This is Part Two of a three-part blog series covering my perspectives on the payroll market based on NelsonHall’s latest annual market analysis, Payroll Services: Globalization and Digitalization. Part One features the payroll buyer perspective, including the buyer view of the impact of innovation available today. In this part, I look at the managed payroll service providers currently pushing the pace of innovation.

Managed payroll services: providers & solutions to watch

With payroll at the heart of the employee experience (and housing some of the richest and often underutilized data sets in the organization), and taking account of the shortcomings and learnings from the pandemic, firms across sectors are prioritizing investments to futureproof their payroll operations for greater resiliency and empowering its shift from simple processor to strategic center of expertise.

The renewed focus on payroll has managed service providers rapidly proliferating digital solutions to modernize and automate this historically manual, time-consuming process, dedicating on average ~19% of annual revenues toward technology and innovation, with roadmaps focusing on enhancing the user experience (mobile first/only, deeper personalization and augmentation through AI/ML/NLP); enabling digital payment solutions such as on-demand pay; advancing automation toward fully autonomous, "touchless" payroll processing; and enabling deeper predicative payroll reporting and insights.

Here are some of the managed payroll service providers and solutions pushing the pace of innovation in payroll services and technology, which I will be keeping a close watch on as we move ahead.

HCM technology providers

HCM technology providers have gotten serious about payroll in recent years, somewhat creating their own category of payroll solutions. With technology at the core of their business, supported by sizable annual investments to advance their platforms, these providers have brought a virtual ''cannon to a knife fight'' in a historically innovation-starved market. Their technology is powerful, deeply integrated with core HR, time and benefits, and progressing rapidly – placing traditional payroll providers on notice while mutually benefiting those that can integrate and supplement the HCM's capability (most often multi-country providers).

UKG

The newly merged firm (Kronos and Ultimate Software) paired their deep WFM and HCM technologies to form what will eventually become a tightly integrated, comprehensive global workforce solution. The firms also merged their North American payroll services capability and more recently opened their offering to provide standalone payroll.  Since loosening their HCM offering, UKG has seen strong growth and uptake for its payroll services driven by its advanced digital payroll capability, not only with full HCM platform adopters, but increasingly as a standalone led by several notable enterprise adopters.

Ceridian

No HCM technology provider is more serious about multi-country payroll than Ceridian. Dayforce is now natively supporting seven countries (U.S., Canada, U.K., Ireland, Australia, New Zealand, and Mauritius), with Mexico and Germany on the horizon. Its recent acquisitions of APAC specialists Excelity Global and Ascender drastically accelerated its multi-country payroll capability and further supports its up-market aspirations. Further, Ceridian's Dayforce Wallet, a native on-demand pay and financial wellness solution enabled by its continuous calculation capability, provides early earned wage access to employees, and supports alternative pay methods, including the Dayforce Prepaid Mastercard. Dayforce Wallet has seen rapid uptake in the U.S., as the EWA trend continues to escalate and is targeted for launch in Canada and the U.K. next (later in 2021).

Paychex

Although not a traditional HCM technology provider, Paychex has quietly developed its FLEX technology into a digitally-focused platform offering that spans the employee journey and punches above its weight in HCM technology maturity, including robust COVID-related workplace tools paired with an expansive, one-stop-shop of modern HR and payroll solutions and services, curated to support the needs of growing small and mid-sized businesses. Examples include comprehensive payroll funding and payment solutions like on-demand pay, real-time payments, same-day ACH, and payroll protection through Paychex Promise, which can extend payroll funding collection by up to seven days.

Multi-country payroll providers

Multi-country payroll solutions are greatly benefiting from advances in digital innovation. Modern cloud platforms are standardizing and centralizing payroll to a single control center and dashboard globally, enabled by integrations or APIs capable of bi-directional data transfer that has enabled real-time, consolidated global payroll reporting. Further, advances in integration have enabled providers to cover the globe, supplementing capabilities through the integration of third-party country engines, enabling support for >150 countries through a single governance model and user experience, supported through increasingly localized delivery models. 

