Interview With A CEO: Navigating Cloud Adoption and Payroll Transformations

We sat down with our CEO, Will Jackson, to unpack the evolving landscape of payroll technology in the UK, focusing on cloud adoption, pricing trends, market growth, and the competitive dynamics shaping the future of payroll solutions. 

Q: How is cloud adoption shaping payroll across different UK business segments? 

Will: The UK payroll market is clearly moving towards cloud, but the pace and nature of adoption vary significantly by segment. 

SMBs are leading the charge with cloud as the default for new payroll implementations. Desktop and legacy products linger mostly due to inertia and strong relationships with bureaus and accountants. 

In the mid-market, it’s a hybrid picture. Many companies still operate on legacy hosted or client-server systems, but new requests for proposals (RFPs) are almost exclusively for multi-tenant cloud or single-tenant SaaS solutions. 

For enterprise clients, the landscape is more complex. There’s a heavier mix of hosted private cloud setups and large HRIS platforms that embed payroll functionality. Often, the core payroll engines remain legacy systems, but they’re wrapped in modern cloud user experiences and integrated workflows. 

Q: What are the current pricing levels and trends in UK payroll SaaS? 

Will: Pricing typically ranges from about £4 to £10 per employee per month for core payroll SaaS. When you add integrated HR or managed payroll services, that jumps to around £15 to £25 PEPM. 

We’re seeing annual list price increases of 2-5%, often tied to major legislative changes like National Insurance, pensions, or pay transparency regulations. Looking ahead, price hikes will likely come through value-added bundles, think HR tools, analytics, time management, and enhanced support, rather than just payslip processing fees. AI and compliance features are becoming key monetisation drivers. 

Q: Can you give us a snapshot of the UK payroll market size and growth drivers? 

Will: The market is estimated at around £1.5 to £1.6 billion for HR and payroll software in 2025-26, which aligns with analyst data from IBISWorld and GPA. 

Growth has been steady at mid-single digits (about 4-5% annually) for over a decade, despite economic shocks. This resilience is driven by two main factors: 

• New business: Continued cloud adoption, SME digitisation, and platform consolidation across HR and payroll. 

• “Seat inflation”: Vendors justify higher average revenue per user (ARPU) through mandatory updates for compliance (RTI, auto-enrolment, IR35, etc.) and new modules. 

Q: What about customer retention and churn, especially in the mid-market? 

Will: Payroll shows strong structural stickiness compared to other SaaS categories. Mid-market net churn typically sits in the mid-single digits annually. 

Churn patterns vary by lifecycle stage: Early-stage and scale-ups tend to churn more as they outgrow entry-level tools and seek integrated HR/payroll platforms. Mature mid-market and enterprise churn is mostly project-driven, such as re-platforming, rather than price-driven. Key churn drivers include HR transformation projects, poor service or implementation failures in managed payroll, and M&A activities leading to platform standardisation. 

Q: How does the competitive landscape look across segments? 

Will: It’s quite segmented: 

• Enterprise/upper mid-market: Dominated by global giants like ADP, Zellis, SD Worx, Dayforce, SAP SuccessFactors, Oracle, and Workday, often with local engines or partners. UK-focused players include Zellis, Moorepay, MHR, Advanced, Cintra, IRIS, and Access. 

• Mid-market: Key vendors are Moorepay, MHR, Advanced, SD Worx mid-segment, Ciphr, Sage People, Employment Hero, HiBob with payroll partners, Pento, and BrightPay Connect (targeting larger bureaus). 

• SMB/micro: Split between accountant-led solutions (BrightPay, Moneysoft, Primo Payroll, QuickBooks Payroll) and direct SaaS offerings (Sage Business Cloud Payroll, Xero, Rippling, Employment Hero, smaller cloud natives). 

Q: What are the dynamics between bureau-led and direct-to-SME payroll models? 

Will: Both models have strengths: 

Bureau-led vendors (e.g., BrightPay) benefit from deep penetration and retention via accountants and bureaus, with lower customer acquisition costs (CAC) and strong product feedback. However, revenue per SME tends to be lower. 

Direct-to-SME models (e.g., Pento) often achieve higher ARPU through bundled HR and payroll services, stronger brand control, and better customer experience, albeit with higher CAC. 

Q: Who tends to win with accountants versus direct sales? 

Will: Vendors strong with accountants and bureaus include BrightPay, Moneysoft, Primo Payroll, IRIS Staffology, and Xero/QuickBooks small firm programs. 

Direct-led models gaining traction are Pento, Employment Hero, Rippling, Sage Business Cloud, ADP (for larger SMEs/mid-market), Zelt, and other all-in-one platforms. 

Q: How are customer acquisition costs evolving, and what about free tiers? 

Will: Paid media and outbound costs have risen, pushing vendors to lean more on partners, accountants, and content channels to manage CAC. 

Free or heavily discounted accountant editions, especially from accounting platforms, have raised the bar for pricing at the low end, making it tougher for pure-play payroll vendors to compete solely on cost. 

Upmarket, pure-play vendors are focusing on mid-market and bundled HR/payroll/services offerings to justify higher ARPU and absorb CAC. 

Q: Finally, how does payroll penetration differ between in-house and outsourced models by segment? 

Will: Broadly speaking: 

• SMB/micro: Many run payroll in-house but rely heavily on accountants or bureaus for outsourced calculation and submissions. 

• Mid-market: Mixed approach—some operate in-house on HR/payroll platforms, while a growing share uses managed payroll or BPO for compliance and resilience. 

• Enterprise: More likely to outsource via managed payroll, BPO, or shared service centers to handle complexity and scale. 

This evolving landscape shows how cloud adoption, regulatory pressures, and shifting customer expectations are reshaping UK payroll, turning it into a strategic enabler rather than just a back-office function. 

If you’re navigating payroll transformation, understanding these trends can help you make informed decisions that drive efficiency, compliance, and employee satisfaction. 

Why You Should Contact Us 

The Leppington Group Limited (TLG) is a UK headquartered company specialising in payroll advisory, audit and consulting services.  

Originally founded in 2011, TLG has established itself as a reputable, independent and trusted partner for organisations seeking expert guidance for any aspect of payroll requirements. 

TLG's core services include payroll audit & health checks, issue navigation, procurement, vendor selection, implementation guidance, project mediation, payroll administration, and cyber & privacy services. 

TLG's commitment to excellence, and a customer-centric approach, has elevated the organisation as a valuable resource for businesses seeking to optimise their payroll processes without the ‘Big Four’ price tag. 

TLG exists to make payroll simpler, businesses better and results clearer.