Ditching Legacy Systems: Why Moving Payroll to the Cloud is Beneficial

Article Written by Avery Phillips

While using the cloud to handle payroll is nothing new – it was already in use in 2011 – bigger companies have been slower to adapt than small businesses and startups. Let’s look at why companies would be better off following the fairly recent trend of ditching legacy systems and migrating to the cloud.

The Legacy System and Security

A legacy system is one that has been in use for longer than it should because it fits the adage of "If it’s not broke, don’t fix it." This means less work for your IT department. Or does it? 

The problem with legacy systems is that they can be very old. Big banks face aging IT systems that are costly to maintain, and some rely on a programming language, COBOL, that few people still know how to use. Some of these systems are decades old. This makes securing them a problem. They are often running older OSs that are no longer supported with still-open security holes. 

While even as early as 2015, about 93 percent of companies were using the cloud in one way or another, many are still running older systems.

WannaCry

This was how, in May 2017, the WannaCry virus ravaged the U.K. healthcare system. It exploited a weakness in old Microsoft software in order to lock systems and demand a Bitcoin ransom. The vulnerability allowed the virus to jump from computer to computer, encrypting more and more files for ransom.

However, simply migrating payroll to the cloud, trendy as it may sound, does not mean instant security. You still have the legacy systems and their hard drives where information was stored. Ontrack bought five dozen used hard drives in 2017 simply to see what was on them. Almost a third had personal information, including payroll accounts. It’s not enough to move from a legacy system; the legacy system, specifically the hard drive, must be also secured as well. This likely means completely wiping the drive before it is disposed of.

A Move Toward Convenience

Companies are trying to retain employees – particularly millennials, a demographic that has proven to be a struggle. To entice them to stay where they are instead of jumping the proverbial ship for a new job, companies are trying to improve quality of life in the workplace, and that means making things more convenient.

It’s easier to manage payroll when everything is in the cloud, and echecks improve accounts payable workflow. This not only reduces paper waste but also means both employees and outside accounts and bills are paid sooner than having to wait to go to the bank to cash or deposit a paper check. In short, it reduces check float time, which also helps manage the books at the company. 

Echecks are also invaluable in paying international employees. There’s plenty of red tape and laws that must be taken into account when paying international employees. Sending an echeck is far easier than a physical check, and a cloud payroll service will navigate the murky waters of international payroll law for you, making the process of actually paying employees much simpler. 

On the employee end, taking payroll to the cloud means better access to HR. They can access employee benefits and management software from their phone, tablet, or computer. This means increased employee productivity as they can rely less on the HR staff and more on the software. If they can put in a request for PTO in the cloud payroll system, they don’t have to physically talk to HR, saving them time.

Cost

Finally, the trend of adopting cloud payroll and making HR software available to employees has decreased the cost of running an HR department. There’s no expensive upgrade and maintenance, no installation costs, and no hidden fees. It’s all up front, and upgrades are baked into the service. 

Small businesses don’t have to worry about using software they are unfamiliar with, as the cloud-based service makes it easy. Larger businesses can more easily keep track of payroll, ensuring even international employees are paid properly and on time.

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About the Author

Avery Phillips is a unicorn of a human being who loves all things relating to people and their entrepreneurial spirits. Comment down below or tweet her @a_taylorian.