DEBUG: PAGE=domain, TITLE=HR Technology & Services,ID=259,TEMPLATE=program
toggle expanded view
programcode = HRS
programid = 107
database = t
alerts = t
neat = t
vendors = t
forecasting = t
confidence = t
definitions = t

Search within: HR Technology & Services:

action=something else...array(7) { ["program"]=> int(107) ["analyst"]=> int(-1) ["industry"]=> int(-1) ["serviceline"]=> int(-1) ["vendor"]=> int(-1) ["country"]=> int(-1) ["application"]=> int(-1) } array(2) { ["post_url"]=> string(63) "/sourcing-expertise/hr-technology-services/?avpage-views=search" ["program"]=> string(3) "107" }
from:
until:

Access our analyst expertise:

Only NelsonHall clients who are logged in have access to our analysts and advisors for their expert advice and opinion.

To find out more about how NelsonHall's analysts and sourcing advisors can assist you with your strategy and engagements, please contact our sales department here.

Subscribe to blogs & alerts:

manage email alerts using the form below, in order to be notified via email whenever we publish new content:

has Database = t

Contracts Database

for HR Technology & Services

Track the pattern of service adoption by monitoring HR Technology & Services contract awards by your peers. Identify who are the successful vendors this industry now. Updated monthly!

These documents are available to logged in clients that have purchased access to this program.

has Confidence = t -- IGNORED

Confidence Index:

for HR Technology & Services

NelsonHall Confidence Index is a quarterly survey to measure changing levels of business confidence within HR Technology & Services

Join NelsonHall HR Technology & Services Confidence Index:

Every quarter NelsonHall publishes the NelsonHall HR Technology & Services Confidence Index, a Quarterly Index of Confidence that monitors changes in industry confidence in the global HR Technology & Services market.

For a sample report and details of how to join NelsonHall's HR Technology & Services Confidence Index, please contact us

Join NelsonHall HRO Confidence Index

Every quarter NelsonHall publishes the NelsonHall HR Outsourcing Confidence Index, a Quarterly Index of Confidence that monitors changes in industry confidence in the global HR outsourcing market.

For a sample report and details of how to join NelsonHall's HR Outsourcing Confidence Index, please contact Amy L. Gurchensky

Payroll Services a Gateway to Broader HCM Tech & Service Adoption by U.S. Small Businesses

 

NelsonHall recently published a new U.S. SMB Payroll Services marketing analysis specifically focused on how HR service and technology providers are meeting the increasing demand for technology-based payroll and HR solutions from emerging small-mid sized businesses (<250 employees).

The SMB picture

Payroll services adoption remains steady amongst buyers of all sizes and still primarily driven by the need to improve the tactical elements of payroll execution (timely, accurate, compliant). And like larger middle-market and enterprise buyers, small businesses are commonly seeking out advanced, modern cloud platforms and services that can deliver the digital HR capabilities necessary to compete for top talent, address the ‘future of work', and enable compliant, scalable HR operations to support future growth.

The demand amongst small businesses for modern technology and digital enablers that can mature the organization's HR practices and enhance the employee experience is rapidly increasing; and the increasing demand for digital HR capability has shaped the vendor landscape, such that competition in the payroll services space is no longer limited to traditional payroll service providers alone. Technology providers have more recently pushed into the market; for example, Namely adding payroll services to its offering in the fall of 2017 and Kronos acquiring Louisville-based Advanced Payroll Systems in 2018. 

Small market buyers in the U.S. now have more options, with payroll services commonly offered through three core vendor types, including traditional managed payroll services providers, HCM technology providers with payroll services capability, as well as full HRO engagements through co-employment models offered by PEO providers.

Payroll as a gateway to broader services

Historically, payroll services were positioned as 'bureau-style processing services,' focused mostly on simple processing and compliance, which has mostly been replaced in favor of 'technology-enabled managed services' and extended by complementary HCM solutions. Managed service providers are increasingly positioning payroll service offerings as a core component in broader human capital management platform-based solutions, seeking to enable a 'one-stop shopping' ecosystem for end-to-end HCM capabilities that go well beyond payroll.

As a result, all major payroll providers are now heavily emphasizing their technology investments, capability, and digital HR/payroll innovation when positioning their offerings (up and down market). A good example is ADP’s recent 'Always Designing for People' rebranding effort, to emphasize its HCM innovation focus and investments. Additionally, payroll providers are expanding their offerings well beyond traditional managed payroll-only services to offer comprehensive HCM solutions.

With this HCM focus, payroll is more commonly being positioned with SMBs as a single, but core, component to broader HCM technology and services; buyers are most often seeking and buying a bundle of core HR, payroll, time, and benefits together as an entry point, and increasingly adding talent management capabilities next, most commonly onboarding, recruiting, performance management, and learning.

