Opening Balances, often referred to as OBs, usually have a negative connotation in relation to HRIS and Payroll system implementations or conversions. Simply put, opening balances are the year-to date earnings, benefits and tax data for individual employees from a client’s legacy payroll system that needs to be loaded into the new HRIS system in order to generate tax forms, such as W-2s.
Why do OBs have such a bad rap? Clients find it cumbersome to pull the data, and consultants usually find OBs problematic to balance. As a result, many clients opt for a January 1 go-live, as it’s the start of a new tax year, which means they are able to skip pulling, loading and validating OBs, because there is no data to validate at the start of a new year.
While that logic is sound, choosing a January 1 go-live just to avoid OBs comes with other challenges that may far exceed the effort and fear of loading OBs for a mid-year HRIS/Payroll system conversion. Let’s explore some of those challenges.
With a January 1 go-live, most of the detailed and critical preparations for go-live must be designed and tested from September through December. This can be problematic from a bandwidth perspective. At this time of year, payroll professionals are extremely busy gathering information for posting year-end bonuses and fringe benefits, applying year-end adjustments and corrections, and preparing for W-2 reporting in January. These tasks are time-consuming and should be given full attention during the last quarter of the year. Choosing a go-live date other than January 1 will take a lot of stress off the shoulders of your payroll team.
During the end of the third quarter and during the fourth quarter, benefits teams are also busy with open enrollment activities such as creating enrollment sessions and updating new benefits plan options and employee election options for the upcoming benefits year. This leaves the benefits team little time and energy to be involved in the design and implementation of the new system, although they’re a valuable stakeholder group that you’d ideally bring into the implementation project.
Finally, from a timing standpoint, holidays are a major disruptor during the last four months of the year. There is a holiday in each month, and November and December are the times where people most often travel for holidays and take extended periods of vacation time. This has a two-fold impact: It limits the time available to spend on critical year-end tasks and makes it difficult to have the people with the necessary expertise present and involved in the day to day tasks involved in implementing a new system.
Perhaps the most compelling reason for choosing a mid-year go live date is because it will result in a higher quality implementation and better project outcomes. No matter what time of year you are implementing a new system, your implementation partner, whether it is HRchitect or another partner, will always be giving your project 100%, however that might not always be the case for those people from your organization who are involved in the project. This is crucial to note, because projects where the client-side team is highly engaged are exponentially more successful in the long term. Over hundreds of HCM technology implementation projects we’ve seen that on non-January 1 go-lives, client-side teams are more available, and better equipped to participate in the development of their new system and have more time to spend on implementation without sacrificing current processes or skimping on their full-time job duties. With mid-year go-lives, each member of the implementation team can be more fully engaged in the creation, configuration and testing of their new software. After all, if the implementation of a new system is driven by a desire to improve on the old system, doesn’t it make sense to give the project the full attention of your team?
If January 1 isn’t the best time to go-live, when is? Any date will work, although you might want to consider the start of a quarter, such as April, July or October 1st. First, these dates allow enough time to thoroughly review opening balances before loading into a new system. These dates also allow for HR, benefit and payroll teams to give year-end tasks the attention they require. Last but not least, the best time to think about changing processes is after the year has been completed, W-2’s have been provided, and open enrollment is complete, as you will have had time to analyze what is working and what is not in your current system which will translate into desired changes in configuration and processes in your new system.
If a January go-live makes sense for your company, and you have the resources to devote to the project, then chart your course and keep the deadlines in mind. If you’re at all questioning whether a January 1 go-live is too ambitious, I’m here to reassure you that you can choose a different go-live date without fear of OBs. With HRchitect as your implementation partner, our experienced consultants will leverage tools and best practices for system implementations to make your implementation project a success, no matter which go-live date you choose.
About Laura Palulis
Laura Palulis is a System Consultant with HRchitect, the leader in HCM systems strategic consulting. Laura has over 20 years of experience in the payroll and tax field and was an Ultimate Software customer for 18 years. When not working with customers, Laura can be found hiking, quilting and travelling the world.