TLDR: A new report from The Hackett Group reveals that payroll operations are becoming a critical focus for AI-enabled transformation, with leading solutions automating nearly 70% of processes and significantly reducing costs. The study highlights the increasing adoption of generative AI and other emerging technologies to address rising workloads and budget constraints in payroll departments.
MIAMI – The Hackett Group, a prominent generative artificial intelligence (Gen AI) consultancy and executive advisory firm, has released its latest Digital World Class® Matrix, spotlighting the payroll software marketplace as a key area for AI-driven operational transformation. The report underscores how advancements in user experience, automation, and emerging technologies, including agentic AI and continuous calculation, are reshaping global payroll processing.
The findings indicate that payroll organizations leveraging advanced software providers are realizing substantial benefits. End users report an average of 67% of their payroll processes are now fully automated, leading to a dramatic reduction in administrative workloads. Furthermore, top payroll solution providers are achieving nearly 70% automation and cost reductions of up to 71% through the integration of Gen AI and other innovative technologies.
This research comes at a crucial time for payroll departments, which are facing increasing demands. According to The Hackett Group’s 2025 Payroll Key Issues Study, teams are grappling with a 7% increase in workload while simultaneously experiencing a 2% decrease in budget. In response to these challenges, organizations are increasingly adopting software solutions that offer enhanced automation and Gen AI capabilities to alleviate operational pressure and ensure seamless payroll delivery.
The Digital World Class® Matrix provides an in-depth analysis of the most impactful payroll technology providers in the market. It details how their solutions enhance payroll operations through advanced automation, continuous calculation, and anomaly detection, among other features. The report evaluated 18 providers based on their capabilities and the value delivered to customers, drawing insights from vendor briefings and extensive customer interviews across 26 distinct criteria.
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Key emerging technologies highlighted in the report include agentic AI, which refers to intelligent applications capable of autonomously executing multiple steps within a process. Early applications of agentic AI are primarily focused on compliance management and anomaly detection, with expectations for broader expansion in the coming year. Other functions gaining traction include continuous calculation, which enables real-time gross-to-net processing, and earned wage access, providing employees with flexible access to their pay outside traditional cycles.
