On Payroll: Talking with Mark Newsome, Sr. Corporate HR Manager at McKee Foods

McKee Foods Corporation, Workday customer #7, worked closely with us in the development of our Payroll product and on 2nd April 2009 they went into production on both Workday HCM and Payroll. McKee replaced an on-premise ERP system and is now using Workday to process more than 350,000 paychecks/year for 6,500 empoyees in 7 plants across the U.S.

I had the good fortune to spend some time talking with Mark Newsome, Sr. Corporate HR Manager at McKee Foods Corp about their experiences with Workday and some of the new capabilities he sees as vital to McKee′s ongoing business objectives.

AOT: It sounds like you′ve been running on-premise HR and Payroll solutions for the past 14 years. What were your early impressions of Workday and how would you compare us to the prior system?

MN: Cost is a huge factor. Our ERP system was increasing in cost and our expectations were that we would more than double our costs in our next upgrade. We simply couldn′t sustain those increases any longer.

Upgrades are a great example. Before it would have taken months and significant amounts of money invested in consultants to complete an upgrade. We just completed the update from Workday 7 to 8. It took one-and-a-half weeks, no consultants, and no cost, resulting in both improved performance and functionality. That′s a great payback for us.

AOT: How about the basics: the application, business processes, etc. The meat and potatoes of HR?

MN: Workday greatly simplifies our internal processes. Let me give you an example:

As you know, we were using a traditional on-premise ERP, which served its purpose very well for us for a very long time. In the old world, if we had internal job movement, a manager would have to send a pay rate change to HR and HR would manually input that information into the Payroll application. Due to internal policy, Payroll would have to enter all salaried pay rate changes. Also in the old system, if someone put paid time off (PTO) into the system of record, and then decided not to take the day off and forgot to change it, then we′d have to make a payroll adjustment manually.

In our new world, with Workday – whether it′s a pay change or a PTO transaction – if it is entered in the HR system, it just happens in Payroll. We simply make that adjustment online, with no intervention from Payroll. It is all the little things like that – better processes, better automation, etc. – that give our HR team back the time to work on more strategic projects. And our information is more accurate too.

AOT: In a recent case study, you referred to our Payroll calculation engine as “revolutionary.” Can you talk a little about that?

MN: In the past, for payroll, it took quite awhile to make individual pay calculations, while running Payroll processes. Now, it′s very quick. Now we can adjust and run an individual pay calculation in a matter of seconds on the fly. Those quick and easy individual pay calculations keep us from having to re-run the entire organizational pay calc each time. Those individual pay calcs took much longer to complete in our old system.

AOT: Like so many companies, a majority of McKee employees don′t use a computer in their day-jobs. Workday puts a lot of focus into building highly intuitive solutions. How have all the employees taken to logging into the system?

MN: With our previous application, employees had the ability to log into the system and look at their own pay information. Since the majority of our employees are hourly and don′t have access to computers in their immediate workplace, they didn′t access the system for the most part. They just didn′t take advantage of it.

With Workday, we really wanted people to get into and use the system. One decision that has really helped this was to no longer issue paper pay slips, and people have logged into Workday with great frequency. In the first week, we had more than 5,000 employees log in and for the most part and we have continued to average in excess of that number every week; it seems our employees have really taken to the new environment. More than 95% of our employees have logged into and used Workday…I think most would call that a success.

As an organization, we are very focused on being green now and employees understand and support the fact that we can make a significant impact with this small change in behavior. We′ve already talked about the fact that we′re now saving a tree about every two weeks. Extrapolate that over a year, just in pay slips alone. Not printing payslips saves money too, which goes directly to our bottom line. And that speaks to employees because all of our employees are involved in profit sharing.

AOT: What advice would you share with a peer that is weighing the pros and cons of Workday with those of a traditional on-premise solution? And please, don′t pull punches!

MN: We were a little bit taken back by the amount of work that was necessary for report writing. However, since we were one of the early customers, we spent a lot of time there and helped pave the way so it will be easier for others.

On the pro side, we were one of the first customers on Workday Payroll and we were able to process payroll on the first shot. We only had a couple of people that didn′t get paid right on the first cycle and I′m pretty sure that was attributed to user input errors.

Also, in our prior environment we hadn′t put in place workflow or automated business processes. It required additional custom code that we would have to manage through upgrades, and it wasn′t feasible for our IT staff to undertake the development and maintenance. With Workday, workflow is integral to the system and we′ve been able to leverage standard business processes with just a few tweaks, all of which are done via the Workday UI. This has allowed us to implement a full set of business processes, which would have been impractical before.

AOT: As a pioneering customer using a multi-tenant payroll system, what are your thoughts now on Software as a Service vs. on-premise?

MN: The SaaS experience has been absolutely great. All the database administration and hardware and maintenance stuff — we don′t do that anymore. It′s all out the window. One aspect specific to payroll and SaaS is performance. With our prior system, performance tuning was an ongoing IT project, something that we worked on all the time over more than a decade. With Workday, we saw a significant improvement in payroll processing performance between updates 6 and 8, and there is additional tuning going on in the background all the time. That delivers a lot of value for us, and it eliminates an ongoing IT project. That′s a very good combination.

For more details on McKee′s Workday deployment, check out this recent writeup and video interviews on Workday.com.