CloudPay

CloudPay provides global payroll and treasury services through its digitally-focused, technology-enabled operating model. Through Connect 2.0, it provides a deep set of certified HCM technology integrations, which it continues to expand with additional platform providers. Further, CloudPay offers a full suite of analytics tools that help organizations visualize and understand their payroll data, including benchmarking capability to leverage the collective data of its entire client base (to provide clients with KPIs for benchmarking elements of payroll efficiency against peer organizations). CloudPay plans to launch and roll-out a dedicated mobile app including employee-facing ESS/MSS capabilities, along with expanding its highly adopted treasury and global payments services to offer alternative payment methods, including support for on-demand payroll capability, pay cards, and digital payment solutions.

Immedis

Purpose-built for global payroll, the Immedis platform focuses on unifying payroll to a centralized view globally while driving out traditionally manual activities through digital capabilities like perpetual data validation. The AI-enabled tool identifies gaps in payroll data that impact payroll completion, surfacing data management issues, continuously checking and subsequently validating the data quality and completeness, surfacing gaps in global payroll data for any country in real-time. A recently launched feature leveraging its perpetual data validation is its new Country Specific Information tool (Immedis CSI), which validates country-specific, regional, and local data to ensure all information is up to date and accurate, thus avoiding potential issues during processing.

HR BPaaS providers

Buyers are increasingly looking to payroll providers to take on an expanded scope, seeking to adopt and bundle processes closely linked with payroll. Further, with compliance a key challenge, remote work and talent acquisition spanning the globe, the appetite and demand for localized HR compliance advisory support are steadily increasing, which is inching payroll vendor offerings slowly toward a deeper HRO capability. HR BPaaS providers are well-positioned to support this trend and have opened up offerings to be more flexible in recent years, enabling firms to pick and choose the service components that best fit their requirements.

The HR BPaaS provider group has also pushed hard on technology and innovation investments, seeking to enable a deep digital offering to meet the needs of a wide range of buyers, with a focus on technology-enabled, platform-based offerings, real-time payroll insights, and automation to advance the critical process forward. 

ADP

ADP has made sizable technology investments in recent years, leading to its Next Generation HCM and Next Generation Payroll engine, each maturing in digital capability and underpinned by the ADP DataCloud, ADP Marketplace, and ADP Mobile app. The cloud-native Next Generation Payroll engine currently enabled for the U.S., Canada, Australia, and Mexico, will see country localizations for Ireland and New Zealand next. ADP's roadmap will advance its digital pay capability, with support for touchless payments, expanded security for e-payslips, and enabling a native on-demand pay capability within its Wisely solution. ADP also launched a new offering called Roll by ADP, an AI-enabled SMB payroll offering that provides a mobile-first, app-based payroll solution, providing a personalized, augmented experience entirely within its mobile app, for managing payroll anywhere, anytime, and with limited or no experience.

OneSource Virtual

Workday specialist OSV offers full lifecycle BPaaS services exclusively for Workday customers and is now supporting ~40% of the HCM platform's payroll module adopters. With payroll a central component in OSV's managed services offering, it has expanded its client-facing, in-tenant service delivery solution OSVAtmosphere with a set of web apps designed to provide clients with real-time actionable insights at each step of the payroll process through to tax, garnishments, and payroll funding. OSV plans to expand the solution with additional apps due 2021, aligning to its broader HR service offering, which includes dedicated apps for workforce data management, benefits, and COBRA administration. With Workday adoption accelerating outside of the U.S., OSV will enable some of the apps to support clients in Workday-supported countries beyond North America, including a payroll app-enabled for the U.K. and Ireland due in early 2021. 

Next week, in Part Three, I will give my perspective on the managed payroll services market's outlook and what to expect as we move forward.