The cost of true cloud payroll solution can be measured by taking into account the differences between the solution, vs. traditional on-premises solutions.
In South Africa, most companies are tech-enabled, with the vast majority using desktop applications to manage their payroll. However, many organisations are embracing cloud computing technologies due to the cost savings offered, and the speed and agility at which services can be procured.
As businesses move along their cloud journeys, they need to ask themselves whether they understand the true cost of cloud versus on-premises solutions.
Cost factors to consider
The Covid-19 pandemic has put today’s competitive landscape under immense pressure, forcing organisations – from small and medium sized enterprises to corporate giants – to gravitate towards providing easy, secure, and accessible payroll solutions. Scalability and ease-of-use are critical to saving money and remaining agile. This means that rigorous research should be conducted before making any cloud vs. on-premises comparison.
Security used to be a compelling reason for organisations to go the on-premises route, however, this has changed. Good cloud providers have the best security tools and measures in place to ensure clients’ data is encrypted and protected at all times, helping companies achieve continuous compliance with data protection regulations. All this at no costs for monitoring, and organisations do not have to invest in best-of-breed security solutions, a cost-effective option for businesses.
At the same time, improved efficiency is a major factor and cost-saving distinction between on-premises and cloud options. A good cloud provider will generally provide integrated, automatic data back-ups and recovery. Your cloud provider is also expected to maintain software and hardware updates, ensuring that their customers always have access to the latest technology.
Measuring the cost of cloud
However, a key point when it comes to measuring the cost of cloud vs. on-premises payroll solutions is that cloud providers work on a software-as-a-service (SaaS) basis – charging a pay-as-you-go or per-user basis – meaning that the cost involved is significantly reduced. It depends on consumption. A true cloud product is single-instance and multi-tenant. You only pay for what you use, and it can be scaled up or down instantly as needed.
It is almost impossible to do a like-for-like costing. When a customer purchases an annual licence fee for a payroll product, elements including legislation costs, system feature enhancements, and maintenance of the software need to be included. All of that, plus scalability and redundancy, is already included with true cloud. This even before elements such as the company’s appetite for risk have been considered.
The flexibility and scalability of true cloud enable companies to instantly react to changing customers, markets, and technology requirements. It’s quite simple to work out the exact cost. It’s your payslip fee multiplied by your number of employees. You pay as you use on a monthly basis, making things easier from a cashflow point of view. No large upfront contract fees and zero hefty outlays for equipment.
The benefit of cloud is that if you look beyond the technology, particularly in a payroll environment where there are ongoing legislative and tax changes, the fact that these are dealt with immediately means the customer is always compliant and up to date. The benefits go beyond monetary value.