New technology makes payroll systems redundant

More companies are closing down their own payroll systems and moving to the cloud, where customized template solutions are offered as a service and ensures that wages fall on time and are always adjusted in relation to new legislation and changes to legal agreements. In addition, the solutions ensures that GDPR is complied with and that safety is top notch.

For most companies, the routine settlement of wages is not a core process in the daily life – right up until the wages are not paid on time, or there are other errors in the wages – because THEN it suddenly becomes a core process. Problems and errors in the payment of wages have a negative impact on the company and its employees.

That risk reduces more companies with cloud-based template solutions adapted to the company’s needs, where the supplier takes responsibility for right and correctness in relation to regulatory changes and new legal agreements.

Supplier provides legal update

%22We are moving from a situation where companies with their old %22on premise%22 solutions, which are often hosted or located on local servers in the basement, are responsible for implementing updates, to a new era where law and legal adjustments takes place automatically. In this way, the company’s IT people will no longer have to follow up on a new holiday law or adjustment of tax-free mileage allowance from 2.48 to 2.54 per. kilometers driven.%22

This is explained by Mads Eske Jessen, partner in the SAP house 2BM, which implements and operates cloud-based payroll systems, of which KMD Payroll Cloud is the most widespread in the Danish business community right now.

A protected cloud environment

The development takes place as companies generally put more of their employee master data, their salary and terms in the cloud with new cloud-based HR management systems.

It has several benefits to go into the cloud with its payroll and HR systems.

“It is located in a protected cloud environment, where the supplier is in control of current legal changes and compliance in relation to GDPR. Through templates, it is possible for the company to adapt the solution to its own needs, and the suppliers make sure to update the payroll system with the required adjustments. In addition to a more efficient payroll administration, there are also savings on internal IT investments and emergency preparedness. At the same time, they also benefit from the great reach of the service. The supplier’s improvements for one customer, benefits all customers with the same need, and the continuous improvement of the system is the individual customers’ assurance that the wage settlement is always up to date,” says Mads Eske Jessen.

Scalable solutions

Another advantage of cloud- and template-based payroll systems is that implementation is significantly faster than before.

“I have been helping companies in this area since 1997, and I think the implementation of my first SAP payroll system took a year and a half. It was really big and complicated. Now the implementation time is typically 3-5 months. The complexity is basically the same, but economies of scale and standards mean that time and expense are much less. At the same time, the solutions are scalable, as you pay per payslip, and it is a help for companies that are either in seasonal industries or for other reasons need to turn down the payroll system.”

Fewer payroll experts in the market

But competent payroll employees and accountants who can handle the cloud-based payroll system, that the the company has chosen, do not hang on the trees these days, and payroll settlement must meet certain deadlines, which is why holidays, maternity leave and illness can still be a challenge.

Therefore, several companies receive external assistance when faced with a challenge, or they choose an outsourcing strategy, and place the overall responsibility on an external partner who handles their payroll function.

2BM has established a service center where payroll consultants help 2BM’s SAP customers to operate the payroll function so that the potential is utilized optimally and the payroll is settled on time and correctly – we do this, among other things, for customers who use KMD Payroll Cloud.

%22Regardless of the supplier of the payroll system, the payroll function is changing. The next generation payroll system offers efficiency, risk minimization and an overall payroll function as a service. A local payroll function no longer has a central significance in daily life, and yet it is still absolutely crucial for companies’ compliance and employer branding,” says Mads Eske Jessen

Mads Eske Jessen

Partner, 2BM

“Regardless of the supplier of the payroll system, the payroll function is changing. The next generation payroll system offers efficiency, risk minimization and an overall payroll function as a service.”

Article is also published in Jyllandsposten 06/09/2021

Karina Vittrup

Karina Vittrup



Steen Bjørnskov

Steen Bjørnskov

Principal Consultant


Mads Eske Jessen

Mads Eske Jessen

Partner, Head of HCM


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