ADP's annual global payroll customer event took place in London recently, bringing together 224 decision-makers from some of the world's largest companies, representing ~20m employees. The event featured a global economic update, ADP's strategic vision, and product development updates. The event also included a "round the world" experience sharing insights into local payroll nuances and topics.  

Key highlights

Highlights from the event include:

• ADP Assist (announcement here), ADP’s GenAI solution, built by domain, clearly demonstrated how productivity gains can be made; e.g. a scenario where nudges indicate higher than normal levels of overtime and prompting emails to be sent to all relevant supervisors to validate overtime levels, with options to chose a tone of language that is casual, formal  or shorter and more direct
• ADP Roll (announcement here), ADP's newest payroll product with chat-only features, demonstrated how work is changing, where only 3% of its users leverage a desktop and a whopping 97% process their payroll through mobile only
• ADP is enabling a workbook configuration within the ADP Global Payroll software
• Requirements for pay/gender (DEI legislation) and pay transparency are growing, and ADP DataCloud is looking to support these needs globally
• The buyer needs of a global payroll mobile app vary, but there were examples of how it is being used across Pay and Time in multiple countries; for instance, ADP client Principal uses the app to punch in/out through the etime product as well as being able to see payslips.

CEO Maria Black took the stage to share her priorities after one year in office. This is a milestone year as ADP celebrates 75 years in the industry and has been led by only seven CEOs. She shared how she sees the organization balancing its long history of stability alongside ongoing innovation. Maria focuses on the importance of "listening" to help drive the investments of products and services. For example, she has a practice of placing an empty chair in every room to represent the client in every meeting.

The ADP client base has a huge demand for new services and high expectations of ADP. Helping navigate global payroll needs in the complex global environment takes maturity, skill and a lot of listening. ADP is taking purposeful steps in its design decisions and looks to build lasting and innovative solutions.

What to look forward to from ADP's global payroll

Expect to see the following payroll developments from ADP:

• Marketplace developments will be growing on an international scale
• Variance check improvements
• Unified practitioner experience (ADP GlobalView and Celergo)
• ADP Integration Hub will be expanded to include both in and out activities, all in one place
• GlobalView and ADP Workforce Management will be integrated in 2024
• Benchmarking and payroll efficiency are coming
• ADP Roll will be expanded to Europe in 2024; this product is one to watch being one of the first GenAi- built and chat-only payroll products on the market
• An increase in the adoption of the ADP app across its customer base. With the addition of intelligent self-service prompts within the app, it will bring an elevated payroll experience, helping catch anomalies at source and once the ADP marketplace is expanded through the app, HR and payroll functions will be able to drive greater innovation and flexibility to support their workforces.

As we move into another year where salaries are not growing at the rates seen in previous years, payroll is becoming increasingly important for organizations. My point of view is that organizations should be looking to ensure their employees receive the best payroll experiences possible and should include this in how they measure employee experiences.

In the HCM technology and HR services market, delivering a rich employee experience is often associated with having the most user-friendly UI, seamless digital processes (zero touch) with field validations and single-point-of-entry to ensure high quality data. As discussed in NelsonHall’s recently published Cloud HR Transformation report, the next frontier of employee experience developments, where most investments are being made, is delivering greater personalization and insights to help decision making.

Indeed, the HR technology and services market has seen a trend towards incorporating more conversation and customized engagements with employees. Conduent, a CX and HR transformation service provider, noted that between 2020 and 2022, chat grew from 14% to 30% of all interactions (here).

A number of HR service vendors offer CX best practices and are leveraging CX developments to define a rich employee experience that incorporates unstructured conversations. One of the trends outlined in NelsonHall’s CX market analysis is growth in conversational interactions by better integrating sales, support, and marketing.

Conduent takes a broad look at customer experience and incorporates both conversation and empathy as part of it. The company aligns to three key characteristics of a positive customer experience:

• Competent: correctness & completeness
• Convenient: simplicity/ease of use & responsiveness
• Caring: empathy & appreciation.

HR technology and service providers have primarily focused investments on the first two of these characteristics. Regarding the third, Conduent’s recently released study (2023 State of Experience in the New World of Work) cited only 34% of HR organizations are very effective at providing consistent, empathetic omnichannel workforce experiences.

HR service providers that bring CX capability look to design high-touch human experience alongside high-touch digital experience, with appropriate handovers incorporated. How do they do this? Conduent designs its HR services offerings starting from employee journey mapping exercises. The journey experience explores scenarios where issue resolution is not just about simple vs complex or high volume vs low volume, but it also incorporates an additional dimension of high emotion vs low emotion. As part of this concept, at the core of the employee experience is employee wellbeing. Conduent’s journey mapping methodology incorporates insights, experience, engagement and monitoring to enable dynamic, personalized and proactive experiences.

