48 | INNOVATION
Understanding payroll systems in the cloud: prevention, resolution and resilience
Paul Unwin MCIPP, Payments Integration Manager, Caxton, explores how cloud-based payroll systems operate, what happens when issues arise and the steps to take when those inevitable outages occur
C loud-based payroll systems have pay experience. This move to flexible systems offers scalability, automation and accessibility. However, with this convenience comes a critical responsibility: pay professionals must understand how these systems operate in the cloud, what happens if / when outages occur and how to mitigate these risks. Recent disruptions, such as Cloudflare and Amazon Web Services (AWS) outages, have highlighted transformed how businesses manage both payroll and the wider employee that even the most robust platforms aren’t immune to failure. While prevention is key, businesses must also prepare for resolution strategies and broader resilience planning. This article explores two core areas, which are preventative steps to reduce risk and resolution strategies when outages occur. With my current role, it would be amiss to not conclude with why payments resilience should be a priority for every organisation. Why pay professionals need cloud literacy Payroll is business-critical. Employees expect timely and accurate payments, and any delay can damage trust, morale and compliance. With most payroll systems now hosted on cloud infrastructure, professionals must go beyond operational knowledge and understand: l how their provider’s cloud architecture works (e.g., reliance on AWS, Azure or Google Cloud) l points of vulnerability, such as domain
name system or ‘DNS’ failures, application programming interface (API) dependencies, and third-party integrations l shared responsibility models, where the provider manages infrastructure, but the business remains accountable for data integrity and continuity. This knowledge enables pay teams to anticipate risks and communicate effectively during incidents. Preventative steps: building a robust payroll continuity plan While no system can guarantee 100% uptime, businesses can significantly reduce exposure through the following proactive measures: 1. Understand your provider’s service level agreements (SLAs) and architecture: l review SLAs for uptime guarantees and compensation terms l ask providers about redundancy measures and whether they operate across multiple data centres or regions l understand dependencies: if your payroll system relies on AWS, an AWS outage could cascade into your operations. 2. Implement multi-layered backups: l maintain secure offline backups of payroll data, including employee details, tax information and payment schedules l schedule regular exports from the cloud system to encrypted local storage or a secondary cloud provider
l test backup restoration processes quarterly to ensure readiness.
3. Establish alternative processing methods: l document manual payroll procedures for emergency use, including calculation templates and approval workflows l train staff on these processes to avoid confusion during outages l consider hybrid models, where critical payroll functions can run locally if the cloud system fails. 4. Vendor diversification: l avoid single points of failure by using multiple suppliers for payment execution l for global businesses, consider regional providers alongside primary platforms to spread risk l evaluate fintech solutions that offer API- based payment rails as backups. 5. Monitor system health and industry alerts: l subscribe to status pages for your payroll provider and underlying infrastructure (e.g., AWS, Cloudflare) l use really simple syndication (RSS) feeds to be alerted to any issues / outages l use third-party monitoring tools to track latency and downtime l establish escalation protocols for early warning signs. Resolution strategies: responding to cloud outages Even with robust prevention, outages can and
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