Small Business Payroll – The Pros and Cons of an in-House Payroll Systems

In-House Payroll System Hardware Options

This week begins the first of a three part series on in-house payroll systems. During this series, the hardware components that comprise this type of system, pros and cons of this type of system, and software options will be examined.

An in-house computerized payroll system is located on company property, and equipment may be owned or leased from a vendor. Businesses have more control over this type of system, and can tailor the security system design to meet individual needs. System operation is performed onsite by company employees including programmers, systems analysts, data entry personnel operators, system administrators, etc., providing more control to the business.

Hardware options are determined by the size of a company, requirements, budget constraints, and the need for dedicated computer systems in certain departments.

Hardware Options:

  • Mainframe Computers – largest and most powerful computers, used for the entire company. Each department links to the mainframe, sharing the resources (storage and processing) with other departments. In large companies, a separate mainframe may be dedicated to payroll processing, benefits and human resources functions
  • Minicomputers – smaller and less costly option than mainframe computers. This can be a good option for small to medium sized businesses. Again, departments share the available resources.
  • Microcomputers or personal computers (PCs) – flexible options from many vendors.

Microcomputer Networks Networks connect computers and applications. PCs are able to communicate with each other in a network, and employees can access applications from their computers. PCs share software programs, and have access to printers, modems, etc.

  • Local Area Networks (LANs) – In a LAN, computers are physically connected to each other, data is transmitted at high speed short distances, and managed by a main computer or minicomputer.
  • Wide Area Network (WANs) – In a WAN, data is transmitted over long distances using telephone lines and Internet.

Client/Server Technology Application programs are distributed by running on a personal computer. The data is on a server (mainframe, minicomputer or PC). Payroll, benefits and human resource applications are installed on PCs in the payroll and human resources departments.

Client/server applications may be comprised of a combination of these components: hardware, graphical user interface, file management system, network operating system, and communications protocol.

Data Processing Payroll and human resources data can be processed using two different methods, real-time processing and batch processing. Real-time processing allows the user to have immediate access to the data as updates are made. During batch processing, data is collected, coded in groups for processing, and returned when updates are complete. The user usually does not have access to the data while updates are made.