3 payroll-presentation

New York University
Payroll Assessment
Final Report
July 2009

Copyright © 2009 Accenture All Rights Reserved.
1
Table of Contents
• Executive Summary
• Project Objectives and Approach
• Findings
• Opportunities
• Options Analysis and Recommendations
• Recommended Projects and Implementation Roadmap
• Appendix

2
Executive Summary
• Findings
– Current annual payroll operating cost of $4.7 million offers significant opportunity for
improvement
– Time & Labor process is completely manual
– HR/Payroll system is 30 years old and presents considerable risk of failure
• Recommendations
– Continue to run payroll as an insourced function
– Implement a Time & Labor solution
– Transition payroll into a true Service Center model and optimize payroll operations
– Reengineer key aspects of HR transaction processing to improve speed and efficiency of
transactions which affect payroll
• Financial impact
– Reduce steady state run cost by $2.1 million, a 45% reduction
– Payback: 2.3 years with an NPV of $18 million

3
Executive Summary
The to-be Payroll environment at NYU will have the following characteristics:
– Run cost reduced by approximately 50%
– Automation of all payroll-related processes
– Elimination of the risk associated with an obsolete HR/Payroll system
– Payroll department optimized for maximum efficiency
– Payroll operating in a Service Center model
– Simplified payroll processing calendar with fewer pay cycles
– University-wide shift in behavior and mindset:
• More operational discipline and more timely processing
• Fewer exceptions
• Elimination of check distribution and reduction in check cashing services
• A self service model for data entry and issue resolution; examples:
– Self service for employee personal data entry (e.g. time entry, address change)
– Self service Employee Portal for procedure and policy information
– 800 number for employee inquiries

4
Project Objectives and Scope
• The objectives of the payroll assessment were to:
– Investigate opportunities for improving accuracy, efficiency, and effectiveness across NYU’s US
Payroll process
• Assess both short-term and long-term payroll considerations
• Benchmark payroll operational metrics and compare to leading practices with specific
focus on operational efficiency, cost-to-serve, field/input compliance, and payroll
work/activity distribution
– Analyze payroll service delivery alternatives (in-source/outsource) and supporting technology
– Define a high-level roadmap and go-forward recommendation
– Develop a financial analysis of options including one-time and ongoing costs aligned with the
proposed roadmap and recommendation
• The assessment focused on NYU’s US payroll operation including Time & Labor (T&L) as a key
input/component to payroll processing; the scope of the assessment also included:
– Payroll transaction and exception processing
– Supporting payroll related technology
– Payroll processing procedures & documentation
– Overall payroll process compliance (payroll operations and input dependencies)
– Processing of HR transactions which affect payroll
Note: see Appendix for more details on Project Approach

5
Data Gathering for the Project
Data gathering consisted of two activities:
– Building a fact base of current state data: operating costs, third party services and costs,
transaction types and volumes, service delivery structure, pay processing calendars,
technology applications, etc.
– Conducting a total of 18 interviews, involving 48 NYU personnel, to understand the roles,
procedures, issues, opportunities, and challenges with the current payroll process
• Schools/Units – Time data collection, review, and submission; HR transaction
preparation and entry
• Central Areas – Time data entry and payroll processing; Academic Appointments; HR,
Benefits, and IT Support
Note: see Appendix for the detailed inventory of interviews/interviewees

6
Themes/Findings from the Interviews
• Time & Labor processing is almost 100% manual
• Onboarding and other upstream HR activities cause delays in the entry of HR transactions,
which then create late payroll transactions
• There is a lot of complexity inherent in a new hire transaction which often results in delays
and late processing
• There are an unusually high number of reviews and approvals in the end-to-end process
• There is no standardization of Time and HR processes/roles within the Schools/Units
• A majority of the complexity and issues within the Schools/Units is with the cost accounting
associated with Pay and HR transactions, not the payroll transaction per se
• End users want better access to information – about employee data and about payroll-
related processes and procedures
• There is no standard tracking mechanism for Sick/Vacation time (some schools use shadow
systems, others do it manually); this information is very frequently not accurate
• While overall customer service from the central Payroll department is viewed favorably, there
is considerable reliance on individual contacts/relationships to resolve issues – there is no
“service center” model for customer service
• There are fundamental limitations with the Integral system, and fundamental risk of failure
with the Integral Payroll module
• Current check distribution procedures are cumbersome and costly

