Recently HR Magazine had a chance to speak to Karen Paterson about her company Patersons Global HR & Payroll Solutions, and how technology is changing HR. The web-based software company focuses on the delivery of International Payroll/HR software and services in over 160 countries worldwide, has over 200 employees and 3,000 further partners working from five global offices.

HR Magazine: How did you come about founding Patersons Global Payroll?
Karen Paterson: After working in retail banking for a few years, and finishing my MBA from Southampton, I began working as a tax consultant. Very early on I was approached by a client who was trying to set up an integrated international payroll system. At the time there were no providers in the market who could do this. So in essence the company developed from this business problem.

HR Magazine: What advantages does starting from this 'bottom up' approach have in creating HR software?
Karen Paterson: Well the essential business problem hasn't changed, but by building the technology from the bottom up, and by knowing the issues we were trying to solve upfront, we could develop the software in a practical way, as an integrated solution on a global scale. Where we gain our competitive advantage is that you cannot build this sort of big enterprise software quickly. We let the market drive how we developed the features and functionality and the architecture of the application. And we grew the company gradually in line. We had organic growth, where we worked with the clients coming to us to solve specific problems for them.

HR Magazine: How many years did it take to develop the software?
Karen Paterson: The application is nine years old. However because it is one code base it is constantly improving and it is now about 1.8 million lines of code. By 2004 and 2005 we were ready to start growing the business rapidly. In 2006 we did a big deal with IBM and also Siemens and at this stage we became known worldwide.

HR Magazine: What are some of the challenges you have had in your company's evolution?
Karen Paterson: Over the thirteen years I have done this I have recognized that there are some people that could like to see you not succeed. There was a time when we did not have enough money to expand, though we are fine now. As an entrepreneur you actually can't blink but must keep looking forward.

HR Magazine: How would you describe your company's organisational culture?
Karen Paterson: I think that we are fun. We like disruptive technology and anything that drives change. I think our company is always trying to be the best. We are very state of the art. I make sure that all of our developers have the very best coaching and tools and toys to train with. We are very creative and innovative and again we have this desire to be the best in the world.

HR Magazine: Since starting your company in 1996 have you noticed any changes in the role HR has played within organisations?
Karen Paterson: I think there has been a huge change. I think that before HR was viewed as a necessary function with very little input at board level. HR was very transactional. Whereas now I think particularly since 2002 onward things started to change where people saw that a strategic role for HR was critical for business success. Organisations are starting to recognise that the workforce is the biggest cost to the business.

HR Magazine: During this same period how has HR technology evolved?
Karen Paterson: In the late nineties and early two thousands the ERP1system was the only choice to have a truly international HR system. Software as a Service was available but it was a fairly unknown market. IT departments focused a lot on having control of systems inhouse. After Y2K and some major glitches with large ERP systems, multinationals started to question the value of spending millions on these ERP systems. Much of this inability to track the value on the money spent has fueled the Software as a Service market. The ability of a company to outsource not only the development and maintenance of the software but also the hardware and hosting is appealing to a greater number of organisations. If you are a manufacturer your specialty is in manufacturing not software. A company like ours is able to create software and develop it properly. To get this expertise in house is costly and not always possible.

HR Magazine: Why do you feel that there has been a number of new Software as a Service company's emerging in the past few years?
Karen Paterson: I think that the low cost of entry for software on demand is appealing during a credit crunch. This has been an important factor driving the growth of Software as a Service recently. The 'pay as you go' model is incredibly attractive to people on restricted budgets. This is also combined with the acceptance of the internet. Nine years ago when we first shipped our product broadband was just starting to be rolled out, whereas now it is everywhere.

We are also aware that the needs of small to medium sized companies are very similar to those of the larger multinationals. So being one step ahead we have also recently launched Click4HR which is an on demand, click and buy online HR solution which is ready to use, is hassle free with no downloads. This costs as little as $US49, which as an offer I doubt it can be beaten elsewhere.

HR Magazine: As internet data transfer speeds increase with faster fibre optic connections how will this change HR outsourcing processes?
Karen Paterson: Delivery will increasingly become internet based. It is the only practical, sensible way to deliver, and to leverage the ability to deliver file shared services. I really feel that people will start to build global templates. Everybody thinks that their individual company is different, whereas actually there is global template. I also think people will start to look at best of breed. Instead of buying ERP systems that cover everything from recruitment to e-learning and transactional HR they will look for best of breed and then integrate. So, that global templates will have integrated best of breed applications.

HR Magazine: What different levels of acceptance of HR technology and HR outsourcing have you noticed in different markets around the world?
Karen Paterson: There are some differences in some of the central European countries which are behind the west. Some of the former communist countries or existing communist countries like China, that are quite protectionist, are wary of not having control of their information. Even though Hong Kong belongs to China it will flourish without that protectionist behavior. As the level of inward investment to China slows down discouraging of the advance of technology may lead to a competitive disadvantage. A similar thing is occurring in Russia. Latin America is similar but is enveloping internet based software a lot more easily. What we are seeing with emerging markets is that they don't have a lot of legacy software because it didn't get built in the old days. So they are taking a quantum lead to the early adoption.

HR Magazine: Do you see emerging software companies in India as future competitors to Patersons in the Software as a Service market?
Karen Paterson: No, not at this time as there are a million and one ways to get this type of complex architecture wrong. Technology companies have to be constantly looking to the future and see where technology is going. If you establish competitive advantage and do that then it is very hard for people to catch up.

HR Magazine: How do you suggest that HR Managers can get input and influence their company to switch to more efficient HR technologies?
Karen Paterson: I think at the moment cost is important. We are in a global credit crunch. I think the ability to give management control and visibility over their workforce and at the same time reduce costs is probably one of the most compelling arguments that will get heard.

HR Magazine: Do you have any last words of advice for our readers with regard to HR technology?
Karen Paterson: Make the right choice when you are procuring software. Think strategically, think internationally, and that Software as a Service is where the world is going.

1Enterprise Resource Planning (ERP)
systems usually consists of hardware and software that integrate the data and processes of an organisation into one single system.