HR Transformation in Hong Kong through Success Factors, Oracle or Workday HCMs
Recently, it seems like everyone is rolling out Tier 1 HCMs (SAP / Success Factors, Oracle or Workday) in Hong Kong, due to the HR transformation initiatives of their US or European headquarters, or local HR initiatives. A lot of the HR teams we work with in Hong Kong aren’t aware of how the roll-out of the new HCM impacts them and what they need to understand and prepare for the roll out in Hong Kong. Apart from getting access to a shiny new system, one of the most important things to be aware of is how this will change your calculation of payroll in Hong Kong.
Processing payroll in Hong Kong using Success Factors, Oracle or Workday
From a Hong Kong perspective, one of the most important things to understand is that all of these HCM either:
- Have no payroll processing ability in Hong Kong (e.g. Workday); or
- If they support Hong Kong payroll (and wider Asia), purchasing the payroll processing system or module for Hong Kong will be expensive compared to your existing local payroll system.
This means that to process payroll in Hong Kong with a 1st tier HCM in a cost-effective manner, you basically have two options:
- Purchasing or maintaining a separate Hong Kong-based payroll system, then integrating the system with your tier 1 HCM and performing your payroll administration in-house; or
- Engaging a payroll outsourcing partner in Hong Kong and leveraging their system, integration and skills
A large number of HR teams looking for cost-effective HR transformation will engage with a payroll outsourcing provider in Hong Kong. Removing their team’s time spent working on payroll administration and leveraging the payroll service provider’s existing HCM, system integration and specialist expertise saves a lot of cost and gives them more time to focus on HR initiatives that change the business.
For example, given that most payroll service providers in Hong Kong include the payroll processing system in their service fees, the cost you would have spent on purchasing and maintaining a payroll system in Hong Kong and the integration with your tier 1 HCM can instead be used to give you more time by outsourcing your payroll processing.
How does integration between SAP, Success Factors, Oracle, Workday and a payroll provider in Hong Kong work?
SAP, Success Factors, Oracle and Workday have standard integrations that enable payroll service providers to integrate their payroll processing systems with Tier 1 HCMs, so that payroll service providers in Hong Kong can retrieve relevant information (such as new joiners, terminations, etc.) from the tier 1 HCM, process the Hong Kong payroll based on this information and also import the payroll system back into the tier 1 HCM.
There are a number of ways to develop the integration and the most common method is automated transferring of files through a secure middle server. In short, the tier 1 HCM is set up to automatically export any information that impacts payroll to a secure middle server. The payroll service provider then automatically collects the information and imports it into their payroll processing system and runs the payroll. Once complete, the payroll service provider can then export the information back into the secured server, where it is then imported back into the tier 1 HCM, to ensure that the HCM has a record of the payroll information or any finance reports, eg GL reports. See an example flow diagram below:
Selecting a payroll processing provider in Hong Kong
When selecting a payroll processing provider in Hong Kong, it’s important to do your homework and ensure your payroll processing provider is future-proof. Outside of your usual due diligence questions, here are some payroll specific questions you should include:
- Success Factors, Oracle or Workday integration – Can the payroll processing provider integrate with Success Factors, Oracle, Workday, or your company’s specific HCM? For which part of the integration will they take responsibility?
- Regional footprint – What is the payroll outsourcing provider’s regional footprint like? Are they going to be able to support you in most of the countries in which you operate?
- In-country support – Does the payroll outsourcing provider have in-country support? Or is the support going to be offshored to cheaper locations, e.g. India or the Philippines? Can you physically meet someone if needed in an urgent situation? Having in-country support gives you the peace of mind that you can always reach a local payroll expert when needed.
- Data hosting and security – From where will the payroll data be hosted? How secure is the data? Does the provider have the security accreditation, e.g. ISO27001?
- Value added services – Does the payroll service vendor provide any additional value add HR services, such as employment visa applications, EOR/dispatch employment, recruitment in Hong Kong? Having a single HR service provider can greatly simplify the outsourcing of your HR administration.
Identifying a payroll provider is an important part of your Tier 1 HCM roll out in Hong Kong and finding the right partner will be a key ingredient in achieving your HR transformation.