Hoping for the best, but preparing for the worse

It’s about now in this coronavirus crisis when everyone in a business still able to operate should be thanking their disaster recovery nerds and business continuity planners.

The CEOs and Chairs of organisations able to seamlessly and safely operate from a myriad of spare bedrooms around the country should be buying a nicely matured bottle of red for whoever was ahead of the curve and ready for weeks of lockdown.

The unfashionable areas of Business Continuity Planning (BCP) and Disaster Recovery (DR) are now coming into their own and the CFOs, CTOs and CIOs that had a plan in place can justifiably say: “We were hoping for the best, but we were prepared for the worst.”

Datacom’s Director of Payroll, Kevin Murphy, knows how to do both, and help others do the same.

Datacom’s Director of Payroll, Kevin Murphy, knows how to do both, and help others do the same.

“I’m working from home at the moment. That’s all part of our BCP contingency planning around Covid-19,” he told me recently when running through how Datacom works with its customers to run their most important processes in its cloud, including payroll.

It doesn’t get more important than payroll.

“If anybody misses a pay, it wrecks people’s lives. When people don’t get paid and their automatic payments fail, and then they turn up to buy gas the following morning and their card isn’t accepted…

if you pay people late, you really do wreck their lives,”

“It’s probably the most disengaging thing you can do is paying people late. And there’s no way that that those people are then focused on their job the following day. They’ve got all sorts of other things to sort out.”

Paying staff the correct amount at the correct time is more than just an operational issue. It can quickly become a reputational issue, as some companies have discovered to their cost this year before Covid-19.

Murphy is occasionally amazed at how bad some BCP and DR plans are around payroll.

“It’s not uncommon to find people who say….’look, if it all goes to custard and we can’t run our payroll, then we’ll just repeat last pay cycle’s payroll and upload the same file again to the bank,” he said.

It quickly becomes more than a head-slapping ‘D’oh’ moment.

“It means that all the people who were on leave at the time are on leave again. Anybody who got a bonus gets another bonus. If you got overtime or didn’t get it. There’s all sorts of errors. That takes months to clean up afterwards,” he said.

Murphy pointed in particular to New Zealand’s Holidays Act, which bases pay on averages over the last 12 months, which means errors are compounded.

Payroll disaster recovery and continuity planning in a post Covid-19 world is now more than just handling a building closure or power outage. It is all about remote working, and accessing all the necessary data, processing power and payment systems in the cloud.

It also means doing it safely and legally from a privacy point of view.

“Privacy laws have gotten an awful lot stronger in Australia recently and they’re getting stronger in New Zealand.

“Privacy breaches are a big thing in payroll because the data that we’re dealing with poses significant risks to the individuals of identity theft,” Murphy said.

That means ensuring staff are not storing sensitive data on local laptops and home computers, and that they’re accessing data and systems in the Datacom cloud that use multifactor identification and VPN protection.

Working from home can also add to the risks of incorrect payrolls, along with the complications around enforced leave taking.

“There’s a significantly increased risk of leave leakage, where people are absent and not reporting leave taken. So absence management just got a whole lot more complicated. And anybody who’s still depending on paper-based leave forms is going to have problems capturing all of that.”

Murphy encourages clients to move to cloud-based payroll systems to reduce the risks associated with having to constantly renew software machine by machine, and reduce the risk that key people may not be available to fix or run a system.

Datacom is particularly focused on its own DR plans. It runs from two sites that constantly replicate between each other, and now handles payroll for 15 percent of New Zealand’s workforce.

It moved into the cloud in 2000 and has built up its capacity to connect to both banks and tax offices, allowing customers to make payments to staff and PAYE payments to the Government seamlessly. It is becoming increasingly important as the Inland Revenue Department and the Australian Tax Office move to virtualize their systems to connect to businesses through intermediaries such as accounting and payroll platforms.

“Recently, both the ATO and IRD have introduced variations of payday reporting. In Australia they call that single touch payroll. But it’s essentially the same thing, where each pay cycle information needs to be provided to the tax agency. And if you’re running on our software, then that’s completely automatic. You don’t need to upload files to your gateway or anything like that. It just provides a higher level of automation.”

Cloud-based payroll and the consumption metering model that goes with it helps companies be more flexible with staff and operating costs.

“That’s really important to a lot of our clients. We’ve got quite large clients that are very seasonal. The horticultural sector, for example, have a massive workforce picking apples and tomatoes during a part of the year, and revenues drop at other times of the year, so it’s important that those costs scale as well,” Murphy said.