A growing trend in SMB service offerings is the addition of HR compliance support capability, to provide clients with access to live HR experts for day-to-day compliance advisory and guidance. Offerings include on-demand HR advisory and support through dedicated SMEs, handbook creation, HR knowledgebase and tools, employee surveys, analytics, and benchmarking capability across company size, region, and sector. Examples include Paycor’s HR COE, Namely’s Comply, Advice, Action offering enabled through partner integration with ThinkHR, and Zenefits’ HR Advisory offering.

Integrated partner solutions

Vendors are also rapidly expanding their HCM offerings through the development of formal and informal 'marketplaces' to offer integrated partner solutions (enabled through advanced APIs), which address white spaces in vendor offerings and allow buyers to enable custom HR solutions to fit their unique needs. Larger, more mature payroll providers and HCM technology providers are gradually working their offerings toward 'open platform' approaches, which will enable clients and third parties to develop integrated solutions for connecting to vendor platform technology, aiming to further enable clients to derive 'custom' HCM solutions leveraging modern technology with bidirectional integrations.

The top five focus areas for integration partner additions by SMB payroll providers are:

  • On-demand payroll capability (e.g. DailyPay, PayActive, Rapid!)
  • Global payroll partners (e.g. CloudPay, Safeguard Global, activpayroll)
  • Time and attendance (generally for more advanced capabilities beyond basic time and attendance tracking, e.g. advanced scheduling)
  • Talent management capability, most commonly at the SMB level (onboarding, recruiting, compensation, performance, and learning)
  • Analytic reporting capability.

In speaking to vendors, a key trend is the growing demand for multi-country payroll by SMBs (key countries in focus include the U.K., France, Germany, and ANZ). While native multi-country payroll capability is limited amongst most SMB payroll providers, many are now commonly partnering with providers that can offer integrated multi-country payroll capability.

SMB investments and roadmap

Much like upmarket solutions, SMB payroll-enabling technology is being differentiated through features focused on enhancing the user interface (UI) and user experience (UX) to be more personalized and guided, expanding digital enablers to offer modern capabilities like a mobile-first design, embedded AI/ML/NLP, deep workflow and process automation, IoT connectivity, geofencing capability, biometric and facial recognition, and visual dashboards with real-time analytic reporting.

Top investment and roadmap focus areas across SMB payroll providers for the coming 12 to 18 months include:

  • Enhancing the UX/UI to provide a consumer-grade experience that is engaging, simplified, intuitive, personal, and guided  
  • Advancing toward a mobile-first/only capability to enable full platform functionality on mobile devices for both administrators and employees
  • Enabling on-demand payroll and digital payment solutions
  • Expanding offerings beyond payroll with new product offerings; top focus areas: HR advisory and compliance support, analytic reporting, talent management (most adopted: recruiting, performance, learning)
  • Infusing AI, ML, and NLP across the platform to drive 'extreme' personalization, guided experiences, and enable predictive and prescriptive insights in context
  • Opening platforms and developing formal/informal marketplaces for third-party integrations and extended HCM solutions
  • Expanding partnerships and integrations with global payroll providers to support multi-country payroll requirements.

The outlook for the SMB payroll services market

The outlook for small business payroll services in 2020 and beyond is both exciting and concerning. While the market is healthy, thriving, and growing, the recent challenges of COVID-19 have wreaked havoc on small businesses in the U.S. and will continue to do so for the foreseeable future.

Payroll vendors have done a tremendous job supporting and sustaining 'business as usual' for their clients, providing an overwhelming amount of support, tools, training, guidance, and advisory in helping clients navigate the challenge, assess options and interpret government directives for workforce impacts. With providers increasingly positioning themselves as 'trusted business partners' and differentiating through the user and client experience, service providers have an opportunity to truly prove their value and solidify their partnership commitment, which will drive client retention long-term. 

There is no doubt SMB payrolls will shrink across hard-hit sectors (hospitality, travel, retail), which will reduce or slow overall vendor revenue growth for 2020, particularly if the economy shifts into a deep recession and buyers pull back on decision making or shopping for services. Vendors with sizable SMB populations will take the biggest hit from headcount and payroll shrinkage.

However, with payroll a critical process all businesses must execute flawlessly regardless of global concerns, combined with the learnings from COVID-19's impact, this should support net positive growth with payroll services adoption in 2020 as buyers of all sizes seek to de-risk and futureproof payroll operations, particularly those lacking a modern cloud infrastructure and sound BCP/DR capability to operate in unpredictable times.

No comments yet.

Post a comment to this article:

close