Democratization of the Payroll Business

Journalist Markus Matt asked Ason founders Christian Kobler and Christian Fässler why is Ason needed in the payroll market, why the product is making the breakthrough and about current state of progress.

Gentlemen, why another payroll software? Why does it need Ason?

Quite simply, because payroll outsourcing does not yet scale.

Can you elaborate on that?

It is indisputable: payroll accounting does not add value to companies and, as a peripheral process, is predestined for companies to buy in this service rather than do it themselves.

What is preventing payroll providers from breaking through?

Every customer has its own specific requirements. Current payroll software can only automate a maximum of 80% of the cases; a lot must be done by specialists. Unfortunately, this is not scalable.

Why hasn't this problem been solved long ago, at least by the financially strong companies like SAP?

Payroll is in a legal minefield where innovation has always been secondary to the need to develop a product that is always compliant with the law.

The concepts of the leading payroll software vendors date back to the 1980s. A lot has been "built and painted" since then, but at the core we still see pure database solutions of the last century.

And why has no startup managed to revolutionize payroll yet?

The barriers to entry for newcomers are extremely high. It takes years to get at least a reasonable technical overview. In addition, a revolutionary overall concept that really had the potential to transform the market was usually missing.

Moreover, it is not attractive for clever and innovative minds to sacrifice a few years of their creative work for an optimized but ultimately not revolutionary version of an ITSG-certified payroll software.

What a payroll system must be able to do is determined by Swissdec in Switzerland and ITSG in Germany. Do these institutions think holistically?

Behind these institutions are the legislator's desires - and the programs are designed accordingly.

The reality of payroll knows far more rules than just those from tax and social security law, just think of the big topic of labor law or the many rules with regard to company pension schemes. In addition, there are sector-specific and company-specific regulations. Many companies are also internationally active, so there are even more fields. All of this is highly complex. This is where Ason's solution comes in with the so-called "layers of regulation".

Could you explain the term "regulations" in more detail?

A regulation carries components from three areas: the input of data, the processing of data, the presentation of data. The beauty is that you can always build your own regulations that are detached from everything else. Our ecosystem allows all regulations to communicate with each other.

But in the end, every regulation at Ason must be programmed. Let's take the example of short-time work: everything that came here in the form of new regulations had to be tested in depth and breadth, because we had to make sure that the insertion of these new rules into an existing program would work without errors and not cause problems elsewhere.

Of course, each layer must be built up first. But when it is in place, it is stable in itself. Regulations for a sector are a layer above the base (national rules), they naturally build on the general valid regulations and add specific ones for that sector. This new layer extends the existing one but cannot change the other layers.

Let's look at the public service: there is the ITSG rulebook as the base layer and the public service rules are layered on top of that. How are such programs built so far and where is the difference to your logic?

Now there are monolithic state machines, all changes from outside affect everything. If you turn something in one place, changes can happen somewhere else entirely.

With us, it is the case that each individual component can define wage components within itself. Input, black box, output. Input is case management; black box is the calculation of the wage and output is the wage runs.

Layers of this kind can also be built for the public sector, based on ITSG in Germany and Swissdec in Switzerland. The only thing that needs to be defined in the layer is which existing layers they communicate with and depend on. For example, I can say that I change or take over existing wage types with a public service shift.

Can you explain case management to me in more detail?

If I enter a change, there are usually quite a few things that must be changed manually so that everything fits in the end. Unfortunately, there are no automatic solutions at this point. The processes for different types of changes are still mostly described in Word documents, if at all. In many cases, experienced staff simply have the processes in their heads and transfer their knowledge to new staff.

Our approach is “case management” and with it we can map the entire administration, including all subsequent cases. When a case worker sits in front of a normal program, he must think of an incredible number of things when there is a change. He must work through many things. With our solution, these things are already thought of automatically, and the program takes care of many of them.

The clerks are relieved, expert knowledge is no longer necessary. As a result, companies and relevant service providers can finally scale in payroll too.

How does Ason intend to implement this great global vision? You will first have to secure the high sums in the millions that are usual for such projects nowadays, won't you?

We have a clear vision and have developed the machine to achieve it. We are not marketing experts but live the engineering idea. It is not the brand that is in the foreground, but the motivation that this encrusted industry finally transforms itself. We see ourselves as pioneers of tomorrow's payroll.

We are now finding out who is best suited to build the ecosystem with us. Of course, we need a reliable country partner here in each country. They must be allies who want to implement this new global system together with us. We need visionary doers, that's for sure. Until we have found them, we can continue to "bootstrap". We will soon be ready for the market in Switzerland and can start in the real world.

Is it true that you don't have a front end at all? How does that work?

Technically, we have an API, I can get it as a service and choose my own frontend. I can integrate it into any HR system. I have enormous flexibility, low dependency, and enormous transparency. And think of quality management, here too there are completely new possibilities.

By the way: we have proven the front-end feasibility with a demo app. We will also use it to certify regulations. The source code of this app is open source, as are the regulations themselves.

Why will Ason prevail?

It's about the democratization of payroll: if I can construct such an ecosystem and save a lot of clerks, I give a lot of self-determination and transparency back to the company.

Furthermore, our model is also a dream come true for every CFO, keyword transparency. All regulations are structured next to each other. It is always comprehensible what is different in the individual layers compared to the basic state regulations, because precisely these differences are explicitly defined there.

Customized software solutions are finally possible in a scalable way. The standard solution will be free. That is also right, because what is required by the state or the ITSG and Swissdec should cost nothing.