ARE YOU TRACKING YOUR #1 COST?
By Rudolf Melik, CEO, Tenrox

For any business that is looking to automate and streamline its business processes, time tracking software is one of the best places to start. Payroll is the largest corporate expense. Tracking and controlling time leads to immediate and tangible gains in productivity and cost reductions. Time tracking increases operational control, facilitates compliance with various employment and corporate governance laws, reduces costs, and improves efficiency. Some of the tangible benefits of time tracking are as follows:

• Reduces timesheet review time by 80%. Average timesheet review takes 6 minutes; with an automated system, a review takes 1 minute - American Payroll Association
• Helps the company comply with various employment guidelines and industry regulations such as state specific wage laws, FMLA, FLSA and SOP 98 (US accounting guidelines for capitalizing software development costs)
• Organizational policies and business rules are integrated into the submission and approval process; validation is done at point of entry
• Monitors time by team and prevents budget overruns
• Reduces time misappropriation (e.g. long lunches, early departures, late arrivals) which accounts for up to 4.08 hours per week - American Payroll Association

There are hundreds of commercial time tracking applications to choose from. Some companies consider building this type of software in-house. So how do you decide what is best for your organization? This article serves as an introduction to time tracking software, the benefits and what to look for when considering a purchase.

What to Look for in a Time Tracking Solution

Single Time Entry System - One Source of the Truth

Many companies use multiple systems, and each department may have its own administrative staff and manual process to track time for payroll, time for projects and billable work. To eliminate redundant data entry and multiple tracking systems you should strive to implement a single time tracking system used by and accessible to everyone across the organization. Therefore, employees enter time once, managers approve it once, and the same information is used for payroll, project management, charge back and billing purposes.

Many companies use spreadsheets to track work and leave time. The information is then reentered or manually imported from spreadsheet files into the company's financial or HR system. This process is highly error prone and can result in significant payroll processing errors, and lost or duplicate entries. A time tracking software that is integrated with your financial system and provides entry validation policy, approval and notification setup eradicates these types of errors. Consolidating this kind of data often results in conflicts and errors that are difficult to address. National payroll association studies have shown that eliminating such duplicated processes and errors can save you up to 3% of total payroll costs.

Labor Reporting

Time tracking software provides managers with a real time view of operations. Managers are able to analyze and assess resource needs more effectively thereby reducing the need for overtime or use of external consultants. Unnecessary overtime payments and consulting fees can quickly reach the $100,000 mark even for a small company. A time tracking system would help you avoid this cost from creeping up.

Leave Time

With a manual or spreadsheet based time tracking system, overtime and leave time policy enforcement is verified after the fact. Managers and administrative staff are the only line of defense for detecting and correcting invalid and unauthorized leave time. A time tracking solution enables you to specify your work and overtime policies, and to set up leave time accrual and usage rules per employee, department and site. The system then automatically enforces these rules at point of entry, so users can never submit invalid or unauthorized entries. This feature alone reduces the administrative effort from a few hours to a few minutes per pay period per manager. Many companies have reported that just controlling leave time pays for a time tracking system in less than 12 months.

Self Service

Self service features for timesheet and leave management are another way of reducing redundant and unnecessary overhead. For example, some time tracking applications provide a leave request workflow. Users use the workflow to request leave and can verify the status of the leave request online until it has been approved or rejected. The system automatically calculates the leave time remaining and updates the user's timesheet (and availability) once the leave request has been approved to ensure that no work is assigned to that person during their absence.

Holiday Management

In addition to managing work and leave time, a time tracking solution should provide holiday management. The system should automatically enter time for pre-configured holidays by region for every user. After the fact entries or invalid time entries for holidays can lead to invalid timesheets and payroll processing corrections. These types of automations make the timesheet tracking process much simpler and a more welcome task since as you have probably experienced manual timesheets are notoriously late and filled with errors.

Billing

Timesheet data that is collected to track research and development, billing, or inter- departmental charge backs may require supporting documents and notes. The software you choose should let users and managers attach notes and documents to the timesheet itself or to specific time entries. These notes should then automatically appear in charge-back reports or invoices to facilitate tracking and approval. Our customers report that invoices and charge backs with insufficient documentation or detailed notes are three times more likely to be rejected, face much more scrutiny and lead to iterative debates and discussions with clients or departments being charged for the work.

Project Tracking

For companies that track projects, other productivity enhancing features to look for include: the ability to assign work and collaborate with team members on estimate to complete, manager and executive dashboards and home views that report on status and display progress and project health indicators, and integration with project tracking applications so that approved timesheet data automatically updates the project schedule.

Reporting

Most of what we have discussed so far has focused on data collection, tracking, ensuring compliance and facilitating approvals. However, you will quickly find out how important it is to be able to report and analyze all of this great operational data you have collected. The time tracking application should include reports to show time spent by activity, project or team, as well as leave time and overtime by user. The application can also provide live analytical pie and bar charts that let executives view real- time high level or detailed operational information of their own choosing using drill in/out capabilities. These types of operational reports help executives spot over budget and late projects or potential problem areas so they can take immediate action to improve the situation.

Buy or Build

Companies who have capable internal IT staff have to deal with the dilemma of whether to build in-house software solutions to automate various operational processes. Any organization that is faced with this question should carefully consider its options. Perhaps it can support a certain process in the short term using a paper or spreadsheet- based approach or an in-house developed application, but in the end building in-house should only be a last resort option. With substantial innovation and the proliferation of new enterprise software, there are, in most cases, commercially available products that will cost much less, have much less project risk, do a lot more, and can be deployed in far less time than an in-house alternative. Also, many time tracking applications offer a software development kit (SDK) and report designer, therefore, internal IT staff can use the SDK and the reporting engine to build whatever custom features, enhancements and reports you require. Buying is a better short and long-term investment that allows organizations to focus on their core competencies.

Final Thoughts

Automated tracking of your number one cost can lead to instant efficiencies and savings. Timesheet management has a large and immediate business impact and return on investment. You need to approach this project carefully and should not underestimate the internal resistance to change. Do not oversimplify your needs and choose software that may rapidly become a legacy system. Make sure whatever vendor you choose provides you with an integrated solution that can scale as you automate more business processes that are related to time tracking. At the same time, do not attempt to automate all business processes at once; start with a few key processes. A phased implementation with specific milestones is much more likely to succeed than a large system implemented at once across the organization and to automate many business processes.

More and more software companies are implementing a time tracking system to benefit from the automation and self services features, reduce administrative overhead, comply with regulations, and to improve their operational efficiency.

Author: Rudolf Melik, CEO of Tenrox (www.tenrox.com), has twelve years of experience in the workforce and project management industry. For more information call Tenrox at 626 796-6640 x1000 or send an email to info@tenrox.com.

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