SAP User Group helps Yorkshire Water make National Insurance savings

Yorkshire Water has exploited the advice and expertise of the UK & Ireland SAP User Group in order to develop a new HR and finance function.

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Yorkshire Water has exploited the advice and expertise of the UK & Ireland SAP User Group in order to develop a new HR and finance function.

According to Fred Rennison, a member of the SAP Reporting and Support Services Team at Yorkshire Water and the volunteer chairman of the SAP UKI HR Payroll User Group, the project has helped the company realise a 100 times return from the company’s annual membership fee (£500) of the user group.

Three years ago, Yorkshire Water found that it could save the business money by taking advantage of National Insurance variations on a range of “salary sacrifice” schemes. This required a legally-compliant HR and finance system that would be able to accurately work out variations and ensure that correct amounts of PAYE tax and National Insurance contributions were being paid to the tax man.

The HR department started its project with a pension salary sacrifice scheme. This required employees, who opted into the scheme, to agree to a lower salary, with the difference being paid directly to a pension provider by the company. The benefit for the company and employees is that they pay less National Insurance and tax.

With a workforce of 2,500, the salary sacrifice scheme clearly has a big impact on the company’s costs.

On the back of the deployment of the HMRC-approved salary sacrifice system in 2008, Yorkshire Water has since run similar schemes using the system. These include cycle to work, water bills for employees (the company takes the cost of water bills out of the employees’ salary) and childcare vouchers.

"Having done one, we were then well placed to do the others," said Rennison, who revealed that the company deliberately decided against using SAP’s salary sacrifice functionality in its Human Capital Management module.

He said: "It did have it [the functionality], but you had to activate the module. It would have cost us a lot of money and introduced a way of working that didn’t fit with our company ethos."

"If you systemise things, it requires you to integrate within the system, which would have been a burden on managers," Rennison explained.

By being part of the SAP User Group, Rennison’s team was able to make all the required changes to the company’s SAP-based HR and financial system in-house.

"The user group is very good for networking. They shared experiences because there was nothing commercially sensitive," said Rennison. He added that people in the user group were "very, very co-operative".

Rennison said that he chose not to use a consultant because he wanted experience-based advice.

"A consultant will pretty much do what you specify, (even) if you spec it wrong... I wanted to get advice from practitioners. We’ve seen consulting solutions reeled out and thought ‘that doesn’t work for a real person’. We needed a reality check for the design," he said.

Furthermore, Rennison said that the user group was useful because companies were very open about problems or mistakes they had made, which meant that Yorkshire Water was able to quickly implement changes to the system.

SAP UK & Ireland User Group Annual Conference

21-23 November 2010, Manchester

Early Bird rate now available click here

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