In a recent interview, Conduent specialists pointed out that cycle anxiety can be as much about employee experience as the cycle time. For example, if an employee is not told when they will likely get a response or how long things take, not knowing often causes more frustrations than if they had information about timescales. Any London train commuter will have experienced this feeling on the occasions when customer information is not updated with next train times.

A broad employee experience framework that incorporates employee journey mapping with human interventions offers the ability to deliver many benefits and considers overall communication, not just timely and accurate transactions.

Conduent recently delivered HR transformation and outsourcing services to a global pharmaceutical organization. It is not only on track to achieve the expected savings of up to 35%, but it is also increasing the company attraction, employee support, experiences, engagement, and retention across 110k employees distributed across ~80 countries. It is achieving cost efficiency improvements by decreasing the number of cases via Knowledge Management and additional automation. It reduces manual administrative work through RPA applied to compliance risk and minimizing error rates. And it is also improving quality, SLAs, and the cycle time.

With the advent of generative AI to support conversations, NelsonHall expects HR service and technology vendors to further develop conversational capability, exploring new ways of engaging with employees, managers and HR operational teams to ultimately drive greater attraction, engagement and retention (employer brand loyalty) whilst managing operational costs. Finally, the importance of a rich data set to support conversational solutions that aid decision-making should not be underestimated.

Last month, NelsonHall participated in the SD Worx Analyst Day, which included an update on key milestones since Kobe Verdonck took the reins as CEO in September 2019. The last three years have seen SD Worx supercharge its European growth and intensify its focus through achieving:

• Geographic expansion from 10 to 23 countries in Europe, where it utilizes its own IP in 17 of these
• Revenue growth from €768m to ~€1bn in gross revenue
• Customer growth from 70k to ~82k customers.

SD Worx has shared its vision for the next 5 years, keeping its course for pan-European growth through further targeting:

• Geographic expansion from 23 to 30 countries in Europe
• Revenue growth from ~€1bn to ~€2bn in gross revenue
• Customer growth from 82k to 100k customers.

To achieve this growth, SD Worx is looking to focus on the following key areas of differentiation:

• Integrated end-to-end HR solutions using the SD Worx, Gro, Flo or Pro service models
• SD Worx payroll software and subject matter expertise as the core method of delivery rather than using in-country partners
• Bringing local expertise, whereby in-country presence is core to its delivery model
• Consistent user experience, as all employees will have the same experience irrelevant of underlying software
• Aiming for a top 3 position in countries with a population >10m
• Being an employer of reference to attract talent.

SD Worx will look to support customers of all sizes and in all industries, locally and internationally.

However, as SD Worx actively drives payroll consolidation across the European HR and payroll market, one of its main challenges will be to establish the SD Worx brand and operational frameworks in its new markets.

Its aim of driving one experience across all platforms is ambitious, but with the client scale it is looking to achieve and through ongoing investments and acquisitions to support scale, this vision has strong promise. We can expect further acquisitions over the next five years to support its growth targets, in particular in Eastern and Southern Europe. This builds on recent acquisitions supporting the company’s expansion, including Integrho (Spain), Intelligo (Ireland), and HRPRO (The Balkans).

Following a year in development, IBM’s Talent Transformation division and EY’s Organization & Workforce, Mobility, Payroll Operate and HR Transformation division have announced a strategic alliance. The alliance enables the two organizations to co-create talent solutions and offers a new Center of Excellence for Talent, which could be a game-changer in terms of the HR scope it offers to the market. The COE will offer solutions with both data-driven AI and hybrid cloud to provide one of the broadest advisory, talent, HR, mobility, outsourcing and payroll transformation services available in the market, as well as offering long-standing domain expertise and delivery credibility.

This alliance cements what was an emerging model of the two organizations working together, and recognises a close cultural alignment. The alliance has naturally evolved from a number of mutual clients in the financial services sector, where the opportunities for synergies across the EY and IBM offerings were clearly demonstrated. Further, the EY and IBM talent businesses are closely entwined with a deep working knowledge and vested interest in each others’ businesses. IBM is already a client of EY for mobility and M&A services and EY is a client of IBM for Talent Acquisition, HR outsourcing services and technology services. This development also follows the formalized Financial Services Alliance that was established in April 2021 between the two organizations.

As part of the alliance, a new teaming agreement is now in place that brings a more formal framework from which to support joint client engagements.

