Payroll, Technology

The Future Of Payroll

Last Friday (25/9) I was lucky enough to attend and present at the 2015 Australian Payroll Association (APA) annual conference at the Australian Technology Park in Sydney.

Once again, Tracy and the APA team put on a super event. With 3 streams of fabulous content & presenters, great organising and catering, and a wonderful batch of exhibitors showcasing the best of industry suppliers.

I was charged with presenting the topic “The Future Of Payroll”. In preparing my presentation, I was reminded of a quote by Peter Drucker:

“Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window”

Nonetheless with the following caveat, I gave the improbable a crack:

“This is an opinion piece, not a well referenced, academic, peer-reviewed, double-blind tested advancement of human thought”

I thought I would test my talents as an aspiring futurist, by documenting my presentation here, for review and judgement now and in years to come.

My Presentation:

The Payroll Profession is changing. As Heraclitus of Ephesus (Ἡράκλειτος, Herakleitos; c. 535 BC – 475 BC) best put it:

“Nothing endures but change…”

The Future Of Payroll will be a construct of multiple ingredients. I group the key influences on the future into 3 categories:

  • Technology
  • Compliance
  • Society


There is little doubt that technology is changing the world in which we live, seemingly faster than ever before. No aspect of business or society seems immune to the #DigitalDisturb that is occurring. There are numerous, inter-related technologies that are and will in the future transform the payroll process and profession.

The 10 key ingredients that I see in the changes that are coming are:

1. Maturing of Online applications:

I’ve been saying for some time that I see the word “Cloud” disappearing from marketing vernacular. Online is storming back into everyday use.

With 16% of Australian businesses now using online business systems, it is pretty clear where payroll technology will be deployed in the future.

  • The key is, online technology is no longer just a deployment method. Online applications are developed using modern, agile methodologies & technologies that just weren’t around when desktop apps were developed. The rate at which they evolve and adapt to user requests and compliance requirements are unheralded. The near future (some argue the present) will see the featureset of “Cloud” payroll systems surpassing Desktop & Desktop going the way of DOS
  • Historically, the payroll technology market has been quite segregated. Small business has used entry level applications like MYOB & Reckon. Medium-sized organisations moved onto mid-market systems such as Attaché & Micropay, whilst larger companies utilised enterprise systems such as TechnologyOne & NGA. As I see it, the way software is now developed and deployed, the future will see a significant desegregation of market, with large and small enterprises alike using the same systems. The barriers to featureset development are simply crumbling, with small teams of developers pumping out more functionality than much larger teams of the past making it more cost effective and timely to deliver highly feature-rich solutions.
  • Open APIs (technology that allows for the integration of disparate systems) and the immaturity of the online application space has seen the rise in what Doug Sleeter has termed “Chunkification”. This has seen separate systems for Payroll, ESS, HRIS, Rostering, T&A, Award Interpretation, LMS and alike. Whilst this trend may continue in the near-term, sooner rather than later I suspect we will see significant cannibalisation within the Payroll technology eco-system as solutions mature. In fact we are already seeing it with more and more HRIS, ESS, T&A etc functionality appearing within the core payroll technology and vice versa. In Australia we have already seen Timesheets Online rebrand as Astute Payroll and move from the add-on market to compete directly in the payroll space.
  • I predict that in the next 5 years, there will be significant mergers and acquisitions among technology providers as we see vendors race towards “All-In-One” solutions.
  • Conversely there will be more and more competition out of previously cooperative relationships. Recently we have seen Zen Payroll in the US rebrand as Gusto, as they try to distance themselves from their once key eco-system partner Zenefits. Gusto are adding benefits functionality which will compete with Zenefits, coinciding with Zenefits announcing they are adding payroll functionality, which will compete with Gusto.

