2 Ways to Spot “Cloud Silos” and How They’re Costing You Money

Many small and mid-sized businesses are dependent on payroll, HR, and workforce management data housed within separate software silos.

Problem is…they don’t always play nice together.

Each silo has its own task, and draws from its own data-source, and while it seems like a great concept (after all, it’s the only way of making the process work years ago), in reality it’s laden with costly practical challenges.

Let’s take a look at the problems with siloed information and give you tips to spotting inefficient silos before onboarding a dated total workforce management solution.

Tip 1: Siloed Programs Will Lag in Populating Data Updates. 

Software silos are infamous for inconsistencies, which are problematic when needing to report information to places like the IRS or Social Security Administration. For example; Your employee Jane Doe got married and changed her name to Jane Smith. Her name was changed in your siloed HR system, but due to a “timing issue” was never updated in your siloed payroll system. It’s now January and Jane Smith receives her W2 which says “Jane Doe.”

Sounds like an overly obscure issue, but as the layers are peeled back, Jane Doe’s new name was one of a handful of different updates that weren’t made due to the “timing issue” between your HR and payroll silos. When the dust settles and corrections are manually made, the damage amounts to $4,500 of direct HR & payroll labor cost, another $1850 in retroactive wages for rate of pay changes that didn’t occur, and an additional $385 for tax liability that triggered amended returns that needed to be filed with the IRS and state agencies. All over a “timing issue!”

It may be overly simplistic, but when evaluating a total workforce management solution, an important question in this era of cloud-based solutions is, “How many different isolated portals is my employee data sitting in?”

If your answer is more than 1, then you’re not dealing with a truly integrated solution, and there’s a silo somewhere.

Tip 2: Separate Silos Lead to Data Gaps and Overlaps

When each software application requires its own data source, it’ a recipe for data gaps and overlaps. Without a doubt, these are some of the biggest time-robbers of HR specialists, controllers, and business management professionals.

Gaps

Gaps happen when information gets updated in one silo, but never makes it into another. Without a disciplined manual process, data management between the silos can quickly become an insurmountable project. Each of your workforce management tools house an important range of information, and gaps in the data lead to incomplete employee data reports, and patched workarounds.

What do I mean by workarounds? Take the simple aforementioned task of making an employee name change. If making that name change has to “trigger” the software to update 2, 3, or 4 other name fields, somewhere in the solution then you’re looking at silos rebranded as integrated, and we’re right back at our “timing problem.” You’ll find this in most legacy software solutions that are working to catch up to the market demand for cloud solutions that share data fluently. Of note, you can be with one vendor and still be dealing with silos.

Overlaps

Data overlapping occurs when you have the same data fields in an application but different information. Now you are faced with the problem of identifying which information is must current, and which is stale. When Jane Doe get’s married and claims new payroll deductions, she’s also has information changing in her employee benefits and HR portals. Furthermore, Affordable Care Act data testing demands information from payroll, employee benefits portals, time and labor, and HR silos. With the ACA, data gaps and overlaps can now lump IRS penalties on top of your cost of wasted man-hours.

If there is one takeaway from this blog, it’s this: If you’re using siloed software solutions for total workforce management, you’re wasting money and time. It’s unavoidable.

While newer and more agile players in the total workforce management market are making strides to build and offer truly single-login integrated HR portals, some of the larger HCM players are seeking agility solutions in platform as a service (PaaS) options from budding tech companies, such as Apprenda, in New York’s emerging Tech Valley. Nonetheless, as we continue to evolve from onsite data, to cloud, to integrated-cloud solutions, we’ll only be as agile as our data.

Related Blog: 6 Considerations When Looking for a Total Workforce Management Tool

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