This past week I had the opportunity to attend ADP rethink, its global HCM client event in Berlin, where the theme was "Transforming the Way the World Works." With many organizations undergoing massive change and transformation brought on by digitalization, the selection of Berlin as the backdrop seemed fitting given the deep history and massive change the city has experienced in past decades.

Celergo acquisition highlighted

For the past two years, ADP’s rethink event has highlighted key acquisitions: first in 2017 with its acquisition of The Marcus Buckingham Company (ADP Standout employee engagement solution), and then in 2018 with the addition of WorkMarket (Freelance Management Systems, FMS). Both of these are now integrated into ADP’s HCM solutions and are beginning to make an impact on clients adopting the solutions in concert with ADP’s wider HR services offering.

This year’s rethink wasn’t without its own acquisition buzz, as Celergo, which ADP acquired this past August, took center stage. Its founder, Michele Honomichl, gave an enthusiastic presentation on the company's history and path to ADP, but more importantly, conveyed their commitment to continued innovation in global payroll by combining its capability with the scale of ADP to deliver a unified global solution.

Both offer very different payroll delivery models. Celergo operates more as a consolidator and payroll manager globally, where ADP Streamline is more of a traditional payroll outsourcing solution supported partly by ADP in concert with in-country providers where it doesn’t operate or have capability. What Celergo brings to ADP is a single cloud solution that can integrate and consolidate payroll for over 140 countries. 

The key here is integration capability (a fundamentally critical element to global payroll transformation and data movement), something ADP was slow out of the gate with. The last few years we saw presentations (and success stories) on Global Cloud Connect (GCC) – but with the Celergo addition, ADP gains a leading cloud payroll aggregator platform, and more importantly, critical integration capability needed to grow its global payroll service adoption. Plus, it also gains a global mobility/EXPAT capability it doesn’t offer today, a service which is increasingly in demand.

While ADP hasn’t communicated specifically how Celergo and ADP Streamline will coexist and become a truly unified solution, it is certain that, once combined, it will represent one of the most capable, scalable (140 countries) global payroll solutions on the market, complemented and supported by one of the most comprehensive HR offerings and recognizable HCM brands globally.

The marriage between ADP and Celergo is already producing success stories (likely originated separately before the acquisition) that shows what is possible with their combined capabilities. Examples showcased included:

• Microsoft: ~116k employee in 109 countries; consolidating >50 vendors to two and maturing its payroll operating model and performance, with plans to expand into deeper digital transformation next (e.g. RPA, AI, etc.)
• FirstData: ~24k employees in 118 countries; consolidating 53 systems for time and payroll to a single solution, drastically transforming its delivery model to improve on key KPIs (e.g. 30% reduction in payroll discrepancies, ~57% decrease in manual checks), and saving ~$7.5m in payroll operating costs, ranging from accuracy, labor, and PTO leakage efficiency gains. Most critically, FirstData gained global visibility into its payroll and the ability to derive analytic reports, a process that took a month to complete manually before conversion.

Global payroll the real star

But the buzz wasn't just for the shiny new toy at ADP. Instead, there was a deliberate and genuine focus this year on global payroll, and more importantly, global payroll transformation. I spent much of my time observing the various demo booths, which covered global time, HCM, talent management, payroll, and more, all showcasing ADP’s “next-generation” global HCM offering. What stood out to me is how many clients swarmed the global payroll booths – both Celergo and Globalview (ADP’s global payroll solution) for demos.

Throughout the event, I spoke to senior HR leaders from multiple multinational organizations who are among the most recognizable brands in the world, and all of them seemed challenged by what do to about their global payroll operating models. Most are on, or have completed, a cloud HR journey and are now targeting payroll next, seeking to transform the operating model and landscape in the near term. What is surprising is how many have yet to make a decision, and for some, it is a significant concern. With the leading ERP platform providers expiring support for legacy on-premise solutions in the coming years, the clock is most certainly ticking, and these organizations are likely feeling the pressure to find a future proof payroll solution.

While payroll took center stage, ADP certainly showcased its next-generation HCM capabilities and new features designed to support the evolution of work, including:

• Supporting agile team structures, complemented by TMBC insights
• Integration with WorkMarket for total workforce visibility to eliminate what it calls “HR shadows” (lost visibility to non-employee workers due to transitional gaps in HCM capability)
• Real-time pay capability, driven by its new next-generation payroll engine and complemented by Wisely/Global Cash Card
• ADP data cloud for analytic insights and benchmarking (also complemented by TMBC engagement data).

Outlook

Looking ahead, the challenge for ADP will be integrating two highly capable, well-established global payroll solutions into one unified, integrated offering – a challenge it will need to carefully execute to make the Celergo addition a success – and determining a brand for its new addition (history tells me it will likely be something including both names).

ADP will begin steadily rolling out its next-generation payroll engine in 2019. It has one client live on the new engine already, which is being rolled out to Workforce Now clients in the U.S. Its rollout plan for the payroll engine includes supporting ~100 clients by the end of 2019. The solution will be rolled out to pilot clients in Australia and Canada in 2020, with future expansion countries likely to come from Europe, APAC and LATAM.

ADP also remains committed to HCM platform technology innovation, advancing its solutions to compete with and rival the leading HCM platforms in the space, and engage clients with the next-generation tools needed to navigate the rapidly evolving workplace. Complemented by its growing ADP Marketplace (now with >280 third-party applications and supporting 4.6m API calls weekly), and breadth of HRO services, ADP can offer a genuinely comprehensive HR transformation solution that can support clients of any size, complexity, or location.

ADP's innovation investments in its next-generation solutions over the past three years (~$450m in innovation-oriented R&D spend in FY 2017 alone), combined with its strategic acquisitions in TMBC, WorkMarket, and Celergo are steadily paying off. ADP buyers and clients I speak to are seeing and experiencing the deeper HR transformation capability and options ADP can deliver, well beyond its traditionally payroll-centric heritage, and now more globally capable than ever.