2. Omni-channel Integration

  • The buzzword for 2015. Rather than:
    • your rostering system talking to your Payroll system; and
    • your HRIS system talking to your payroll systems but not Rostering; and
    • your Payroll talking to your accounting system; and
    • your Point-Of-Sale talking to your accounting system only; etc

Omni-channel integrations is where ALL systems integrate. Your POS system talks to your Rostering system for better rostering; your HRIS system talks to your Rostering system AND Payroll for more seamless on-boarding of staff and so on and so forth.

  • This is all made possible by the modern open API approach. Where vendors historically made integrations hard, they now realise making things better for the consumer, i.e. easy integrations, makes for better sales and support.

3. Integrated Financial Services

  • The ABA file HAS TO GO! It is an insecure text file format that is probably at least 10 years past its used-by date.
  • Off the back of omni-channel integration, the future is, confirm the payroll in the payroll application and immediately the data appearing ready for approval within the banking application. No exporting and uploading, just a seamless click of a button.
  • Integrated financial services extend into automated funding approvals. With better accounting and payroll integrations, banks can automatically assess risk and approve overdrafts and a like. This will provide business witheasier, faster cash management around funding the payroll.

4. Employee-centric design

  • Payroll technologies have generally been employer-centric. Its about making life easier for the payroll officer and the employer. I see the next generation systems being Employee-centric – how can we help the employee (as well as the employer).
  • Making payroll interactions easy, helps both employees and employers
  • Providing employees life-time access to pay slip history, rather than taking that away from them once they leave an employer and lose access to the ESS system, is EMPLOYEE-Centric.
  • Helping employees manage their lives: make it easy to research and swap super funds in the same place I get my pay slips.
  • Help me manage my life – all those things we keep in filing cabinets at home, why can’t they be where my pay slips are, online, secure and accessible from anywhere? My insurance companies, my utility provider’s details etc.Beyond social media to Life Management.

5. Mobile

  • The world is mobile. More people own a mobile phone than a toothbrush!
  • From a payroll technology perspective the future is mobile. Its all aboutease-of-use and 24/7 accessibility.
  • It starts with employee interactions with the Pay office (timesheets, leave, pay slips etc), but it will evolve to Payroll management. I see a future where “Payroll By Automation” (discussed later) means easy payroll management via a mobile device!

6. Internet of Things

  • More and more devices are coming online. From fridges to cars. Its all about collecting and utilising data.
  • T&A systems have been driving IoT for some time, connecting bundy and bio-recognition systems to the Payroll or rostering system.
  • So what other data do we collect in Payroll that might be automated by the IoT in the future?
    • How about online cars reporting mileage data direct to payroll?
    • Automated expense reimbursement, as expense management apps collect data from various devices back to the payroll system.
    • Deductions – such as personal use items might be automatic as the car or personal use item automatically sends the data back to payroll.

7. Artificial Intelligence

  • The current trend in payroll technology is “Payroll by exception”. Automating the elements of payroll that we know conform with what we expect, so can automatically be approved.
  • I see AI offering us “Payroll By Automation”. When a human deals with an exception, there is a certain process that they go through, such as contact the manager to confirm the exception is in fact correct. There is pure logic in how we deal with exceptions, so, at some level, there is no reason that logic can’t be replicated by an application. And the key with AI, is the logic does not have to be programmed, it can be learned, meaning no-one would have to set the rule to email a manager about an exception, the system would work out to do that itself!
  • This is already happening with Expense Management, with start-ups such as Xtracta out of New Zealand developing an app that is able to teach itself how to extract the relevant data from an electronic invoice or receipt.

8. Big Data

  • Data is the new battleground for competitive advantage
  • From the beginning of mankind until 2003, we have amassed 5 Exa Bytes worth of data. Today, we collect that much data EVERY 2 DAYS!
  • In the payroll technology space, it is all about analysing patterns andpredicting behaviours to better service the business and employee needs.