Scope of the EY-IBM Alliance

There are four areas of focus for the EY-IBM Alliance: Talent Technology Services, HR Outsourcing Services, Payroll Services, and HR Cloud Transformation.

Talent Technology Services

The alliance now brings together the EY mobility and people experience technology assets with IBM’s talent microservices and deep expertise in platform strategy, hybrid and multi-cloud architecture.

The alliance roadmap includes transforming HR processes across recruitment, career progression & learning, and employee support. The technology vision of the new Digital HR Operating Model recognizes that technology is moving fast, and so the operational framework must enable technology to be continuously adapted as new opportunities arise; for example, through leveraging microservices and accelerators on the IBM talent platform.

HR Outsourcing Services

IBM already had significant capability running multi-process HR outsourcing contracts, plus capability to deliver talent and skills transformation services (across both recruitment and learning) blended with sophisticated data-driven analytics. Analytics and technology are differentiators of the IBM outsourcing offering,  and this new alliance enables a richer offering extending to mobility and expat services, enhancing its offerings.

Payroll Services

Both organizations have significant payroll service capability and offerings; however, the alliance offers support across 160 countries for payroll services, powered by intelligent workflows and proprietary payroll technology. The alliance means payroll services can be more easily blended between EY and IBM.

HR Cloud Transformation

To support HCM platform change (such as Workday and Oracle), implementation teams will be enabled more easily across the two organizations, with an anticipated 3X speed of deployment leveraging the bench strength, technical capability and data-driven methodologies to help transform and enrich the employee experience.

EY-IBM Alliance Governance & Target Market

The alliance will be governed by EY’s Global Talent Committee and IBM’s Talent & Transformation leadership team. Each organization has appointed a Global Alliance leader as well as regional leaders.

Where offerings overlap between IBM and EY, such as in consulting and change management, the strong client focus and cultural alignment between EY and IBM will help ensure that the client’s interests and needs are prioritized. EY and IBM have a mutual interest in measuring the NPS of the alliance clients and have the goal that the NPS are increased as a result of working closer together.

The alliance aims to target organizations where IBM and EY already have existing joint relationships. For these clients, it offers an opportunity to enhance the services without having to go to the wider open market as the partnership is already established and provider credentials already assessed.

NelsonHall Insight

There is continued pressure on organizations to source talent and support greater mobility at speed, scale and with digital processes; these processes are becoming essential for organizational growth.

Further, as organizations increasingly focus on attracting and retaining staff, they are demanding more integrated solutions. The EY-IBM Alliance can address integration more directly through richer support for both consulting and technology solutions that can embed AI and automation throughout the talent process to help simplify and streamline the end-user experience. No longer is there a rationale to transform just on cost efficiency. Delivering an ongoing superior employee experience that is being continually invested in, offering greater insight, and a roadmap for process and talent innovation over time has become key. At this time of intense competition for professional services personnel, the formation of this alliance couldn’t be more timely.

The alliance cements a new services approach to address more holistic needs across HR using rich analytics and a multi-service adaptable model supporting clients with an ambition to take employee experience and operational excellence to new heights.

Links to corporate announcements:

https://www.ibm.com/blogs/internet-of-things/ibm-ey-partnership-hr-mobility-payroll/

https://www.prnewswire.co.uk/news-releases/ey-and-ibm-expand-alliance-to-help-organizations-address-talent-challenges-831223932.html

Last week marked Neeyamo's Payroll Beyond Borders' virtual global payroll industry event. The keynotes were delivered by payroll industry leaders Dan Maddux, Executive Director, American Payroll Association, and Ken Pullar, CEO, CIPP. The event had around 1,200 participants from around the world and was the first global coming together of global payroll industry experts since the start of the pandemic. As well as looking at the impact of the pandemic on payroll operations, there was also attention paid to how global payroll and agility is increasing in importance, reflecting changing priorities and the need to "meet the employee" where they want to work.

New Payroll Complexities Created by the Pandemic

The pandemic and related regulations or government subsidies meant new levels of complexity were introduced to payroll operations, complexities that needed to be handled without any delays. Payroll leaders highlight that payroll teams, both outsourced and in-house teams, should receive recognition for their efforts. The migration of staff to work-from-home locations put additional strains on payroll departments, both because of the associated risks and also the challenges in managing employment taxes in alternative payroll jurisdictions. Employees don't always feel the need to tell their employers where they are located if they are working remotely. Over the next year, some organizations may be facing the tax impact of changed employee locations retrospectively. The business continuity plans that were activated were not designed or expected to remain in place for months on end as lockdowns were extended. 

