ISG Research is happy to share insights gleaned from our latest Buyers Guide, an assessment of how well software providers’ offerings meet buyers’ requirements. The Payroll Management: ISG Research Buyers Guide is the distillation of a year of market and product research by ISG Research.
In the ever-changing world of enterprise operations, payroll is a critical function that sits at the intersection of HR, finance and compliance. To say that payroll is complex is an
Payroll technology has evolved in response to new business models, a rapidly expanding remote workforce and the increasing demand for real-time, automated systems. As digital transformation in the workplace accelerates, enterprises are under pressure to adopt payroll systems that keep pace with regulatory changes and align with broader HR and organizational strategies.
ISG Research defines Payroll Management as the end-to-end administration of worker compensation across various geographic and regulatory landscapes, encompassing domestic, international, multicountry and global operations. Effective payroll management requires navigating the intricate web of local, national and international tax laws; labor regulations; and employee benefit structures. For domestic (U.S.) payroll, this means maintaining compliance with federal, state and local requirements. In international and multicountry contexts, payroll must account for cross-border complexities such as currency conversions, expatriate packages and jurisdiction-specific tax treatments. On a global scale, payroll management demands a unified approach that ensures compliance while providing centralized reporting, artificial intelligence-driven analytics and automation to reduce manual effort and minimize errors. Advanced technologies enable organizations to adapt to the dynamic needs of a diverse workforce, streamline processes and deliver accurate, timely compensation, regardless of location.
Keeping pace with regulatory changes—whether related to payroll taxes, overtime rules or benefits contributions—presents a major challenge, as failing to stay compliant can result in financial penalties, legal risks and damage to an organization’s reputation. Additionally, many enterprises are forced to manage payroll processes with limited resources, often requiring payroll teams to do more with less. This challenge is particularly pronounced for organizations that operate across borders or in multiple regions, where local expertise is necessary to ensure accuracy and compliance.
Data accuracy is of the highest importance when examining the topic of payroll. Payroll data must be precise not only for the sake of timely payments but also to meet compliance obligations. Errors in payroll calculations can lead to discrepancies that frustrate workers and may attract regulatory scrutiny. While many enterprises have turned to automation to help address these issues, the complexity of managing large-scale payroll operations means that technology alone is not always sufficient. Human oversight, thorough audits and continuous process improvements are often necessary to ensure payroll data accuracy.
Remote workforce strategies have introduced additional payroll concerns for many organizations. The shift to remote work, accelerated by global events, has created new layers of complexity. Payroll teams must now account for employees
Several trends have emerged in payroll, driven by the demand for more dynamic, real-time software. The demand for automation continues to grow as enterprises look for ways to streamline payroll processes, reduce manual interventions and improve overall efficiency. Automated systems that handle everything from tax calculations to compliance reporting are essential for organizations looking to scale payroll operations. While automation reduces errors and frees up valuable human resources, it also requires a payroll system that integrates seamlessly with other enterprise software, such as human capital management systems and time and attendance tools.
Another key trend is the increasing use of AI and machine learning in payroll. These technologies are detecting anomalies in payroll data, ensuring compliance with local laws and forecasting payroll expenses based on historical data. AI-driven systems help organizations reduce errors and mitigate compliance risks by identifying potential issues before they become critical problems. While AI offers promising solutions, it’s important to recognize that these technologies are still evolving, and enterprises must balance innovation with practical concerns about specific operational needs.
Additionally, the role of payroll within the enterprise is shifting. HR’s influence on payroll has grown as payroll increasingly intersects with broader HR functions such as worker experience, benefits administration and workforce planning. This shift highlights the need for payroll systems that integrate seamlessly with other HR technologies, providing a more holistic view of the employee life cycle.
Innovations in payroll technology are transforming how large enterprises manage this critical function. One of the most significant developments is the rise of cloud-based payroll systems, which offer scalability, flexibility and enhanced security compared to traditional on-premises systems. Cloud-based platforms enable organizations to manage payroll operations from anywhere in the world, providing real-time updates and ensuring that payroll teams stay on top of regulatory changes without delay. These platforms also allow for greater collaboration between payroll, HR and finance teams, ensuring that payroll processes align with broader business goals.
Another important innovation impacting payroll software is continuous payroll (or real-time payroll) which enables on-demand wage access.
AI-driven compliance is also transforming how enterprises navigate the complex web of tax laws and labor regulations. AI-powered payroll systems analyze local labor laws, apply them to payroll calculations and ensure that organizations remain compliant across multiple jurisdictions. These systems reduce the risk of human error and streamline the compliance process, freeing up payroll teams to focus on more strategic tasks. However, while AI and automation are providing new tools for compliance, many organizations are still grappling with the challenges of adapting legacy systems to today’s software.