9. Crowd Sourcing & Prefilling

  • Crowd sourcing and prefilling of data is all about reducing duplication of data across entities (related or otherwise), speeding up set-up and increasing data accuracy.
  • Employees already see this with the ATO eTax.
  • Multi-tenanted online systems allow the vendor to aggregate data across clients. If several customers have already set-up a particular Super Fund with identical details, we can be pretty confident it is right. As soon as a new customer enters the USI, there’s no reason the data can’t be “pre-filled” as it has been validated by “the crowd” (I know SuperStream is now offering a centralised validation service for Super Funds, this was just used as an example).
  • Privacy Laws will be tested. Will we be allowed to prefill employees based on their TFNs? Or Contractors based on the ABN? Maybe, maybe not, but prefilling and crowd-sourcing will evolve and simplify data entry.

10. Block Chains

  • This is a very complicated area of technology that I must admit I am still coming to grips with myself.
  • A block chain is a distributed database that maintains a continuously growing list of data records that are hardened against tampering and revision, even by operators of the data store’s nodes
  • Best known for use with the Bitcoin online currency, block chains could have a major impact on payroll technology, as data becomes fully auditable and validateable (I just made up a word, but it just works right?), from source to end-point. This will help with “Payroll Automation” as data becomes more reliable and secure. I see this affecting timesheet collection and approval and expense management.


Obviously the future of payroll will continue, as it always has, to be shaped by compliance. Predicting what politicians and bureaucrats may or may not do, is probably like adding a blind-fold and ear muffs to Peter Drucker’s quote about the future (at the start). But nonetheless, here’s my crack at it with 8 key areas I see impacting on Payroll:

1. Single-touch Payroll

Well publicised ( and brilliant in its principle, I genuinely think a well-executed single-touch payroll roll-out would revolutionise Payroll in Australia. Its just a shame they are heading for failure!

  • GREAT idea, already poorly managed
  • Unrealistic deadlines
  • Decisions by committee don’t work (SuperStream should have taught us that!)
  • Focus needs to be on the User eXperience around the Payroll Process and the end-game data requirements, NOT the intermediaries and trying to appease all stakeholders.

2. Tax Reform

  • There is talk that an increase in and broadening of the GST base (say from 10 to 12.5 or even 15% like NZ), could be used to:
    • Eliminate state payroll taxes (and therefore the need to report on these); and
    • Reduce marginal tax rates

But hey, they said they would eliminate Stamp Duties when GST came in in 2000, but they never did! We can only hope.

  • The Henry Tax Review and several others have all highlighted the inefficiency and uncompetitive nature of Salary Sacrifice FBT concessions for the Not-For-Profit sector. These will be eliminated as a modern, capitalist economy cannot have an employee on the same pay, working the same job, in the same industry, being taxed more just because their employer is not an NFP.

3. Further Federalisation of Workplace Compliance

Personally, I’d love to see greater federalisation (i.e standardisation) to make operating interstate easier for business (and particularly the payroll profession)! Specifically:

  • Fairwork does specify Long Service Leave as part of the package, but due to the complexity (which payroll professionals are expected to deal with), 5 years on we have no move on federalised LSL. Maybe one day?!
  • Workers Comp. – with a more mobile workforce, managing workers comp policies across states is getting more and more complex, a good government would make employing staff easier and do something about a federal Workers Comp system.

4. Equal Pay For Equal Work

  • Any Australian business with more than 100 employees is already obligated to report to the Workplace Gender Equality Agency (
  • It seems common sense to predict that if gender pay inequality is being managed, how long until we see simply the “Equal Pay For Equal Work Agency”, with reporting requirements extending to:
    • Race;
    • Religion;
    • Sexuality;
    • Non-english speaking background; etc etc

5. Elimination of Tax Returns

  • New Zealand have already moved this way, its common sense that the ATO will follow suit. Simply the cost of managing small, individual tax returns exceeds the revenue it generates. Its inefficient and will go. This will mean:
    • The end of annual reporting (NZ are bi-monthly instead) – no payment summaries, no mag media file lodgement. Single-touch payroll should practically mean “real-time” taxation and reporting.
    • This needs tax once tax right approach to payroll as there would be no “evening out at year end”. I expect better compliance rules around deduction management, to ensure tax once-tax right.
    • Despite changes in recent years, I still don’t think the government has got the taxing of bonuses and commissions, nor leave loading right. I expect further changes to get to the tax once, tax right utopia.