7
Not replacing the Integral Payroll system
carries substantial business risk
The university’s HR and Payroll system is called Integral. This system has the following characteristics:
• Was originally developed in the 1970’s
• Runs on a mainframe computer, which is expensive and nearing obsolescence
• Integral is obsolete software with many structural limitations; very difficult to modify and maintain
– For example: No effective dating, limit of 7 jobs per employee
• Only a handful of organizations are still running Integral
• Number of IT professionals with Integral expertise is small, and getting smaller
 There is substantial business risk associated with continuing to run the 30 year old Integral Payroll
system
– Payroll failure – with no real contingency plan
– Inability to implement regulatory changes
– Dependence on two specific NYU support individuals, both of whom are nearing retirement
– Dependence on a relatively small third party support firm, JAT ($6 million annual sales, <100 employees)
 Business requirements that will require significant additional effort and cost in the absence of a
PeopleSoft implementation:
– Support for Abu Dhabi and any other global sites
– Position Management
– HR/Payroll historical data conversion in the Data Warehouse
– Additional PASS/HRIS enhancements

8
Comparison of NYU With Peer
Organizations in Higher Education
Common Payroll-Related Characteristics Within Higher Education How NYU Compares
Shared Services model for Payroll and Employee Service Does not have today
Usage of an ERP system (most often PeopleSoft) Does not have today
Existence/adoption of online self service tools Have some
Existence/adoption of an “Employee Portal” for online content and
communications
Have very basic
capability
Relatively complex pay calendar Yes
Complex processing around Grants and funding of academic and
research appointments
Yes
Systematic tracking of Time & Labor data and Sick/Vacation balances Almost entirely manual
today
Usage of Outsourcing for Payroll-related services For W2 processing
On par
Lagging some
Lagging significantly
Assessment of NYU relative to peers

9
$6.5M Annual Cost
Other Cost
0.2%
Payroll Labor
23.2%
Office Supply Cost
2.8%
Facilities
0.3%
Equipment Cost
1.1%Shipping & Handling Cost
4.3%
Other Third Party Fees
3.0%
Field Support (Schools &
Units) Labor
42.9%
IT Labor
15.5%
Time and Labor - Labor
6.6%
Current Cost Structure
Almost 50% of total cost
is dedicated to
supporting a manual time
and attendance system
Most of the cost of Payroll is outside of the Payroll Unit… Almost 60% of the cost of Payroll is in IT and
the Schools/Units which must dedicate FTE to supporting Time and Labor tracking and Payroll

10
Cost of Payroll Operations
Significantly higher cost… NYU Payroll operations cost approximately five and a half times the average
payroll operations as measured by cost per check and cost per employee served. Over 50% of cost is driven
by the manual Time and Attendance system
External Benchmark: American Payroll Association
Payroll Cost per Payee
$304.04
$72.93
NYU Average
External Benchmark
Payroll Cost per Payment
$15.20
$3.44
NYU Average
External Benchmark
Current
Current

11
Efficiency of Payroll Operations
Significantly lower efficiency… The average Payroll operation services approximately three and a half
times more employees per Payroll FTE than NYU. Almost 50% of the NYU payroll labor in this equation is
dedicated to supporting the manual Time and Attendance process
* Payments Processed metric is skewed by the fact that a large portion of NYUs population is paid monthly. If this population were paid semi-monthly, the
NYU average would be about 7,700 per FTE (about 1/3 as efficient as benchmark)
*
External Benchmark: American Payroll Association
Payees processed per Payroll FTE
293
984
NYU Average
External Benchmark
Payments processed per Payroll FTE
5,849
26,144
NYU Average
External Benchmark