The pandemic and the general ensuing migration to WFH has helped shift the employee/employer power dynamic in favor of the employee. Employers will increasingly need to meet their employees' requirements as to where they want to work and how they want to work if they are to keep talent. Payroll systems need to be agile to support additional payroll jurisdictions, and payroll managers should consider adding new processes to enable employees to include remote locations for recording their place of work.

Employers are advised to re-evaluate business continuity plans and payroll controls. This is a time to upgrade and improve business continuity by investing in more robust digital processes to enable payroll to continue flexibly. The pandemic has exposed significant manual processes based on outdated systems that need to be re-evaluated to keep the payroll running during times of crisis.

On-Demand Payroll Increasing in Significance

There has been a growth in on-demand payroll offerings, otherwise known as ESAS (employer salary advancement schemes), particularly in the U.S. and the U.K., which are the primary markets currently. The pandemic has helped accelerate this growth: in the last two years, more workers have had to contend with financial stresses caused by a combination of limited or zero savings, reduced income, and unforeseen emergencies. And as the cost of living continues to rise in most markets, this isn't going to get better any time soon. Even amongst workers with above median, secure incomes and a decent level of savings, a growing proportion has been facing problems with their financial budgeting, perhaps due to timing mismatches between income and major outgoings. The household debt-to-income ratio has been rising for years, and in the U.S. and U.K. is over 100. With the current war for talent, there has been an increased focus by organizations on employee retention and the employee experience – and this includes improving employees' financial wellbeing. It should go without saying that employees that are financially stressed are not going to be the most productive, healthy, safe, or loyal members of the workforce.

But there are major considerations to be taken into account by employers when considering introducing on-demand pay systems, among these:

• The potential impact on company cash flow, though this is not an issue for organizations that work with third-party ODP providers
• Providing employee education on the principle that having access to a proportion of their pay on an on-demand basis does not automatically lead to financial wellness. Placing restrictions on the frequency with which an employee can apply for on-demand pay might help employees in their debt management and/or financial budgeting to an extent
• The risks of exposing employee data to financial services companies who might push other loan products.

So which types of employees are more likely to be interested in on-demand pay solutions?

• Younger employees with little or no savings, who are also facing large one-off outgoings, and who are new to financial budgeting
• Part-time and temporary employees, who will continue to represent a growing proportion of the overall workforce in all geographies
• Industries like hospitality and industries that have a high proportion of hourly-paid workers, especially industries with significant amounts of overtime (not having to wait to the end of the month when you have done a lot of overtime and have an immediate financial need is a significant benefit)
• The public, healthcare, and education sectors, which are major employers.

There were some concerns about on-demand payroll expressed by payroll leaders at the event. Among these was a concern that, given many companies have spent decades moving employees away from weekly pay cycles to monthly (U.K.) or two-weekly (U.S.) cycles, and thereby reducing operational payroll costs, is going on-demand a backward move for both employer and employee? However, from the employee's perspective, having access to on-demand pay is likely to be an attractive element in a benefits package.

The pandemic has changed organizations' priorities in terms of their people and operations. And it has thoroughly tested the robust nature of payroll operations, to unprecedented levels. There was a general consensus at the event that there is a continuing need to prioritize agility and automation in global payroll operations.

Nobody should underestimate how essential payroll is, though putting money into the bank accounts of employees in an accurate and timely way is often a thankless task. Payroll processes need to be robust if they are to support new ways of working, and Neeyamo's event was a valuable way to discuss and test thought leadership ideas.

Since the start of the pandemic, company benefits have played an increasingly important role in helping organizations protect the safety, wellness, and health of their employees. This is increasingly the case, not only for physical wellness, but organizations now have greater awareness of mental health and financial wellness impacts on their staff given recent challenges and mass resignations.

2022: a perfect storm for benefits

The dominance of remote/hybrid work environments also opens up new opportunities for benefits functions to offer new benefit types that could be seen as tangible expressions of a company’s culture. Therefore, If employee welfare, attraction, and retention are not top of the list of your key strategic priorities for 2022, they should be. Not only are organizations and HR functions adapting to new ways of working and changing business environments, they are also facing the fact that employees have started to "vote with their feet”, demanding a better work-life balance. We are experiencing the largest wave of mass resignations seen in most of our lifetimes. This is also not helped by the retirement of baby boomers and an aging workforce. 2022 is the year to act, and these challenges also offer a great opportunity for benefits teams to relook at the role they can play in strengthening the resilience of companies and their workforce.

