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Ceridian Analyst Day: HR and Payroll in the Cloud: Spotlight on Dayforce

Last week, NelsonHall attended Ceridian’s analyst event. Ceridian 2013 revenue excluding Comdata was ~$950m. Its cloud business generated ~$100m in revenue and is growing at ~35%. 

Much of the focus of the event was on its Dayforce cloud HCM platform which provides:

  • Payroll, including tax
  • Benefits, e.g. annual enrollment
  • Recruitment / talent, the most recent module added a few months ago
  • Workforce management
  • HR Self-service, included with all the above modules.

Additional capabilities to be introduced over the next three years will include performance management and compensation, along with increased messaging on talent capability.

Around 900 clients have gone live on Dayforce since Ceridian acquired it in April 2012, or an average of around 40 per month. Pending size of client, implementation time is ~17 weeks. Among the benefits of migrating to Dayforce, Ceridian highlighted that:

  • Payroll processing runtime on Dayforce is ~10 minutes where it was previously ~2 hours on the mainframe.
  • Dayforce means one system for payroll and T&A, with one employee record and one user experience
  • Reduction in administrative time; Ceridian estimates by up to 50%.

Looking at target markets for Dayforce:

  • In the U.S., the average client has ~1,200 employees, with a target of 500+. Ceridian is not actively targeting Dayforce to clients seeking BPO services
  • In Canada, the average size is 800, with a target of 250+ 
  • MNC targets are North American HQ firms with a few employees in many countries, which Ceridian uses ~50 partners to serve. Ceridian does consolidated HR and payroll reporting and plans to extend its payroll engine on a country by country basis.

Dayforce is not yet launched in the U.K., where the current focus remains managed payroll.

Dayforce being a SaaS offering, Ceridian does not charge clients until they go live; a prime reason it does not typically target large organizations due to length of implementation. However Dayforce does have the capability to serve large clients with its largest client having ~186k employees.

In 2013 Ceridian hired 120 employees in North America in support of Dayforce, and in 2014 is adding 5-10 new hires per week. Ceridian will not force clients to migrate to Dayforce. Though when clients do migrate to Dayforce, Ceridian estimates a 15% uplift in around 90% of migrations as clients buy additional modules.

Multi-country payroll: Ceridian has been doing multi-country payroll for 11 years, with services delivered locally in-country. Ceridian currently provides payroll and HR in seven markets and has expansion plans to be in 20 additional countries by end 2014. Its model is to run Dayforce in all countries needed and use its ~50 partner network which delivers in ~70 markets today. Multi-country payroll has been growing at 20% across the board as opposed to 8-9% single-country growth.

Ceridian 2014 priorities include:

1. Customer experience, including:

  • A focus on net promoter score (NPS), including surveys after implementation
  • Increasing referenceable clients three-fold by Q3 14
  • Introduction of change management, done at all levels, from employee hand holding, as for many clients it is their  first time using the cloud, to senior leaders on how to use the data that Dayforce can provide

2. Improving employee engagement, including:

  • Coaching and guidance to managers doing performance reviews on how to provide employee feedback
  • Initiatives such as a program called “fun at work”, which includes participation in various events

3. Ongoing product development, including bringing EAP and wellness together in LifeWorks. And LifeWorks content is being added to Dayforce.When Ceridian’s CEO David Ossip meets with clients he leads with LifeWorks when talking about Ceridian’s service offerings.

 

With its strong focus on the mid-market, Dayforce is likely to continue to add ~30 clients per month  as mid-market employers seek SaaS HR services without BPO support - these companies can feasibly use an internal employee interface to work directly with the provider to address employee inquiries. When it adds compensation and performance management to Dayforce Ceridian will benefit from the trend for buyers of SaaS HR services to also purchase talent and performance management modules. And the addition of LifeWorks content to Dayforce will help Ceridian in its targeting of companies looking to improve employee engagement.

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