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Technology-Enabled Service Focus Driving Advances in ADP’s HCM Client Base

 

Last week, my colleague Amy Gurchensky wrote on the topic of ADP’s user-centric innovations paving the way for growth in its HR services business. Indeed, at its recent annual analyst event, CEO Carlos Rodriguez was keen to reiterate that ADP is a technology-enabled services organization, not a software company, and this was backed up by client case studies. Here I provide a summary of two client cases and examples of recent client wins that illustrate ADP’s positioning as a user-centric, service-oriented HR vendor.

Client Cases

Ally Financial

Previously known as GMAC (General Motors’ captive finance unit), Ally Financial has ~8,000 employees in the U.S. and some in Canada. ADP was chosen by Ally as its service provider for six key reasons:

  • Tenure & maturity: including the need for a vendor who would be there for the long haul
  • Comprehensive solution: full breadth of HR support for services including workforce administration, payroll, time, etc.
  • Integrated technology: ADP’s talent suite including recruiting, performance, learning, succession
  • Subject matter expertise: including call center support by ‘people that get it, not just tech guys’
  • Vision for evolution: a provider with a strategic path forward, e.g. adding mobile capability, improving user experience, etc.
  • Affordability: not a driving factor, but after considering other key factors, ADP was found to be meaningfully less expensive than some of its key competitors.

Ally Financial stated that the most important aspect of the ADP partnership was honoring commitments to each other, including the commitment to evolving products over time (e.g. implementation of mobile).

Canyon Ranch

With 1,850 employees in the U.S. and 100 gig workers, the luxury spa vacation company Canyon Ranch uses ADP services including ADP Analytics, and has been focused on a new metric: New Hire Attrition. To reduce attrition, an interactive onboarding process was implemented. In addition, the interviewing process was improved with more behavioral-based and peer interviewing. This has led to measurable improvement, including cost savings via reduced interview time because of less rehiring.

There is a dashboard that managers sign into each morning and see new hire attrition and retention. Average tenure is now ~8 years, while the average tenure in the hospitality sector as a whole is just ~1.5 to 2 years. Candidates are attracted and new hires are staying at Canyon Ranch due to its improved recruiting process, employer branding and culture. Thus far, there has been a 38% improvement in retention, translating into 190 people that Canyon Ranch has not had to replace. Going forward, Canyon Ranch will be looking to implement turnover probability metrics to further reduce attrition.

ADP’s HCM client base & new wins

ADP has 61,000 HCM clients. Workforce Now has 60,000 clients. 80% of new clients are multi-module, ~47% use Workforce Management, and ~24% use the Talent module. There are ~6,000 clients with >500 employees, of which 68% use HR and Benefits, 65% use the Time module, and 47% have one or more Talent modules. Recent wins include:

  • Telligen (700 employees), who wanted a fully-integrated, seamless HCM solution and a partner with commitment to HCM innovation. This is a full HCM solution including Payroll, Analytics, Benefits, Talent, and Document Management
  • Flynn’s Tire and Auto Service (500 employees) became a client based on progress made in Workforce Now Product and the Service model. Modules include HR, Benefits, Payroll, Workforce Management, Recruitment, Analytics, and Onboarding.

ADP Vantage has 650 HCM clients with over 4,000 employees per client. Less than 10% of new clients purchased payroll by itself in FY17, and new clients are purchasing 3+ modules. Recent wins include:

  • Reynolds Consumer Products (21,000 employees) required a better service experience and model. ADP’s partnership with Hackett Group was a key influencing criterion. Modules include Payroll, HR and DataCloud
  • Heartland Automotive Services (4,900 employees) needed a comprehensive and complete single HCM solution along with strong service and support for their change management initiatives. Modules include HR, Talent, Benefits, Payroll, DataCloud, and Workforce Management
  • DHL Global Business Services (38,000 employees) was looking for a consultative rather than a transactional HCM solution and a strategic partnership to support and execute its change management strategy. Modules include Payroll, Analytics, DataCloud, Aline Card, and Strategic Advisory Services.

ADP Multinational has 1,500 clients in 112 countries, and pays 3.5m employees, processing 5m pay slips. Partner integrations include 61 clients with Workday and 42 clients with SuccessFactors. Recent client wins include:

  • First Data (26,000 employees in ~40 countries) wanted a global footprint in time and payroll in all the countries where they operate. Modules include GlobalView HCM, Global Time, and Payroll
  • XPO Logistics (45,000 Employees in ~15 countries) had multiple companies and systems after several M&As and wanted a vendor with integration, scalability, and global payroll experience. A key criterion was deep integration with SAP. Modules include GlobalView HCM and Payroll

I believe that ADP’s focus on continuous improvement in both technology and services will be key to its continued growth, though there will certainly be competition along the way that buyers will be evaluating. For comprehensive HCM solutions, vendors include Workday, Success Factors, Oracle, and Ceridian. For Workday integration, the competition includes the likes of OneSource Virtual, Alight Solutions, DXC Technologies, IBM, and NGA HR. And for SuccessFactors integration, the competition also includes vendors such as IBM and NGA HR.

To keep abreast of the competition, ADP has added Global Cloud Connect to simplify integration among disparate global and local systems in the cloud, which includes standard connectors for Workday, Oracle, and SAP SuccessFactors, and the ability for clients to ‘bring their own data’ in whatever format they have it in.

 

A comprehensive analysis of cloud-based HR services, including key vendors, can be found in NelsonHall’s Targeting Cloud-Based HR Services market analysis published in July 2017, and in October 2017, NelsonHall will be commencing a Next Generation HCM Technology market analysis that will include the leading HCM platforms.

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