2022 is expected to bring a perfect storm that will drive companies to increase their focus on benefits, creating opportunities to address the importance of benefits and the benefits experience and HR teams should be looking to raise the bar in cascading key messages across management teams. Talent shortages are severe in many industries and the competition for companies to offer diverse and attractive benefits will also put companies and HR teams under pressure.

Benefits functions are in a privileged position to offer personalized support across a company's whole employee base and could become the hidden hero of HR in the coming year.

Launching a major new benefits study

To help shed greater light on this important topic, NelsonHall is launching an educational research study, in conjunction with Empyrean, designed to help benefits plan sponsors and administrators understand the wider impact they can make to help their companies adapt and be more competitive. Part of this research will look at the impact benefits can play in demonstrating, shaping and cementing a strong company culture.

Given the market forces outlined above, NelsonHall will look at how the role of benefits plan sponsors and administrators will change over the next year as the strategic importance of the benefits function grows. As part of the research, NelsonHall will be looking at how the benefits function is adapting and reshaping in the light of the wider business environment.

In particular, the study will research the wider and increasingly strategic role of benefits leaders. Benefits strategy is an increasingly important element within an organization’s wider HR strategy, such that benefits leaders are expected to play more strategic roles within the HR department and become key contributors not just in benefits strategy & design but in the development of talent acquisition, talent retention, and overall HR strategies.

The study will also investigate the changing benefits platform requirements. As benefits teams take on more strategic roles within the organization, platforms will take on an increasing proportion of day-to-day transactional activity, with organizations looking to establish hybrid and AI-driven omnichannel operations. These platforms will also increasingly provide the analytics and AI-driven personalized recommendations and decision support to fine tune benefits programs.

Get involved: join the research survey

We'd love to hear your views. To join the research survey The Changing Role of Strategic Benefits Leaders Survey please share your details here. The survey will be open until 31 January 2022 and all participants will receive our research report containing a detailed analysis of the findings.

The survey results will be announced and discussed across the benefits community at the Empyrean EVOLVE client conference in Nashville, TN, from April 6-8, 2022. For those not able to attend, you can obtain a copy of the research report from the Empyrean site following the event.

About Empyrean

Empyrean is a benefits service organization that recently launched its new brand strategy to address "building culture through benefits". It looks to drive positive workplace cultures by connecting its employees to life-enriching benefits. Empyrean’s new brand message makes a strong connection between the role benefits play in building a company’s culture and positive organizational outcomes tied to total employee health and wellness. The brand strategy reflects Empyrean’s product roadmap, as the company continues to develop and roll out employee-centric technologies and services along with strategic carrier and service partnerships designed to improve employee experiences and strengthen employer brands.

For more information on Empyrean’s brand strategy: https://www.goempyrean.com/empyrean-benefit-solutions-launches-new-brand-messaging/

As the pandemic normalizes across day-to-day life, NelsonHall expects HR service delivery to adapt to a whole new set of challenges, both through legislation and HR best practices.

The convergence of three key themes are likely to see new HR solutions being developed: staff welfare and resilience, operational efficiency, and automation.

Staff Welfare and Resilience

Pre-COVID, HR priorities looked something like this:

1. Attraction and retention of talent: by the end of 2019, the EU was experiencing the lowest unemployment in 20 years
2. Upskilling workforces and identifying skills gaps, taking into account jobs that are increasingly being replaced by robots and automation
3. Employee engagement and experience, in particular supporting Gen Z and multi-generational workforces
4. Pay: reporting, gender diversity, and addressing the gender wage gap, and removing bias from processes
5. GDPR compliance: the General Data Protection Regulation (GDPR) is the toughest privacy and security law in the world and was put into effect in May 2018 across the EU.

A 2021 study by SD Worx¹ looking across 21 HR challenges has found that the top five European HR challenges in the coming years are as follows (with the percentage of respondents placing each challenge in the top 3):

1. Staff welfare and resilience: 27%
2. Employee engagement and experience: 20%
3. Attracting and recruiting talent: 20%
4. Sustainable employability of employees (retention): 17%
5. Talent development and internal mobility (retention): 17%

The number one priority in the coming years is not surprisingly welfare and resilience, which is the most significant change from previous years. Staff welfare and resilience in this context means supporting workforces through added pressures to avoid burnout/resignations and supporting healthcare and wider work-life needs.

Prior to COVID-19, staff welfare and resilience was not a concept many HR service providers, platforms, or processes had to give much focus to, except as it related to workplace safety, accident reporting, OH&S, and sickness policy design and implementation.

Through the pandemic, individual staff ‘check-ins’ have become key. Without basic health information on their staff, how can organizations address staff welfare and resilience effectively? And today, organizations need to acquire even more information about employees – home location, travel preferences, vaccination, and medical information.