12
Payroll Quality Metrics
 Lowest % of late HR transactions: Courant, VP Public Affairs, Silver, General Counsel, FAS, School of Law, Tisch, Stern
 Highest % of late HR transactions: Gallatin, ISAW, Vice Provost Academic Affairs, Vice Provost Faculty Affairs
Late HR Input negatively impacts Payroll: NYU issues over 11,000 off-cycle payments annually (Manual
and off-cycle). Off-cycle payments and retroactive adjustments cause rework for both the Payroll department
and the Payroll support personnel in the schools/units.
What schools are the “best”
and “worst” performers?
Off-Cycle Checks
Late HR
28%
Check
22%Payroll Error
17%
Other
13%
Bonus
7%
Late Time
6%
Time Error
5%
Direct Deposit
2%
Late HR Transactions by School/Unit
68.4%
73.8%
87.8%
Top Quartile
Average
Bottom Quartile
Retroactive Pay Adjustment Rate
6.3%
1.2%
NYU Average
External Benchmark

13
Payroll FTE Time Distribution
2.0%
22.5%
5.8%
5.8%
0.0%
30.0%
28.0%
8.0%
Training
Customer Service
Processing Time &
Attendance
Processing Payroll
NYU is spending the majority of Customer
Service time resolving errors and not in true,
proactive customer service
NYU Operations
Where does Payroll Operations spend time? Manual processes cause NYU Payroll personnel to spend
more time than average managing key processes than average.
NYU
NYU
NYU
NYU
Benchmark
Benchmark
Benchmark
Benchmark

14
Opportunities – Time & Labor
Description: Implement an automated Time & Labor solution
• Web-based software which automates time entry and approvals, facilitates time entry through multiple
channels (e.g. clocks, online, etc.), entry and tracking of sick/vacation time, and entry of labor/cost
accounting information
• Implementation of updated roles, processes, and procedures for end to end Time & Labor activity
• Managed introduction of the new technology and processes across the university
Supporting Data
• Approximately 50% of Payroll labor and cost is dedicated to time & attendance management. External
benchmark average is 10%
• Manual time capture is an error-prone process. Each timesheet is manually keyed in at least 3 separate
times (sometimes more depending on the school process). Even at a 99% error-free rate, there would
still be 30 keying errors for every 1,000 timesheets
• NYU Payroll is significantly lagging the benchmark in terms of cost and efficiency – in large part driven by
exorbitant time and attendance costs
Impact
• Up to 50% reduction in Payroll T&A personnel (3.5 of 5.5 FTE) - $200K Annual Savings
• Up to 75% reduction in School/Unit Payroll support personnel (26 of 35 FTE) - $1-2M Annual Savings
• APA estimates indicate that an electronic T&A system will produce 1-3% reduction in total hourly payroll
by reducing overpayment errors and over reporting of sick/vacation time - $1.5-3M Annual savings

15
Opportunities – Payroll Service Center
and Payroll Optimization
Description: Redesign the work within the central Payroll operation
• Move Payroll towards a true Service Center model with a call center capability, automated tracking of calls and
cases, and better integration with related Benefits and HR activities
• Redesign the Payroll Calendar with the objective of reducing the number of different pay frequencies and reducing
the total number of pay runs within a month
• Move to eliminate the current process of hand delivery of checks
• Implement a payment/chargeback mechanism for exception processing such as off cycle checks and garnishments
• Implement operational metrics reporting to improve operational efficiency
Supporting Data
• A significant portion of the school’s Payroll/T&A FTE is spent on customer service tasks such as fielding questions
on leave balances, payroll deductions and missing time
• Payroll support personnel at the school level do not have direct access to the systems of record and often cannot
answer questions. These questions must be escalated to Payroll resulting in duplicate effort
• The current informal system of raising issues has no tracking or reporting system and, according to our interviews,
issues are often lost and must be raised multiple times
Impact
• Relieving HR/Payroll/T&A personnel at the school level from Payroll customer service responsibilities is essential
for realizing the $1.2M Annual savings from field support FTE noted previously
• Employee satisfaction will increase when they are able to quickly and easily find answers to their questions. The
first person they speak to (Payroll Service Center representative) will have the knowledge and systems access to
address their questions
• Shift customer service inquiries to capable, but newer Payroll employees. Current, informal system places the
heaviest burden for customer service on the most experienced (and most expensive) caseworkers in Payroll who
are the known contacts in the field.

