TECHNOLOGY
The statement of work: a critical tool when transitioning to a new payroll system
Reuben Hughes, Payroll Analyst, The Leppington Group, explains why the Statement of Work (SoW) is so important when you’re involved in the transition to a new payroll system, and why it should be used throughout the project
T he SoW is a narrative description of the products, services and deliverables of a project. It must be described in the early stages of the project or relationship and thus must be a clear statement, to avoid misunderstandings during the execution phase. For payroll professionals involved in the transition to a new payroll system, the SoW is one of the most vital documents in the implementation process. Whether a business is upgrading legacy software, outsourcing to a managed provider or deploying cloud-based solutions, the success of the project often hinges on how clearly expectations, responsibilities and deliverables are defined in this foundational agreement. A payroll system transition carries operational, financial and legal implications. Therefore, the relationship
defines the scope of services a supplier is obligated to deliver. This includes specifications on data migration, testing, user training, system configuration and post-go-live support. If disagreements arise about responsibilities, the SoW can be referred to as a record of agreed terms. From a practical perspective, the SoW helps payroll professionals coordinate internal resources, plan testing cycles and ensure readiness for parallel runs and compliance checkpoints. It enables both parties to track project progress using clearly stated milestones and deliverables, reducing the likelihood of delays or missed requirements. Characteristics of an effective SoW An effective SoW for payroll implementation should include detailed, unambiguous information on the scope of work, success criteria, roles and responsibilities, timelines and support “If disagreements arise about responsibilities, the Statement of Work can be referred to as a record of agreed terms”
commitments. Generic descriptions such as “configure system” or “provide training” are insufficient. Instead, specific outcomes should be outlined, such as “complete three parallel payroll runs with less than 1% variance” or “deliver two days of on-site training for payroll team and line managers.” Clarity around complex payroll features is a commonly omitted variable of the SoW. What’s often construed as a potential ‘miss-sell’ and an area that we see frequently as the cause for a relationship breakdown between client and vendor, is when expected functionality isn’t part of the finished product. For example, a payroll team expecting full automation of salary sacrifice arrangements may find, too late, that the base system supports it only through manual workarounds unless explicitly stated in the SoW. If these capabilities are left vague, there’s a risk that critical elements of the system may be delivered with partial functionality or require additional charges for completion. Building and managing the vendor relationship The implementation of a new payroll system should be treated as a collaborative project rather than a transactional purchase. This begins with establishing a productive working relationship with the vendor, which the
between the payroll team and the software supplier must be clearly
structured and supported by a mutually understood and enforceable document. A well-written SoW not only underpins the contractual relationship but also provides the practical blueprint for managing expectations and avoiding disputes. Why the SoW matters The SoW serves a dual purpose: it’s both a legal safeguard and a practical project guide. From a legal standpoint, it
| Professional in Payroll, Pensions and Reward | September 2025 | Issue 113 56
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