Is this asking too much? As we normalize our new ways of working and adapt to new HR practices, the GDPR provisions create unique challenges for HR, which faces a dilemma of how to respond to welfare and resilience issues while respecting GDPR rules. GDPR obligations need careful attention in this regard, as health information has the protected status of ‘special’ category data under data protection law. Various European countries are introducing local recommendations to help businesses navigate the next stage.

When NelsonHall interviewed HR service providers in 2020, we asked them how they were adapting. Most were creating communication tools to support employee outreach and manage business continuity and furlough during the crisis. Companies and service providers were initially timid to record health information such as vaccination status, but with legislation in various jurisdictions, organizations and HR tech providers are finally stepping up to implement robust solutions to record vaccinations.

NelsonHall expects that the HR priority given to employee welfare and resilience will likely stay for the longer term, so we expect more to be done to implement stronger processes in this area. HR service offerings expected to develop over 2022 and beyond will increasingly address vaccine uptake, mental health support, flexible working, and work office restructures with new procedures.

Operational Efficiency

The SD Worx study also identified that the highest priority in 2021 was addressing operational efficiency. It found that ~50% of organizations recognize operational efficiency as being the top priority or project for 2021. Similarly, NelsonHall’s 2021 Cloud HR Transformation market analysis report² identified the top driver for cloud HR transformation as helping organizations stay competitive with improved cost, process improvements, and a superior employee experience.

Going forward, managing staff welfare and resilience should ideally be more than a line manager function performed through informal ‘check-ins,’ and it is imperative, to keep operational costs down, that HR revisits tactical solutions to build stronger processes to support resilience and welfare across employee populations. Without an HR response, talent attraction and operational efficiency will be challenged. The HR-specific COVID responses and workplace practices of organizations are critical now, especially given that many employees have experienced new-found benefits in working from home and have increased work-life balance demands and/or preferences.

Automation

Finally, what hasn’t changed? The SD Worx study found that in both 2020 and 2021, looking across 19 different HR functional and cross-functional areas, the top priority and the projects most organizations looked for help with from external specialists was improved HR process automation.

Looking across the cloud HR transformation market, NelsonHall’s 2020 report found that 5% of organizations interviewed were using robotic/AI automation services from providers, and this increased to 18% in 2021. The satisfaction level across organizations serviced also increased from a score of 4.0 out of 5.0 to 4.3/5.0. Automation can’t solve all needs for all processes, but in times of increased stress and to support the mass disruption that many businesses have had to face, a service partner strong in automation and technology as well as compliance can certainly save the day, and arguably should be table stakes when selecting a provider.

Summary

NelsonHall expects that in 2022, more HR offerings will be developed to support improved automation around staff welfare and resilience and help organizations drive greater operational efficiency while supporting employees’ individual needs with personalized HR service offerings. Part of addressing individual needs will also include a longer-term emphasis on flexible or remote working, a key factor in attracting and retaining talent over the next year. Finally, given the complexity of European legislation and storing data, providers need to be very savvy with the GDPR and help clients establish robust processes to make an impact. 

HR may be cautiously putting in place new processes that store more personal data, but unless HR steps up, operational inefficiencies are likely to persist; HR can no longer afford for the management of staff health and welfare to be primarily a line management responsibility. Further, a lack of coordinated action could exacerbate staff burnout or resignations at the management level and discourage new talent if the organization is not seen as an employer of choice.

1 SD Worx 2021 ebook: Ride smarter not harder, Towards people-first digital HR

2 NelsonHall’s 2021 market analysis report: Cloud HR Transformation Services

This past week I had the privilege of attending isolved’s Connect annual user conference at the Diplomat Beach Resort in Hollywood, Florida. The event marked a few firsts for me personally: my first time attending isolved Connect and the first time I have traveled for an in-person event in 18 months. It was great to get back to meeting and connecting with vendors and buyers face to face again!

Considering current events, the conference was quite well attended, with isolved confirming a 70% increase in conference attendance y/y from 2019 – which speaks to the value its HCM platform and extended HR services are enabling for its buyers and partners. isolved has done a lot to keep that value flowing, maturing its solution through product development and select acquisitions. 

isolved’s strategy, tactics & roadmap

On the strategic side of the platform, isolved quickly put its recent purchase of AI-enabled analytics platform provider TrenData HR to work, launching isolved Predictive People Analytics at the event. The offering provides leaders access to AI-driven predictive insights against data from across its People Cloud suite of modules, surfaced through configurable dashboards and augmented by a voice-enabled virtual assistant.