16
Components of a Payroll/HR/Benefits
Service Center – Future Vision
Academic, Admin, and Student Employees
Employee Portal and Online Self Service
(requires implementation of PeopleSoft)
Integrated Employee Call/Service Center
Processing Teams and Case Resolution
HRIS
Service Center Tools
• Portal
• Knowledge Management
• Case Management (REMEDY)
• Document Management
• Automated Call Distribution
• Computer Telephony Integration
• Other
Payroll Team HR Team Benefits Team
Tier 0 Service
Tier 1 Service
Tier 2 Service

17
Opportunities – HR Reengineering
Description: Reengineer HR transaction processes with the Schools and Units
• Improve end user access to information – both employee data and process/procedure documentation
• Look to more broadly distribute PASS within the Schools, down to the department level
• Look to reduce the number of approvals on a transaction
• Implement better controls/audits on Academic and Student onboarding, to reduce missed payrolls
Supporting Data
• Average percentage of late HR actions (PASS) is 74%
• Currently, only one of the schools interviewed has PASS distributed down to the department level, but they
are in the top quartile (internal benchmark) of timely PASS submissions and they perform their duties with
less personnel than average (1:134 ratio vs 1:88)
Impact
• Reduce percentage of late HR actions from 74% to 25%
• Reduce off-cycle paychecks by approximately 50-70% for an estimated annual savings of $100-200K
• Reduce Payroll FTE by 1 for an estimated annual savings of $50K

18
Opportunities – Payroll Outsourcing
Description: Outsource the data processing components of payroll to a third party
• Shift responsibility for the data processing of some, or all, of the following components to a third party
processor:
– Gross to Net payroll calculation
– Garnishment processing
– Off cycle check processing
– Check printing and distribution
– Tax reporting and processing and W2 processing
• The two different service models for Payroll Outsourcing are outlined on the next page
Supporting Data:
• Outsourcing of payroll – in the “data processing model” (see next page) would result in an 18% reduction in
the annual run cost
• Outsourcing of payroll – in the “managed service model” (see next page) would result in a 16% increase in
the annual run cost – given the significantly higher third party service cost associated with the “managed
service model”
Impact
• Reduction of the quantity of exceptions, as envisioned in the to-be environment, would be essential in
managing the ongoing run cost of payroll outsourcing
• Portions of Employee Benefits are outsourced to Towers Perrin – requiring some coordination of data flows
and other aspects of service

19
Payroll Outsourcing – Service Options
There are two basic service models for Payroll Outsourcing
Payroll Data Processing
(modeled in Options 3,4 – see following pages)
• Outsourcer takes responsibility for the data
processing associated with payroll, such as
Gross to Net, Garnishments, Check printing and
distribution, and Tax reporting and processing
• Client retains the responsibility for employee
service, transmission of data to the outsourcer,
error resolution, overall financial management
and control, payroll accounting, etc.
• Market price of this service typically ranges from
$50-80 per employee per year
• This is a well established and proven service
model; historically more popular with smaller
organizations, although a growing number of
large organizations are opting for this service
• Market leaders are ADP and Ceridian
Payroll Managed Service
(modeled in Option 5 – see following pages)
• Outsourcer takes responsibility all aspects of
payroll operation, including employee service;
this model is more of a true Business Process
Outsourcing (BPO) model; it is frequently
marketed as an integrated Payroll/HR/Benefits
BPO model
• Client only retains responsibility for Vendor
Management
• Market price of this service typically ranges
from $150-200 per employee per year
• This is a relatively new service offering without
a strong track record of service
• Market leaders are ADP and Ceridian

20
Options Overview
Option 1 – Maintain insourced payroll,
automate and reengineer key processes
• Time & Labor solution (presumably Workforce)
• Payroll "Service Center" and Operations Optimization
• HR Reengineering
Option 2 – Outsource payroll (data processing
model), automate T&L, reengineer key
processes
• Time & Labor solution (presumably Workforce)
• Payroll Outsourcing of GTN, Tax, W2, Garnishments
Option 3 – Outsource payroll and T&L (data
processing model), reengineer key processes
• Time & Labor Outsourcing
• Payroll Outsourcing of GTN, Tax, W2, Garnishments
Option 4 – Outsource payroll and T&L
(managed service model), reengineer key
processes
• Payroll Outsourcing with full “Managed Service” model;
includes Time & Labor capability

