ISG Study: Flexibility Drives Demand for AI-Powered Payroll Platforms

Enterprises seek integrated, scalable, compliant payroll systems that can serve remote workers and provide on-demand wage access

New business models, a rapidly expanding remote workforce and increasing demand for real-time, automated systems powered by AI are driving payroll transformation, according to a new series of research reports from leading global technology research and advisory firm Information Services Group (ISG).

“It’s about creating a more agile, compliant and worker-centered function that supports the long-term success of the organization. Now is the time for organizations to take the next step and make payroll a driving force for positive change.”

The ISG Payroll Management Buyers Guides, produced by ISG Software Research (formerly Ventana Research), identify two trends that are setting new expectations for payroll systems: the rise of real-time payroll, which allows workers to access their earned wages rather than waiting for the pay period to end, and the increasing use of AI and machine learning to detect anomalies in payroll data, ensure compliance with local laws and forecast payroll expenses based on historical data. HR Tech Insights: Oyster Powers Global Payroll in 20+ Countries, Simplifying HR Processes “Demand for dynamic, real-time solutions that can handle the tax implications of employees working across state and national borders and the rise of real-time payroll is requiring enterprises to make rapid adjustments,” said Matthew Brown, director of Research, Human Capital Management, ISG Software Research. “Payroll systems must keep pace with regulatory changes and align with broader HR and organizational strategies to minimize risk, drive operational efficiency and enhance employee experience.” Payroll teams now collaborate more closely with HR and finance departments, underscoring the need for modern payroll platforms that integrate with other departments’ software and provide a more holistic approach to workforce management, the reports say. Enterprises are turning to AI- and cloud-based payroll systems to accomplish those goals. AI-powered systems analyze local labor laws, apply that analysis to payroll calculations and ensure compliance across multiple jurisdictions. Cloud-based payroll systems offer scalability, flexibility and enhanced security compared with traditional on-premises systems while enabling organizations to manage payroll operations from anywhere in the world. While AI and automation offer new tools for compliance, many organizations are still grappling with the challenges of adapting legacy systems to contemporary software, the Buyers Guides say. Enterprises may also be missing opportunities to capitalize on the use of payroll systems as tools that offer a unique touchpoint for communicating important updates, sharing benefits information or highlighting key company initiatives. The reports say integrating communication into payroll can help companies foster a stronger connection with the workforce. HR Tech Insights: Holiday Pay Trends and Technology Tools for Improved Employee Payments For its 2024 Payroll Management Buyers Guides, ISG evaluated software providers across five platform categories – Payroll Management, Global Payroll, International Payroll, Multi-Country Payroll, and US Payroll – and produced a separate Buyers Guide for each. A total of 24 providers were assessed: ADP, BambooHR, Darwinbox, Dayforce, Deel, Gusto, Infor, isolved, Namely, Neeyamo, Netchex, Oracle, Oyster, Papaya Global, Paychex, Paycom, Paycor, Paylocity, Rippling, SAP, UKG, Unit4, Workday and Zellis. ISG Software Research designates the top three software providers as Leaders in each category. For the 2024 study, the leading providers in ranked order are: Payroll Management: ADP, Oracle and UKG Global Payroll: ADP, Oracle and UKG International Payroll: ADP, Oracle and UKG Multi-Country Payroll: ADP, Oracle and UKG US Payroll: ADP, Oracle and UKG “The future of payroll is not just about processing payments,” said Mark Smith, partner of Software Research at ISG. “It’s about creating a more agile, compliant and worker-centered function that supports the long-term success of the organization. Now is the time for organizations to take the next step and make payroll a driving force for positive change.” The ISG Payroll Management Buyers Guides are the distillation of more than a year of market and product research efforts. The research is not sponsored nor influenced by software providers and is conducted solely to help enterprises optimize their business and IT software investments.