1. Global Payroll – Implementing an Aggregator Model Lessons Learned Joe Almodovar, Senior Director Global HRIS, Payroll, and Knowledge Management – AT Kearney September 2015

2. Bio…………. Senior Director of Global HRIS, Payroll and Knowledge Management for A.T. Kearney, which is a global management consulting firm located in 40+ countries – 3500+ employees – one billion in sales. 25 + years experience in the HRIS industry as a practitioner and consultant. Some past employers include Kraft Foods, Sears, Unisys, and the Hunter Group (Cedar Crestone/Sierra).

3. Disclaimer …….. The information shared today is based on my unique experiences. Some, none, or all of the information may be relevant to you and your environment. 3

4. Presentation Roadmap  Change Drivers  System’s Environment  Vendor Selection  Implementation  Lessons Learned  Q&A

5. Implementation Jammed Pack with Surprises!!! Lessons Learned

6. Change Drivers…….. Asia finance Controller believed we needed stronger payroll controls Each country payroll was managed by a local vendor with no direct visibility by regional or global management into actual paid gross to net salaries There was no integration of the HR system and payroll systems, leaving room for payroll leakage… e.g., ghost employee General ledger journal entries were manual and only captured paid gross – again no ability to report on gross to net No controls around bank files, room for additional payroll leakage… e.g., changing the account numbers, amounts, etc… The entire process required triple data entry: HR system, local vendor system, and the general ledger system

7. Mandate……… Consolidate payroll vendors and improve payroll controls Move from multiple payroll vendors to one, where we can leverage our size and realize cost savings, and improve overall efficiencies Review and modify payroll processes to improve controls Build integrations for added controls and improved reporting capabilities Transition payroll function from finance to HR, which aligns with other regions and to the function which has the best visibility, and generates, the majority of payroll related actions We want it now…. Of course

8. The HRIS Environment NOMS OPMSXISMyData Fin Data Mart Other(s) EMAIL Other PeopleSoft Custom Java Front-End Systems CRSHRFM ESS PPSMSPS PS NA Payroll Successfactor Learning SaaS Taleo Recruiting SaaS HRIS Integration in Progress

9. Non-US Payroll Environment NOMS OPMSXISMyData Communicated Via Separate Email, Fax, etc… No interface Japan China Singapore AustraliaEtc… Because the interaction with each vendor was manual the Firm had no visibility to what was actually occurring with each country’s local payroll, and required manual GL entries each month Each Country Outsourced To Different Payroll vendors Local A.T. Kearney Offices

10. Payroll Aggregator (PA) Model……….. NOMS OPMSXISMyData Japan China Singapore AustraliaOther The PA provides a “single” point of contact for your firm and manages local payroll vendors, including contracts, SLAs, confidentiality agreements, etc… The CUI is the single point of entry for payroll input, registers, status, GL reports, etc… The PA will process the country payroll in-house or partner with a local payroll vendor Local A.T. Kearney Offices

11. Payroll Aggregator (PA) Model…..… Phase II..……. NOMS OPMSXISMyData Japan ChinaEtc… To add tighter controls, increase efficiencies, and improve the User Experience we plan to build integrations between the global HR/Fin systems and the PA HR Trans (Out) Gross to Net (in) GL Summary Data (in) Local A.T. Kearney Offices

12. Vendor Selection I, along with an Asia HR Director, conducted the vendor selection (geographical distance challenges) Used various sources to form the initial list Gartner Magic Quadrant Freddye Silverman’s Caveat Emptor Presentation Colleague Referrals Drafted RFP and invited 7 vendors to propose iipay – WithdrewCloudPay* NGA – Initial Response OnlyPay Asia – Withdrew CeridianADP* Talent 2* * Denotes Finalist After initial demos 3 semi-finalist selected, 2 short list finalist selected after additional deep-dive demos and onsite visits Approximately six months from RFP draft to contract signing

13. Implementation…….. Ten countries over an 8 month period Staggered go-lives based on availability of payroll aggregator(PA) or local vendor implementation team, A.T. Kearney local Fin/HR team, and fiscal calendar year – requested draft schedule before contract from vendor Two months of payroll parallel testing in each country, except Japan which had three months due to its complex pay and tax regulations Each country had a different vendor team who partnered with the local A.T. Kearney country HR/Fin to gather requirements and review test results. Testing nearly exclusively within vendor domain Implemented process changes that tightened controls leveraging PA model

14. Lessons Learned….. Before you start drafting your RFP and initiating your vendor selection, process map “each” country’s current payroll process in “detail”….. Assumed only core payroll process in each country Added Non-payroll Services The added non-payroll services greatly complicated the disconnect of the existing payroll provider and the implementation overall

15. Lessons Learned Vendor Selection Know your long term outsource/aggregator strategy upfront it may impact what vendors you consider Don’t limit your vendor search to global household names, consider regional players who may have stronger regional knowledge and operational presence Get recent references and also those on second contract renewal During initial demo carefully review common user interface used by aggregator Take a strong negotiating position during contract/pricing discussions SLA – read the fine print carefully, add additional language to if needed Insist on knowing the name of the local payroll partner for each country, research the partner, and also try to obtain turnover % Can they manage expatriates (shadow payroll), money movement, pay in US$, tax fillings, mass retro calc, etc…?

16. Lessons Learned Vendor Selection - cont If practical, schedule an onsite visit of the finalist payroll centers – you don’t want a payroll server in a closet Request an example of every payslip, GL report, pay registers, etc… (will vary by country) for each location and walk through with each of your offices, don’t rely on your local teams to carefully evaluate each item Have vendor share how each payslip is delivered in each county Obtain a time and cost estimate for each critical customization upfront, some local vendors may not be able to accommodate Have the vendor walk you through in detail their implementation methodology – ensure consistency and thoroughness Discuss in detail their ability to support your integration requirements, including timing to and from your ancillary systems

17. Lessons Learned Implementation Each country represents a unique project with its own project plan, issues list, change management, etc… must be clear to all Ensure local team provides current payroll provider with proper termination notice – also be clear about historical pay data strategy, will vendor support? Review the requirements template with each country’s implementation team and your local team – need to ensure consistency and clarity Establish what the baseline functionality/configuration will be for all countries, then add unique local requirements during meetings Attend the requirements meetings between the vendor and your local payroll teams… can be a challenge when conducted in local language Have vendor draft a quality requirements document for major customizations, walk all parties through the doc

18. Lessons Learned Implementation - cont Ensure the vendor and your local teams are clear on payroll cutoff dates and related calendar pay activities – will tweak post go-live Testing – vendor will test behind its firewall, establish go/no go criteria and set expectations with your local teams – who pays for added runs? Have vendor hand-hold your local teams during first live payroll, to include which reports are critical to approval and close processes Walk your local teams through problem escalation process with the vendor. Verify all contact numbers, emails, etc… before go-live Don’t hesitate to establish more frequent status calls between the vendor and your team if things start to derail Local vendors were more responsive to resolving issues than aggregator

19. Contact………. Joe Almodovar Joe.almodovar@atkearney.com Thank You for Attending……

20. Questions?……….