21
Financial Analysis of Options
Option 1 is recommended - This option offers the lowest steady state run cost, and the best
overall financials and rate of return
Note: see Appendix for detailed financial models of all 4 options
NOTE: the Payroll Assessment team has validated the Time & Labor implementation estimate with the NYU PMO team

22
Comparison of Annual Run Cost Estimates
Option 1 delivers the highest annual cost reduction – with the optimal combination of
labor, third party, and other costs

23
Key Metrics – Before and After
Metric APA Benchmark NYU Today NYU After
Cost per check $3.44 $15.20 $8.95
Cost per employee $72.93 $304.04 $179.06
Employees per Payroll FTE 1000 293 775
Checks per Payroll FTE 26,144 5849 15500
% of Payroll time spent on
time entry
6% 31% 7%
% Off Cycle Checks 1.2% 3.4% TBD
NOTE: given the inherent complexities in some aspects of Higher Education
Payroll, NYU should not expect to get to the level of the APA Benchmarks, which
includes all companies across all industry segments

24
Guiding Principles for Implementation
Roadmap and Projects
• The goal of the Implementation Roadmap is to strike the proper balance among multiple
factors:
– Funding and ROI
– Resource availability
– Pace of change
– Timing of benefits realization
– Fit with annual University calendar
– Fit with other large University initiatives
• Each of the projects has been envisioned, with a high level estimate of effort and duration,
with a holistic view of the end-to-end process – considering business process, roles, change
management, etc. in addition to software installation
• Projects have been estimated using three resource types:
– NYU User: functional expert in payroll and payroll-related processes
– NYU IT: technical expert in payroll-related systems
– Contractor: external expert in software, relevant processes, and large scale
project/program management

25
Recommended Projects – Summary
(based upon Option 1)
Project Project Components Duration
(mths)
Total
Workdays
NYU User –
Avg FTEs
NYU IT –
Avg FTEs
Contractor –
Avg FTEs
Total –
Avg FTEs
Time & Labor • Business process and roles design
• System configuration and customization
• Interfaces and Reports design and development
• End-to-end testing preparation and execution
• Deployment planning and execution
• Change Management and Communications
• Program Management
14 3200 2.2 4.4 5.1 11.7
Payroll Service
Center/
Optimization
• Design and implement Service Center model
• Reengineer Pay Calendars
• Eliminate hand delivery of checks
• Implement payment/chargeback mechanism for
exceptions (e.g. Off Cycle checks: $30)
• Design and implement Operational Metrics
Reporting
12 1100 1.5 1.5 1.5 4.5
HR
Reengineering
• Improve end user access to information
• Distribute PASS more broadly
• Reduce the number of approvals
• Implement better controls/audits on Onboarding
processes
9 600 1.3 0.7 1.3 3.3
Note: see Appendix for more details on projects

26
High Level Implementation Roadmap
(based upon Option 1)

27
Next Steps
• Confirm recommendations and going-forward Roadmap with key stakeholders
• Proceed with procurement of Workforce Time & Labor solution
• Begin to plan for startup of projects, for Fall 2009

28
Appendix
• Project Approach
• Inventory of Interviews
• Detailed Financial Analysis of Options
• Project Descriptions

29
Timeline and Activities
Benchmark and Conduct Options Analysis
1
Kick-off
Manage Project
Status Findings/Q&A Final Report
Week
Develop Roadmap &
Define Next Steps
• Conduct interviews across
payroll, business and IT
• Analyze current data
• Inventory and prioritize
opportunity areas
The payroll assessment work was conducted over a 6 week period and included the
following activities and work products
2 3 4 5 6
ActivitiesWorkProducts
• Interview notes
• Prioritized
Opportunities
Inventory
Conduct Current
State Assessment
Findings
• Revised Prioritized
Opportunities
Inventory
• Develop roadmap and
financial analysis of
options
• Define next steps
• Present final
assessment
• Conduct follow-up
interviews (as
needed)
• Continue analyzing
data
• Update inventory
and priority (as
needed)
• Roadmap and
financial analysis of
options
• Next Steps
• Final Assessment
Summary
• Benchmarks
• Options Analysis
• Findings Summary (DRAFT)
• Compare to benchmarks
and leading practices
(where applicable)
• Conduct an options
analysis including
costing
• Summarize
• Socialize findings and
incorporate feedback
• Findings Summary (FINAL)
Phase 0
Pre-Assessment
• Define Data
Requirements
• Collect and Distribute
Data
• Plan and Prep for
Assessment

