Sammy Molinaro is Solutions Director at CloudPay
Solely relying on payroll’s traditional success markers of accuracy and timeliness is somewhat akin to mining for gold and never going deeper than a few feet. It might give you something, but it lacks the real value gained by going further. This has been a long-standing issue within the profession. Indeed, anyone operating within it has recognised that a more detailed and instructive narrative lies deeper in the available data, revealing the full story and highlighting how this market is undergoing a major, tech-backed transformation.
This change is shifting payroll into the spotlight and moving a function that was once confined to the back office into a more central role, particularly within major international businesses. In fact, the latest Payroll Efficiency Index (PEI) 2025 – an annual review of the metrics that really matter in payroll – highlighted this trend in clear detail, and revealed that the evolution is being powered by the rise of the three As: AI, automation and APIs. This is transforming the function into one that can add far greater strategic value to businesses and workers, and ultimately plays a far more pivotal role than ever before.
Deeper analysis
The PEI is built on an analysis of over one million payslips processed across 130 countries and showcases the broad development of faster and smarter, global payroll functions that can identify issues before they escalate, enable smarter, flexible approval workflows, and integrate more cleanly with internal platforms.
In terms of direct impact, this year’s data shows the effect that the three As are having on payroll operations globally. While a 1.21% drop in first-time approvals (FTAs) may seem like a negative to many, in reality – and when combined with other statistics, it suggests a longer-term shift to accommodate more nuanced requirements, in an increasingly complex market. These include both the increase in supplemental runs (the proportion of payroll runs taking place outside of the normal cycle) and 12% rise in calendar lengths (number of days taken to complete a payroll cycle from start to finish).
Therefore, the drop in FTAs is quite the opposite of a failure and actually reflects greater flexibility, which is increasingly becoming a valuable currency in modern payroll. It also suggests that the function is becoming more responsive, with teams allowing for real-time compliance clarifications and for more customer-specific adjustments to be made.
AI, automation and APIs
But what specific role are each of the ‘As’ playing? AI is naturally making payroll smarter by flagging patterns, anomalies and errors that would otherwise have been missed, and would have required significant work to correct later in the process. Automation then smooths, streamlines and expedites activities, before advanced API integrations interlink previously disparate systems, and bring payroll more closely into the central, decision-making parts of businesses. Together, they are the main drivers behind the ongoing and radical transformation seen across the profession, and subsequently in almost every vertical market.
It’s clear, then, that technology is reshaping payroll; however, as in so many other fields, we are still some way off these platforms being able to handle effective pay runs themselves, and businesses will require a combination of people and tech to drive success for the foreseeable future. Fortunately, this trend seems to be widely recognised, with only one in five professionals suggesting they would adopt AI-backed processes without human involvement.
Tech and talent
Ultimately, the findings of the latest iteration of the PEI reinforce what we have believed for some time. Namely, that payroll’s future lies in the intersection of technology and talent, and while AI, automation and advanced APIs are increasingly essential, they are still no replacements for skilled professionals, and must work in tandem to drive the best results. However, their true role is becoming clearer. They are powerful tools that enhance what people do best: interpreting, responding and problem-solving. This means that when paired with intelligent systems, payroll professionals can become true enablers of business agility and be seen far beyond acting as simple administrators of pay, as they were once perceived to be.
Looking ahead to the coming years, the challenge for global organisations will be to maintain this momentum and to continue investing in the systems and skills that support a modern, unified pay experience. The goal is to move away from fragmented, reactive processes and towards a connected, data-rich environment where payroll becomes a source of insight, not just output. It’s an exciting era for the pay profession, and the transformation towards a real powerhouse for strategic growth is well underway.