From a tactical perspective, isolved introduced People Cloud Expense Management, which becomes available in Q4, and offers two levels: Essential and Premier. Both will offer isolved’s Adaptive Employee Experience, which includes a mobile-first UX, OCR for receipt capture, and full transparency into the process through to payment. For leaders, the solutions each provide automated workflow approvals, company-wide reporting, and dashboards for drill-down insights and control. Further, the Premier edition will support organizations with more complex expense management features, including credit card transaction importing, job and project costing, and deeper GL export capability.

isolved is focused on continuing its growth by maturing its technology and deepening its service offerings. Its roadmap looks to advance its talent management capability, including enhanced onboarding experience, support for total compensation management, career and succession planning, LMS integration to its wider engagement and talent products, and more tools to support reward and recognition. From a services perspective, isolved is focusing on supporting health and wealth, with benefits a key area of growth, and will launch a benefits brokerage capability and offering in 2022. 

isolved will also continue to expand its partner network: both its payroll services reseller partners and its marketplace partners. isolved is working to further expand its marketplace of integrated partner solutions to address white spaces within its offerings, and further support its adopters in addressing unique needs and growing their businesses.

Key observations & takeaways

Throughout the week, I spoke with multiple isolved clients and partners (in many ways, clients themselves, commonly leveraging isolved’s platform to enable their own managed services offerings). Something that stands out in conversations with clients is their collective confidence in isolved, its executive leadership team, and the technology itself. Every firm I spoke to indicated lengthy tenures with isolved, commonly over five years, which speaks to the value, customer experience, and care isolved places on long-term relationships and retention of their clients.

I also noticed in my conversations just how much work SMBs need to do to mature HCM practices and support their planned growth as they also navigate today’s challenges as the future workplace continues to evolve. I think it’s indicative of the attendance increase this year, as many have important HCM buying decisions to make to address key gaps and futureproof their HR operations for continued growth. The challenges they face, while smaller in scale, align with those seen by their up-market peers. Top operational concerns I heard this week centered on enabling HR to support growth plans and strategic initiatives more efficiently and effectively for their businesses, finding and retaining top talent, and maintaining compliance.

Looking ahead, isolved’s leadership is keeping its foot on the gas in terms of innovation, platform maturity, and client adoption and retention. A key area of opportunity for the platform is talent management, which will see capabilities advance through its roadmap in 2022. The acquisition of TrenData HR fills a gap in cognitive capability which has enabled its predictive analytics offering and will support further AI-driven capabilities, which will be key for deepening talent insights and supporting an eventual talent marketplace offering. Further, isolved has some work to do to expand its partner integrations, particularly to deepen its capabilities to support unique client requirements and sector challenges and meet the growing demand for multi-country solutions by emerging SMBs. 

With its platform and clients maturing, isolved is on a positive path to continue its growth trajectory. The challenge will be helping SMB buyers realize the need and value in adopting these more advanced capabilities and embracing technology to modernize their HCM practices and advance their business initiatives.

This past week, CloudPay announced the launch of CloudPay NOW, its latest offering focused on modernizing the way workers are paid globally.

The employer-integrated Earned Wage Access (EWA) solution is a key addition to CloudPay’s offering that pairs its unified database and technology-enabled operating model, with its deep global treasury capability to offer one of the most comprehensive end-to-end global pay solutions available in the marketplace.

How CloudPay NOW Works

CloudPay has enabled CloudPay NOW by leveraging a strategic acquisition it made very quietly in 2019 to boost its mobile payment technology. The solution integrates with CloudPay’s unified global payroll database, including workflow based on client payroll calendars, mobile technology, and its highly adopted global payroll treasury offering. The new offering can support EWA in 130+ countries and 168 global currencies. It further enables digital payments globally and in real-time leveraging established global payment RAILS.

The CloudPay NOW user experience is enabled through apps for both iOS and Android and provides employees with real-time access to earned wages for on-demand pay capability across the countries where CloudPay offers treasury support. Users are offered in-app support with chatbot and live chat options.

The benefit is cost-free for employees (employers are charged on a per employee per month basis) and provides them with early earned wage access, and real-time debit/credit card-based transfers to third parties, including person-to-person and person-to-entity. Because CloudPay NOW leverages a combination of credit and ACH RAILS, withdrawals can be performed in less than one hour, including on weekends, a much faster option than traditional bill payment solutions can provide. Transactions can also be scheduled for future dated payments and transfers based on automated target thresholds.