30
Approach
The project approach consisted of three main phases of work
Conduct Current
State Assessment
Develop Roadmap
and Define Next
Steps
Benchmark and
Conduct Options
Analysis
• Analyze current data that will aid in obtaining a deeper understanding of NYU’s
current Payroll environment including systems, processes, issues, level of
complexity, volumes, metrics and current operating costs
• Conduct interviews across Payroll and areas that touch payroll and across
business and IT to obtain a further understanding of the current environment,
issues and opportunities for improvement
• Inventory and prioritize opportunity areas
• Analyze prioritized opportunities and compare to benchmarks and leading
practices where applicable
• Conduct a sourcing options analysis (including costing) leveraging
Accenture’s Global Estimating Models and experience in working with 3rd
party payroll providers
• Summarize findings, opportunities, options analysis and recommendations
• Interactively present findings and incorporate feedback
• Create a roadmap to address recommended changes
• Develop a financial analysis of options
• Define next steps

31
Inventory of Interviews

32
Option 1 – 8 Year Financial Model

33

34

35

36
Time & Labor Implementation
Project Summary
Objectives To implement a web-based solution to automate the end to end process associated with Time &
Labor data entry and management, including the management of Sick/Vacation time and the
management of cost accounting information
Scope A Time & Labor solution to enable the NYU Student and Administrative workforces; will also enable
the process within the central Payroll organization to collect, verify, and submit time data into the
payroll process
Key Benefits • Reduces by 70-80% the effort and cost associated with the current manual activity
• Automates the interpretation of raw time data into the proper earnings categories
• Enables systematic tracking of accrual balances (i.e. Sick, Vacation)
• Enables multiple channels for data entry such as clocks, online entry, etc.
Project Components • Business process and roles design
• System configuration and customization
• Interfaces and Reports design and development
• End-to-end testing preparation and execution
• Deployment planning and execution
Estimated Duration 14 months
Estimated Workdays 3200 workdays
Average Staffing • 2.2 functional/user FTEs
• 4.4 NYU IT FTEs
• 5.1 vendor/contractor FTEs

37
Payroll Service Center/Optimization
Project Summary
Objectives To improve the operational efficiency and cost performance of the central Payroll operation; to
improve the effectiveness of customer service to the NYU workforce
Scope The project is focused on all aspects of the Central payroll department’s processes, detailed
procedures, and roles; also included in scope is the interaction between Payroll and the University on
customer service and issue resolution; potentially the new model will be integrated with the customer
service aspects of NYU Employee Benefits and HR services
Key Benefits • Improves payroll processing efficiency and drives down operating costs
• Provides for systematic tracking of employee inquiries and cases
• Provides more seamless, integrated service for employees
Project Components • Payroll Business process. procedure, and roles design
• Operational metrics resport design and development
• Service center tools (e.g. case tool, telephony) configuration and implementation
• Pay calendar reengineering and simplification
• Check distribution simplification
• Chargebacks design and implementation
• 1.5 NYU IT FTEs

38
HR Reengineering
Project Summary
Objectives To implement a series of process, education, and technology capabilities which will serve to
streamline and accelerate the processing of HR transactions and also improve the quality and
accuracy of the transactions
Scope The scope is focused on the HR transactions that directly affect payroll processing; most of the effort
would be focused on the Schools/Units and how they process transactions
Key Benefits • Reduces cycle time for HR transactions
• Improves quality/accuracy of HR transactions
• Reduces downstream payroll errors/exceptions
Project Components • Design and implement end user support materials (to facilitate timely and accurate processing)
• Design and implement an approach to distribute PASS more broadly across Schools/Units
• Evaluate and design ways to reduce the number of approvals on a given transaction
• Design and implement a quick hit solution (process and/or technology) to prevent new hires from
being “missed” on payroll
• 0.7 NYU IT FTEs

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