Dr. Zelphia Brown
August 12, 2012
HRM 520 Information Systems
Construct a Cost-Benefit Analysis matrix for an organization that is considering replacing its internal payroll system with a payroll outsourcing service. Include direct and indirect revenue enhancements and direct and indirect cost reductions.
For an organization which is considering replacing its internal payroll system with a payroll outsourcing service, the direct revenue enhancements and cost reductions for a company which is into internal payroll system may include increase in productivity of the company’s employees since they can now focus on doing more productive things, and improve the profitability. For instance, this holds true for small businesses with employee strength of 10-20. Moreover, the other direct cost reduction could be avoiding IRS Penalties. According to the IRS, 40.00% of small businesses pay an average penalty of US$845.00 per year for late or incorrect filings and payments. Outsourcing of payroll may help the company to avoid the penalty notices. The other direct revenue enhancements could be reduction on transaction costs. The outsourcing company may enable the employees to claim reimbursement statements and other things online. The indirect revenue enhancements could be building brand in the other countries. For instance, the outsourced company features its partner’s Logo Branding which enables the company to display the company name, and logo in all employee and client access pages. The other indirect cost reduction could be the use of best technology. This holds very true for small businesses which don’t have technology strengths such as latest version of payroll software and the most recent tax table installed on their computer.
Assess the risks associated with integrating a new payroll system and suggest what the project management team can do to minimize those risks. New payroll system has to be integrated in an organization with the
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