Building End-to-End Payroll Integrations in Workday Using PECI and PICOF

Integrating Workday with third-party payroll systems is crucial for organizations that use Workday HCM but rely on external payroll providers globally. Workday provides Cloud Connect for Third-Party Payroll, a set of pre-built integration frameworks to securely send HR data changes to and receive payroll results from external payroll systems. Two key Workday integration methods in this context are PICOF (Payroll Integration Common Output File) and PECI (Payroll Effective Change Interface). PICOF and PECI serve as the outbound interfaces from Workday to payroll vendors and together with inbound result integrations they enable a full end-to-end payroll data flow. 

This article provides a brief primer on these integration approaches and how a Workday consultant can design an end-to-end payroll integration using PICOF/PECI from sending employee data changes to pulling back payroll results.

Workday Integration Basics for Payroll (Brief Primer)

Workday’s Integration Cloud allows building integrations without external middleware, using delivered templates and tools. For payroll, Workday acts as the system of record for HR and compensation data, while actual payroll calculation happens in a third-party system. The goal of an integration is to keep these systems in sync. Workday’s Cloud Connect for Third-Party Payroll provides delivered connector templates that can be configured to extract relevant data changes from Workday and output them in a file for the payroll provider. These connectors support bidirectional data exchange, meaning they not only send data to the payroll system but can also receive data back for a seamless global payroll experience. 

In practice, outbound integrations (Workday to Payroll) are often scheduled around each pay period to send new hires, terminations, compensation changes and other updates, while inbound flows bring back processed payroll results into Workday for reporting and employee self-service.

Workday integration templates greatly simplify development: a Workday consultant can create a new Integration System using a payroll connector template, configure the included data fields and let Workday handle the data extraction logic. Security is managed via integration system user accounts to ensure only necessary data is accessed and transferred. With these basics in mind, let's examine PICOF and PECI the two primary outbound payroll interface formats and how they differ.

Outbound Payroll Data Integration: PICOF vs. PECI

PICOF and PECI are Workday’s two generations of payroll outbound integrations. They serve a similar purpose extracting changes in worker data from Workday to send to the payroll vendor but with different philosophies and capabilities. Below is an overview of their differences and evolution:

Data Captured (Top-of-Stack vs Full History)

PICOF outputs worker data largely in a top-of-stack manner for each worker, it captures the final state of each data element within the pay period. This means if multiple changes occur in one period, some intermediate changes might not appear, risking missing transactions unless additional audits are done. 

In contrast, PECI was designed to capture the full stack of effective changes: it transmits each change event in the order they occurred, giving complete visibility of all payroll-relevant events during the period.

Handling of Corrections & Rescinds

With PICOF, certain actions like rescinding a hire or correcting a transaction are not explicitly flagged in the output; Workday would generate a separate HTML report for manual review of rescinds/corrections and the integration output may need manual adjustments. 

PECI introduces automated change labeling every correction or rescinded event is annotated in the data file so the payroll system can process them systematically. This eliminates manual intervention and reduces errors, as corrections are directly included in the interface file rather than handled through offline ticketing or reports.

Ongoing Support and Features

PICOF is considered an end-of-life product Workday no longer provides enhancements to it. It was the standard prior to 2016, but since then Workday has shifted focus to PECI. PECI is the current standard and is continually improved with new features. For instance, Workday’s Event-Driven Integration (EDI) for real-time triggering of urgent changes is only compatible with PECI, not with PICOF. 

Similarly, PECI connectors introduced features like tracking the last extracted date at each worker level to avoid duplicate data and can even capture future-dated changes to send proactively. Choosing PECI “future-proofs” the integration, ensuring support for the latest Workday innovations.

Integration Output and Flexibility

Both PICOF and PECI output data in a structured format. PICOF historically could be run in two modes: changes only mode or a full file mode where it outputs all current data for all employees. PECI by design sends only changes by default, which is more efficient only employees who got a new package or changed data are sent each run. 

However, PECI also supports a full snapshot on demand if an initial full file or resynchronization is needed. Both integration types allow configuration of which data sections to include and Workday allows adding custom fields or value mappings so the output aligns with the payroll provider’s required format. PECI offers field override flexibility in most sections, making it easier to incorporate additional fields than older PICOF mappings.

Vendor Compatibility 

One deciding factor between PICOF and PECI is the payroll vendor’s capability to consume the data. PECI sends a detailed sequence of events which requires the vendor’s payroll system to handle incremental changes and possibly multiple records per employee. Some simpler payroll systems may only accept a single consolidated record per employee per period. In those cases, PICOF might be used as a simpler feed. 

Workday’s guidance is to use PECI for new integrations whenever possible, but if a vendor cannot support full-stack changes, PICOF is a fallback. Additionally, if the population is extremely large, PICOF may perform better or multiple PECI integrations may be needed. Workday also provides a variant called WECI to handle changes for contingent workers, since PECI’s standard output excludes contingents a consultant should include WECI if the payroll vendor needs contractor data as well.