Despite these technological advances, many enterprises are missing opportunities to capitalize on payroll systems for more than just processing payments. Payroll as a communication tool is often overlooked, yet it provides a unique touchpoint between the organization and its workers. Organizations can use payroll to communicate important updates, share benefits information or highlight key company initiatives. By integrating communication into payroll, enterprises engage workers in more meaningful ways, fostering a stronger connection between the workforce and the organization.
As payroll technology continues to evolve, the role of payroll within large enterprises is transforming. Once considered a back-office, transactional function, payroll is increasingly seen as a strategic pillar that impacts worker satisfaction, operational efficiency and compliance. Payroll teams collaborate more closely with HR and finance departments, ensuring that payroll processes align with broader organizational goals. This shift underscores the importance of adopting contemporary payroll systems that integrate with other enterprise systems, providing a more holistic view of workforce management.
Enterprises that fail to update payroll operations risk falling behind in an increasingly competitive landscape. By embracing cloud-based platforms, real-time payroll, AI-driven compliance and innovative communication tools, organizations streamline payroll processes and drive better business outcomes. The payroll systems of the future must be agile, adaptable and deeply integrated with other HR and business technologies to meet the needs of a dynamic and evolving workforce.
In an era where payroll is rapidly evolving from a back-office function to a strategic asset, the need for contemporary, integrated and scalable payroll systems has never been greater. As enterprises face increasing complexity, shifting regulations and evolving employee expectations, it is essential to rethink how payroll systems can better serve both the business and its workforce. Whether addressing compliance challenges, leveraging automation or seeking to enhance employee engagement, the next step in the payroll journey is to embrace innovation. Enterprises can transform payroll into a tool for operational efficiency and worker satisfaction by evaluating current processes; exploring new technologies like AI, real-time payroll or cloud-based platforms; and ensuring alignment with broader HR strategies.
The future of payroll is not just about processing payments; it’s about creating a more agile, compliant and worker-centered function that supports the long-term success of the organization. Now is the time to take the next step and make payroll a driving force for positive change.
The ISG Buyers Guide™ for Payroll Management evaluates software providers and products in key areas intended to explore all aspects of payroll technology, including core payroll capabilities, global payroll capabilities, international payroll capabilities, multicountry payroll capabilities, domestic (U.S.) payroll capabilities, IT capabilities, manager capabilities, payroll administration capabilities, payroll analytics, payroll strategies and process needs, integrations and overall support for worker pay needs.
This research evaluates the following software providers that offer products to address key elements of Payroll Management as we define it: ADP, Dayforce, Infor, Neeyamo, Oracle, Paylocity, SAP, UKG and Workday.
This research-based index evaluates the full business and information technology value of payroll management software offerings. We encourage you to learn more about our Buyers Guide and its effectiveness as a provider selection and RFI/RFP tool.
We urge organizations to do a thorough job of evaluating payroll management offerings in this Buyers Guide as both the results of our in-depth analysis of these software providers and as an evaluation methodology. The Buyers Guide can be used to evaluate existing suppliers, plus provides evaluation criteria for new projects. Using it can shorten the cycle time for an RFP and the definition of an RFI.
The Buyers Guide for Payroll Management in 2024 finds ADP first on the list, followed by Oracle and UKG.
Software providers that rated in the top three of any category ﹘ including the product and customer experience dimensions ﹘ earn the designation of Leader.
The Leaders in Product Experience are:
The Leaders in Customer Experience are:
The Leaders across any of the seven categories are:
The overall performance chart provides a visual representation of how providers rate across product and customer experience. Software providers with products scoring higher in a weighted rating of the five product experience categories place farther to the right. The combination of ratings for the two customer experience categories determines their placement on the vertical axis. As a result, providers that place closer to the upper-right are “exemplary” and rated higher than those closer to the lower-left and identified as providers of “merit.” Software providers that excelled at customer experience over product experience have an “assurance” rating, and those excelling instead in product experience have an “innovative” rating.
Note that close provider scores should not be taken to imply that the packages evaluated are functionally identical or equally well-suited for use by every enterprise or process. Although there is a high degree of commonality in how organizations handle payroll management, there are many idiosyncrasies and differences that can make one provider’s offering a better fit than another.
ISG Research has made every effort to encompass in this Buyers Guide the overall product and customer experience from our payroll management blueprint, which we believe reflects what a well-crafted RFP should contain. Even so, there may be additional areas that affect which software provider and products best fit an enterprise’s particular requirements. Therefore, while this research is complete as it stands, utilizing it in your own organizational context is critical to ensure that products deliver the highest level of support for your projects.
You can find more details on our community as well as on our expertise in the research for this Buyers Guide.