Business Resources

4 Simple Steps To Conduct Your Payroll Parallel Testing

Based on the definition provided by Deloitte, parallel testing is an “effective methodology for simulating production processes and transactions in a very controlled manner to determine whether systems are working well before a new approach goes “live.”” In layman terms, it means running the old system alongside the new system and comparing the results. During a payroll system implementation, payroll software parallel testing is typically the final phase and arguably, the most critical aspect of a new payroll system implementation.

Why is it so important?

Payroll software parallel testing is critical as it ensures that the new payroll software is accurately calculating the payroll. While the payroll output from both software need not be exactly the same, there should not be any unexplainable large discrepancies. Hence, running a payroll software parallel testing is to prevent any large discrepancies once the new payroll software goes live, thus ensuring that the transition to the new payroll software is smooth and problem-free.

Payroll Parallel Testing Plan

Before embarking on your payroll software parallel testing, there are several considerations that you will need to address. For instance, you will need to select an appropriate pay cycle for the parallel testing. Ideally, the selected pay cycles should not have unusually high amount of input data as this could overwhelm the new payroll system and compromising on time as well. Additionally, pick at least two consecutive pay cycles. The first run of the parallel testing is typically more prone to incorrect data input and technical errors. Hence, having at least two pay cycles will generally provide sufficient information that the payroll system is calculating correctly. Selecting consecutive pay cycles also creates a more realistic situation and it would be easier to observe how the payroll data is being handled across two successive pay cycles.

4 steps to conduct payroll parallel testing

A payroll parallel test comprises of the following basic steps:

1. Export and save all the payroll information and outputs for a selected pay cycle from the old payroll system.

2. The exported payroll information for the selected pay cycle should be entered into the new payroll system.

3. Run the payroll using the new system.

4. Using the results obtained from the new payroll system, compare it with the results from the old payroll system. Address any stark inconsistencies and if the differences can be explained appropriately.

Who should do the parallel testing?

Ideally, parallel testing should be managed by those who will subsequently be responsible for the payroll responsibilities. This will provide hands-on training and exposure to troubleshooting situations before the payroll system goes live. Unfortunately, this would typically double the workload for these people as they will have to be responsible for inputting the payroll data into the old and new payroll system as well as troubleshooting the data. Therefore, it would be good to work closely with the vendors should any questions and problems arise.

While payroll software parallel testing might be a time-consuming and complex process, the ultimate aim is to simplify and enhance the current payroll processes. Discuss and set a consensus on the test objectives. Plan a timeframe to ensure that the parallel testing process does not drag on. Given that the quality of the company’s future payroll is highly dependent on this testing, it would be good to lay down the strategy discussions in the early stages of the payroll software parallel testing.