In summary, PICOF was the original common output file for payroll integration, but it has limitations in change visibility and automation. PECI is the “game-changer” that addresses those gaps by sending every relevant change with effective dates, greatly improving payroll data integrity and reducing manual effort. Given Workday’s direction, PECI is now the recommended approach for outbound payroll integrations, with PICOF only used in special scenarios.

Designing the End-to-End Integration Flow

A successful end-to-end payroll integration covers both outbound and inbound data flows. The diagram below illustrates the high-level flow between Workday and a third-party payroll system:

Workday-to-Payroll outbound flow (via PICOF/PECI) and Payroll-to-Workday inbound flow for results. Workday’s Cloud Connect provides delivered templates to facilitate these integrations.

1. Building the Outbound PICOF/PECI Integration

In Workday, you would start by creating an Integration System using the appropriate template. For example, for a PICOF integration you choose Payroll Interface Payroll Interface Common Output File as the template when creating the integration system. Workday then presents a set of configurable Integration Services, which represent categories of data that can be included. As a consultant, you select which data services the payroll vendor needs and configure any integration attributes and integration maps.

Once configuration is done, the integration system will generate an output file. If the payroll provider requires a different format, Workday can often accommodate that via built-in format options or by using a transformation step. In some cases, Workday Studio or an Enterprise Interface Builder (EIB) might be used to transform the XML to CSV or apply custom logic, but Workday’s delivered payroll integrations cover most needs.

Scheduling & Triggers

Typically, the outbound integration is scheduled to run at a regular interval. PECI integrations can also leverage event-driven triggers for certain changes, ensuring timely updates for critical events when supported. Each run will capture all changes since the last run. It’s important to coordinate the timing with the payroll calendar.

Testing & Validation

A best practice is to test the outbound file thoroughly with various scenarios: multiple job changes in one period, retroactive changes, rescinds, leaves of absence, etc., to ensure the integration logic captures them correctly. Workday provides a Payroll Data Audit report that shows exactly which workers and fields were included in the output, which is extremely helpful to verify completeness. If something seems missing, Workday consultants should play “integration detective,” checking if the worker should have been picked up and whether filters or inclusion rules need adjustment. 

By iterating on configurations and using Workday’s integration event logs and error reports, you can ensure the outbound feed is accurate and trusted by the payroll team.

2. Setting Up the Inbound (Payroll Results) Integration

End-to-end integration doesn’t stop at sending data out. Once the payroll provider processes the payroll, key results often need to come back into Workday. Workday’s Cloud Connect supports importing various payroll outputs for a unified experience. 

Common inbound elements include:- Payroll Results, Paycheck or Payslip information and Year-end tax documents. To bring these into Workday, one might use a delivered EIB or connector if provided by the payroll partner, or configure a custom integration.

The inbound integration is usually scheduled to run after each payroll is completed at the vendor side. It might be initiated by the vendor placing a results file on an SFTP server which Workday pulls, or the vendor could call a Workday web service. In either case, once imported, Workday can utilize this data for composite reports and for user access. 

Essentially, this step closes the loop, ensuring Workday is updated with actual payroll outcomes so that it remains the “single source of truth” for both HR and high-level pay data.

3. Security and Data Governance

Throughout the integration setup, ensure that data is handled securely. Use secure protocols for file transfers. Workday integration system users should have access only to the necessary domains. Auditing who can launch or modify integrations is also important. Workday provides an Integration Dashboard to monitor runs and you can set up error alerts so issues are promptly addressed.

4. Testing End-to-End

It’s advisable to run parallel tests with the legacy process when replacing an old integration or implementing a new one. Compare payroll results to ensure no discrepancies. Pay special attention to complex scenarios. Both outbound and inbound pieces should be tested together.

5. Cutover and Beyond

Once deployed, the integration should be closely monitored for the first few payroll cycles. Workday’s logging and the payroll vendor’s feedback are invaluable. Over time, maintain the integration by applying any needed updates. If using PECI, stay current with Workday’s releases as they continue to enhance PECI’s capabilities. Remember that PICOF will not receive such enhancements, so if you’re still on PICOF, plan a future migration to PECI to avoid missing out on improvements and support.

Conclusion

Designing an end-to-end payroll integration in Workday using PICOF or PECI involves a thorough understanding of both the Workday integration tools and the payroll provider’s needs. For Workday consultants, PECI has become the tool of choice due to its robust handling of change data, automated corrections and alignment with Workday’s future roadmap. PICOF, while still usable, represents an older paradigm and should mainly be considered in scenarios where a payroll system cannot handle the richness of PECI’s output or other edge considerations. 

By leveraging Workday’s delivered connector templates, configuring the integration with the right data fields and mappings and setting up inbound result flows, one can achieve a seamless integration where Workday and the payroll system operate in concert. The result is that employees and administrators get a unified experience workers see their up-to-date pay information in Workday, and the organization benefits from accurate, timely payroll data for compliance and analysis. 

In summary, building a Workday payroll integration with PICOF/PECI is about enabling data unity between HR and payroll Workday captures every HR change and transmits it reliably to payroll, then payroll outputs are fed back to keep Workday in sync. This end-to-end loop, when done right, ensures that despite using separate systems, the HR and payroll domains function as one cohesive whole reducing errors, saving manual effort and providing confidence in the data for all stakeholders.