6. Data Security, Sovereignty & Privacy Laws

Legislation is still lagging behind technology when it comes to online applications and data storage. With my prediction of ALL Payroll packages moving online, this is a major area likely to see more government controls.

  • I foresee new legislation around data ownership and responsibility for data history management – perhaps extending to vendors of technology, not just employers.
  • Sovereignty laws are still lagging. When data stored in off-shore data centres is used for espionage or acts of war, perhaps we will see vendors imposed with firmer encryption and data replication and security compliance rules.
  • Policies around liability for security breaches need further development – do we need to better protect companies from themselves, or is buyer beware enough? Who should be held accountable at law for security breaches and lax policies at client and vendor level.
  • BYO Device and Cloud-based data replication services are creating all sorts of head-aches for companies with staff off-boarding procedures. Will we see legislation to protect businesses from themselves, forcing them to have and maintain strict off-boarding processes around technology?

7. Transportable Bank/Super Account Numbers

  • Transportable mobile numbers transformed the telecommunications industry in the early 2000s.
  • There is no doubt transportable bank and superannuation account numbers would drive significant consumer benefits and competition in those sectors. It would also simplify the payroll process with fewer changes to set-ups required.
  • Long discussed, will it ever happen? I predict it will by 2030, unless a better solution (such as Block Chain technology), comes along!

8. Paid Parental Leave

  • The failure of the current Liberal government to stick to its promise of world-leading, generous, government-funded paid parental leave is a set back, but by no way the last we have heard of paid parental leave
  • Will employer funded parental leave to be legislated? I think in some form yes!
  • Will government funded PPL remain an employer responsibility? Surely not!?

Social impacts affecting Payroll

The expectations of the rising Gen Y (aka Millennials) workforce, will have impacts on the Payroll Profession into the future.

Gen Y (Millennials) & Gen Z

  • Tech. savy – Grew up with mobiles and the internet (and positive reinforcement parenting…)
  • Impatient
  • Career transient

Will drive how Payroll is delivered:

  • Expectations on how they interact with Pay Department – must be mobile, in real-time and easy “on their terms”.
  • Expectations extending to being paid in real-time. Why am I paid in batches – weekly, fortnightly, “’re kidding right?”. I work today, surely I should be paid today. And we are starting to see some companies moving toward real-time payroll. If we can automate the payroll function, why not?
  • More than money driven – what other benefits? I see salary packaging increasing in its relevance.

In Closing

I’ll close with the major, often overlooked point that MOST people who perform the role of payroll management in Australian businesses do NOT consider themselves Payroll Professionals. They are bookkeepers, admin managers, spouses etc. BUT, because their numbers far outweigh those that identify as belonging to the profession, we must understand that the key influences on the process of payroll outlined above, are going to be in consideration of these “amateur payroll managers”. I don’t see that as a negative, it just helps shape where the priorities will be.

So with that and everything else I have detailed in mind, the future of Payroll is difficult to predict as there are numerous influences that will help shape the future of the profession, but I see the key drivers being:

  • MORE automation
  • MORE employee-centric
  • Completely portable
  • Seamless / Integrated
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Matt Paff (BBus GAICD) is founder of Value Adders and a veteran of the Accounting, Payroll and broader B2B Technology industry. Matt’s resume includes time as GM at Attaché Software, one of the world’s longest surviving accounting software companies, as well as starting, growing and exiting a successful accounting technology & business process consulting firm. Matt has held advisory board positions with accounting firm Imagine Accounting as well as Governance technology start-up GovernRight. In his spare time, Matt also runs a RegTech start-up vSure. Matt is passionate about a practical, plain English perspective. He is known for being a straight-shooter and appreciated for his forthright, researched opinions.

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