Cloud based payroll - what you need to consider

Michael Smith explains what Cloud-based payroll solutions can offer SME business owners.

Michael Smith explains what Cloud-based payroll solutions can offer SME business owners.

Business and payroll needs are constantly evolving, as is the technology that serves those needs. Cloud computing has exploded onto the scene and Australian businesses are leading the way in migrating to cloud-based services, but for many SMEs, cloud technology and its application for payroll services is not fully understood.

With cloud technology, SMEs now have access to capabilities that they require but may not hitherto have had the necessary skills set to manage. So, is moving to the cloud the right option for every business? 

Each business and payroll department faces its own set of challenges that lead the business to consider the prospect of migrating to the cloud. Some of these include internal pressures and budgets facing IT departments, lack of internal infrastructure to regularly process payroll, as well as cost and how that cost is valued – expense vs. opportunity. For many SMEs who do not have the capabilities to keep pace with software nor have the budgets to keep up with managing the costs of IT, migration to the cloud is often an easier move to commit to as it provides them with enterprise-scale IT capability without the price tag.

However, there are still some very valid considerations SMEs must examine before migrating their payroll to the cloud. Every business must ask the following questions of any cloud provider before signing on the dotted line:

  • What experience do the provider have in data management for payroll?
  • What is the provider’s experience in payroll database, applications and the relevant updates?
  • What are the service level agreements?
  • What is the disaster recovery plan?
  • How will my data be continually protected?
  • What happens if the office loses its internet connection?
  • Where will my data be stored?  What support is available?
  • What happens if I decide to move to another provider? Can I easily access and move my data?


Discussing these areas with your potential provider will help identify their capabilities and experience in managing payroll services, and provide peace of mind that your data is in safe hands. Here are some typical concerns that outline how migrating to the cloud can help increase business productivity and bottom line.

Security: Securityis one of the greatest apprehensions businesses have in regards to using cloud technology. Trusting valuable data to a third party can be daunting, however cloud technology stores data in a secure environment with the most updated firewall and anti-virus protection. With a cloud service, small to medium sized businesses receive a dedicated team of professionals in an enterprise grade security environment with an affordable budget. 

Performance, availability and mobility: Cloud technology offers secure 24/7 access to data that is always available and backed up. Businesses can login from anywhere at any time through a secure system. The business passes the control and management of backups and disc space to a cloud provider and no longer has to worry about shrinking disc space or if the data is current. Workflow is never interrupted. This also applies to systems like Employee Self-Service (ESS), where security risks are no longer an issue and employees can access their records safely and securely from any device at any time. Cloud software is able to handle a large amount of transactions in a short amount of time.

Infrastructure: With declining IT budgets becoming the norm, migrating to the cloud makes good business sense. IT departments are less and less able to manage the payroll IT functions and cloud technology shifts those responsibilities and the related risks off site and away from in-house IT. Using a cloud service also eliminates the need to maintain hardware and updates to infrastructure as they continuously purchase state-of-the-art equipment to ensure reliable performance.  SMEs are no longer responsible for the management of the application and their in-house IT department no longer has to manage accessibility to data, software upgrades or security patching 

Cost: Cloud technology is an operational expenditure that is controlled and capped and does not suffer from significant or surprising increases. In-house solutions carry higher setup costs, ongoing costs of software and hardware updates and higher monthly maintenance costs.

Data management, back-ups and disaster recovery: Cloud technology offers reliable and flexible backup and data management systems and gives SMEs peace-of-mind with a sophisticated solution that enables data to be accessed, restored or recovered with minimal down time in order to meet payroll deadlines.

Compliance: Cloud technology is tailored to the SMEs’ local market conditions to ensure compliance as required by the business. A credible cloud software provider will maintain a number of compliance accreditations to also ensure every user is complying with internal controls and regulations.

The argument for migrating to the cloud for payroll makes good business sense.  SMEs gain enterprise level computing capability for software applications and infrastructure that can continually grow and adapt to their business needs without the hefty price tag. Cloud payroll provides the reliability and assurance that the payroll function will continue to operate smoothly, with greater accessibility to data that is systematically backed up and all for a lower monthly cost. 

Michael Smith is Managing Director of Sage MicrOpay.

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