The Hackett Group Releases 2025 Payroll Software Digital World Class® Matrix Highlighting AI-Led Innovation and Automation

The Hackett Group Unveils 2025 Payroll Software Digital World Class® Matrix: AI and Automation Lead the Future of Payroll Processing

Amid rising workloads and shrinking budgets, The Hackett Group, Inc., a leading Gen AI consultancy and executive advisory firm, has released its latest Digital World Class® Matrix—offering in-depth insights into the payroll software landscape and the technologies redefining how global organizations manage payroll.

The report—built from vendor briefings and customer interviews across 26 evaluation criteria—reveals a sharp shift in payroll priorities, with providers embracing agentic AI, continuous calculation, and intelligent automation to streamline operations and enhance user experience.

“Payroll is a critical element of operation for any business, and the margins for error are slim,” said Matthew Merker, Senior Research Director for HCM Market Intelligence at The Hackett Group®. “Software providers that enhance automation, while introducing advanced capabilities like continuous calculation, are poised to take the lead in this highly competitive market.”

Market Pressures and the Need for Transformation

According to The Hackett Group’s 2025 Payroll Key Issues Study, payroll teams are contending with a 7% increase in workload and a 2% budget cut—intensifying the demand for efficient, AI-powered software solutions.

Organizations are increasingly turning to digital payroll solutions that offer:

• Enhanced automation

• Streamlined compliance management

• Intelligent anomaly detection

• Real-time, gross-to-net continuous calculation

• Employee self-service tools and conversational AI

Key Insights from the Digital World Class® Matrix

The report evaluated 18 payroll vendors on two primary dimensions:

• Capability Ratings – Assessing features like automation, analytics, compliance, mobile enablement, earned wage access, UI/UX, and platform integration.

• Value Realization Ratings – Measuring outcomes such as cost and workload reduction, implementation experience, cycle time, onboarding, accuracy, innovation pace, and business value.

🔍 Key finding: Organizations using top-tier payroll software vendors report that 67% of their payroll processing is now automated, and 60% have seen cost reductions—a significant win for resource-strained payroll teams.

AI Is Reshaping the Payroll Technology Landscape

Among the most promising technologies:

• Agentic AI: Autonomous AI systems that execute multi-step processes—especially effective for compliance monitoring and anomaly detection.

• Continuous Calculation: Real-time payroll processing that enhances accuracy and visibility throughout pay cycles.

• Earned Wage Access: Increasingly popular functionality allowing employees to access pay ahead of scheduled paydays.

Early-stage innovations—like intelligent content generation and AI-enhanced employee collaboration—are gaining momentum, positioning vendors with robust AI portfolios as key differentiators.

Actionable Guidance for Payroll Professionals

This latest matrix is part of a broader 82-page Hackett Group research report, created to help payroll leaders:

• Identify the best-fit payroll technology partner

• Align investments with strategic goals

• Optimize performance through digital transformation

Complimentary summaries of the payroll research are available with registration. Full report access and consulting inquiries can be directed to The Hackett Group’s advisory team.

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