly fee. You should also factor in the cost of training employees to use the system and the ongoing maintenance costs.

What are some of the leading HR & payroll system providers?

Some of the leading HR & payroll system providers include Sage, CIPHR, and BrightHR.

How do I choose the right HR & payroll system for my business?

The best way to choose an HR & payroll system is to first assess your needs. Once you know what features you need, you can start shopping around for a system that meets your requirements. Be sure to compare the costs of different systems and read online reviews before making your final decision.

What are some of the benefits of using an HR & payroll system?

Some of the benefits of using an HR & payroll system include improved accuracy, efficiency, and compliance. Additionally, a good system can help you save time and money.

Are there any risks associated with using an HR & payroll system?

The risks associated with using an HR & payroll system include the potential for data breaches and cyber attacks. Additionally, if you choose a system that is not user-friendly, you could end up wasting time and money.

How do I get started with using an HR & payroll system?

The first step is to assess your needs and choose a system that meets your requirements. Once you’ve selected a system, be sure to set aside enough money in your budget to cover the upfront cost and ongoing maintenance. You should also factor in the cost of training employees to use the system.

What are some tips for using an HR & payroll system?

Some tips for using an HR & payroll system include taking advantage of automation features, using data to make informed decisions, and staying up-to-date on the latest compliance requirements. Additionally, you should always keep a backup of your data in case of an emergency.

How often should I review my HR & payroll system?

You should review your HR & payroll system at least once per year. This will allow you to assess whether the system is still meeting your needs and make any necessary changes. Additionally, it’s a good idea to review your system after any major changes to your business, such as an acquisition or downsizing.

What should I do if I’m not happy with my HR & payroll system?

If you’re not happy with your HR & payroll system, you should reach out to the provider and see if they can make any changes. Additionally, you can shop around for a new system or consider switching to a manual process.

Important – The information provided in our articles is intended to be for general purpose use only, and not advice for you or your business. We strive to publish accurate information, but encourage you to fact-check and seek expert guidance. We recommend that you always speak to a qualified professional to get advice about how to operate your business under your specific requirements and circumstances.