The Need for Parallel Testing
To obtain the most immediate results and best ROI from a new HRIS/payroll system, it is prudent to implement the system as soon as possible. It is doubly advisable to be sure that your payroll is accurate. Nothing demoralizes a staff faster or more deeply than late or inaccurate payroll. In addition, Federal and state tax agencies look very harshly at companies that under- or misreport their payroll taxes.
The surest way to guarantee that the new software is delivering the right results is to implement a parallel testing system that, as the name implies, will run payroll simultaneously, for several pay periods on both systems. The results are compared and any necessary modifications are made.
Planning Aspects
Parallel Testing is the most complex part of HRIS/payroll implementation and careful consideration should be taken in the planning steps to ensure the least amount of errors and aggravation. While the basic steps necessary to implement a parallel testing program can be quite involved, they are easily identified.
• Archive Data
All input and output data created by the legacy system must be collected exactly as entered. It is essential that there are no discrepancies.
• Re-enter Data in New System
The same data is then entered into the new system
• Run False Payroll on New System
The system is allowed to process the data without any further interruptions and the new output data is archived.
• Compare Results
These steps should be run over several pay periods and involve as many payroll variables as possible. The results from the legacy system and the newly installed HRIS are then compared.
As mentioned, these steps seem simple but proper planning is essential to coordinate the elements involved in the payroll process. Most notably, parallel testing planners should determine the pay cycles involved, who will be involved, any data conversion software needed, what parameters will be tested and the method for verification.
Some simple complications that should be considered are holiday and vacation pay, leave calculations, tax and retirement fund liabilities, and benefits contributions. As one can see, the process can be extremely detailed and is as complicated as the payroll system you are replacing.
Execution
The implementation of parallel testing on a new HRIS should involve the actual people who will be doing the normal payroll input. It should be run over several consecutive payroll periods with at least one involving a paid holiday. Most importantly, it should involve at least one major, executive stakeholder who has the ability to decide and implement any changes deemed necessary.
The verification process will involve the cataloguing of discrepancies that are inherent to the process but not the system and others that are directly attributable to the new system. Of course, the “legacy” issues can be resolved in the old manner but the new issues must be tracked down and the appropriate fixes implemented. The results are then communicated to the appropriate managers for review and further implementation.
A simple checklist for implementation is as follows:
• Adequately prepare the players and the environment
• Input the payroll test data for the pay cycle as if “live”
• Run the HRIS payroll engine and reserve the data
• Compare outputs and manage discrepancies
• Make appropriate changes to process
• Repeat the process through several pay periods
• Make final additional modifications
• Present results to HR or business owner and implement
Obviously, there are multiple complexities involved in following these eight steps. Still, they serve as a good framework for starting the process. As with any business procedure, the more initial planning that you do, the less complications, errors and modifications will be necessary later.
Parallel testing is time-consuming and resource hungry but is well worth the effort when converting your legacy payroll system. It eliminates far more problems than it creates. For a more in-depth look at this subject with some helpful observations and tips on implementation, read our article, “Payroll Software Parallel Testing.”
About the Author
Carolyn Sokol writes about issues that may affect small businesses such as human resources, hr management software, and HRIS programs. She is a founder of PEOcompare.com and contributor to compareHRIS.com, both of which help match businesses to the right HR or payroll service provider for their particular needs. Her background is in marketing and communications, employee education and training, development of policies and procedures and the ongoing delivery of outstanding customer service.