Key Factors and Challenges in Implementing Payroll and HR Software

Source: Äri-IT Spring 2025

Author: Birgit-Kai Kiuru, BCS Itera HRM Consultant

Anyone who has been involved in software implementation at least once knows it can become a complex undertaking.

Complex doesn’t mean bad; it simply requires more thought and planning, and it’s beneficial to learn from the experiences of others. This is especially useful if you have no prior implementation experience or if it was many years ago.

In this article, we will discuss the most important choices and challenges in implementing payroll and Human Resource Management (HRM) software.

A Software Project Must Have a Purpose

The goal of implementing new software should never be merely adopting a newer or more modern system. Instead, it must solve a problem that prevents the company from achieving its strategic goals (such as the growth of the company’s workforce and business). Before even starting the software implementation, the objectives and the success metrics derived from each objective must be agreed upon. Otherwise, it will not be possible to evaluate how the project actually went later on.

Management Interest and Support Are Essential

A software implementation project is a significant investment, and the decision to start the project is usually made by members of the management team. However, management’s involvement should not end there. A management representative plays a key role in internal communication. Resistance to new software is common in almost every company, even when people are not actually satisfied with the old solution. Therefore, it is important to repeatedly explain why this decision was made and how the new software and processes will support the company and its employees.

Management also has a significant influence on the project team, who need to understand that the project is important to the company. If management does not show its support and the project manager cannot get the necessary decisions from management to continue the project, the project team’s focus may shift elsewhere – the project drags on, costs increase, and there are no results.

The management representative must be aware of the project’s status and therefore must participate in the monthly project steering committee meeting, which includes representatives from both the company and the implementation partner. This ensures the flow of information and that it reaches the right people at the right time so that necessary decisions can be made. These steering committee meetings require open communication from both sides, as hidden problems tend to morph into even bigger problems in the next phase.

The Project Team Won’t Fly Without Motivation

An HRM project team typically includes the company’s HR manager, chief accountant, accountants, HR specialists, and sometimes an IT specialist. It cannot be assumed that every employee will embrace this role with bright eyes and excitement. If employees are simply told that there will be a new project, but the goal of implementing the new software is not introduced or explained, nor is it clarified how it all affects key and end-users, then resistance can easily arise. If an accountant or HR specialist fears that the new software may threaten their job, it is difficult to get them to make changes that affect them without explanation. If this threat is real, management should address it early on.

HRM Processes Need to Be Analyzed

“Our payroll accounting is simple and standard” is a sentence we used to hear quite often during the negotiation phase of HRM projects. Separate analysis workshops were not agreed upon because it was assumed that a standard, legally compliant solution would be implemented. When the project started, many specific requirements emerged, which meant finding resources for additional work. To avoid such situations, analysis meetings involving individuals who know the existing processes in detail must also be conducted for HRM projects. The key user and project manager must notice if colleagues are stuck in their current processes and need support to look at things with a slightly fresher perspective. The scope of the project will also become clear by the end of the analysis.

The number of analysis workshops depends on the company’s size, industry, and the number of modules being implemented. If the solution is related to a production solution, an interface is created, or time tracking systems or a self-service portal are implemented, then the scope of the analysis needs to be increased. For large and complex solutions, a design phase is essential.

It is also necessary to analyze what process is actually needed at all, so that implementation time is not wasted on unnecessary things. For example, does a vacation request approval process really need four people? Does the company need to use 48 different pay types? These discussions can be difficult, but final decisions must be made no later than during the implementation – not because the new software cannot calculate these pay types, but because the complex payroll system that has developed over the years has lost its purpose in relation to the company’s development. When selecting personnel data to be transferred to the new software, a critical approach must be taken – it is not reasonable to collect employee data simply out of habit, even if it existed in the old system.

The Project Team’s Resources Are Not Unlimited

Without a plan, it cannot be expected that an employee will be able to handle both their primary work and project-related tasks. If the employee’s regular workload remains the same, they will have to work overtime, or the project tasks will be neglected. It is worth considering in advance whether some of the primary work could be temporarily reorganized or if support staff can be involved – for example, a temporary employee, an intern, or a service provider. Extending the project duration can also be considered, but this should not mean an indefinite delay.

In a software project, it is important not to forget that the technical skills of key users can significantly impact the project’s progress. Learning new software comes quickly and naturally to some, while others need repeated support. It is important that people are not afraid to say when they don’t know how to do something, because it is even worse if this becomes apparent during the first payroll calculation, for example. If the project manager and key user know their people, they can plan repeated training sessions with a consultant or the key user.

In the new software, the quality of personnel data directly affects the accuracy of payroll accounting, so it is necessary for the HR and payroll teams to work closely together and think together about how work can run more smoothly in the future. Therefore, accountants should also partially participate in the personnel data workshop, and HR specialists should know what data is important from a payroll perspective. This makes it easier to implement common work processes.

Summary

• Define the goal and metrics for the new software implementation project.
• Conduct a thorough analysis to avoid unexpected additional work.
• Ensure active involvement of management throughout the project.
• Select the right people for the project team and involve additional resources if necessary.
• Share information about important decisions and changes.
• Understand that the success of the project depends on the entire team.
• As a leader, help those who are struggling to cope with the changes.
• During workshops, focus on the workshop topic; hold longer substantive discussions outside the workshop.
• Be prepared for ongoing adjustments.