Further, the solution has been enabled with curated insights, guidance, and tools to support employee financial empowerment and wellbeing. Employers define set “business rules” within CloudPay NOW to guard and control employee access and withdrawals to ensure healthy usage of the capability. Employees can also adjust preferences (within client business rules) to support personal thresholds and limits.

The impact of CloudPay NOW

For employers, a globally unified payroll solution that goes beyond gross-to-net calculation to payroll funding and payment fulfillment offers real value for multinational firms supporting a global workforce. Traditional payroll solutions stop short of global payments, leaving employers to sort time-consuming money movement and foreign exchange complexities, often extending the pay cycle and timeframes for payments to reach employees.

With payroll at the heart of the employee experience, employers across sectors seek more ways to compete for top talent by providing differentiated experiences. On-demand pay breaks down lengthy pay cycles, and empowers employees to control the timing of their pay, boosts financial wellness, and offers them personalization to meet their unique financial needs (e.g., remittance to family members) and aspirations. Early adopters of employer-integrated EWA have seen measurable and impactful results beyond simply driving up direct deposit and digital payment adoption, with positive impacts on talent attraction, hiring, retention, and engagement resulting from deploying the benefit. 

To date, EWA solutions have been most available and adopted amongst U.S.-based employers and employees, with limited solution options internationally. With CloudPay NOW, multinational employers can offer the benefit of an on-demand payment solution to all of their employees globally, something other EWA solutions have failed to provide, as they are often enabled for a single country, or a few at most.

It empowers employees with control to determine how and, more importantly, when their earned wages are distributed. Payroll processing has long favored the employer with lengthy pay cycles, forcing employees to wait as much as a month for their earned pay. Meanwhile, their lives and financial needs are occurring in real-time, often leaving workers to tap risky alternatives to address unplanned expenses. 

CloudPay NOW provides employees with a tool that converges their pay with day-to-day life in real-time and provides tools to support money access and transfers, with insights to make more informed decisions with their earnings to reduce debt, advance savings, or navigate financial challenges as and when they occur.

The future for CloudPay NOW

The launch of CloudPay NOW is well-timed, given the groundswell of momentum building around digital payment solutions and their adoption. With digital payment adoption rising globally and mobile-first experiences fueling consumer expectations for on-demand experiences, the convergence of payroll with these factors has made employer-integrated earned wage access a standard element in modern payroll solutions. Further, in the environment of COVID-19, many firms learned just how challenging yet vital and impactful the ability to move earned wages to employees in a timely fashion can be – particularly those operating with multi-country footprints. Building resilient global payroll operations will require adopting modern digital capabilities like CloudPay NOW and its underlying treasury capability.

With clients now more commonly looking for their payroll vendors to provide treasury services as part of their managed payroll services arrangements, but not all vendors actively offering global treasury support, CloudPay is particularly well positioned to leverage its offerings synergies to boost adoption; its treasury service alone has been adopted by ~90% of its client base and continues to see similar uptake in new deals.

Looking ahead, CloudPay plans to add a digital wallet capability, including a branded pay card solution and is actively advancing its employee wellness support with expanded budgeting and planning tools. The solution is also enabled for (and has a selection of) non-profit relationships (which it continues to curate) for enabling philanthropic donations by users through their earned wages. It is also in-flight with FCA certification, which it expects to complete next year.

CloudPay will also seek to leverage CloudPay NOW to drive additional recurring revenues.  Longer-term, it sees CloudPay NOW as a standalone offering that could begin popping up in vendor marketplaces through integrated partnerships and white label opportunities for reselling the offering. Its in-country payroll partner network will be engaged first, with broader market providers in focus next.

CloudPay NOW already has a sizeable, multinational brand/employer piloting the capability to support 6k employees across 24 entities and 15 countries by the end of summer. The solution is expected to be well adopted by its client base, particularly those firms operating in challenging sectors with high hourly worker populations. 

The addition of CloudPay NOW to CloudPay’s global payroll offering provides a unique synergy to drive adoption for its complete offering amongst new buyers. Additionally, it elevates its value proposition considerably amongst buyers of global payroll services, providing it with a differentiated, end-to-end offering that pairs payroll technology and services, global treasury, and global payments within a single vendor solution.  

The last two years have challenged employees and HR teams in ways we could never have imagined, and many now have a new outlook on what “work-life balance” means. 2020 and 2021 have seen heightened resignation levels, and companies are only now starting to reflect on the impact of burnout on their employees. While vaccines are being rolled out, and with the threat of local breakouts of new variants continuing, companies are likely to continue to be cautious and invest in greater workforce management capability. They are likely to require more robust processes to support social distancing at work locations for many months to come as society adjusts to the post-pandemic way of living. In Q2 2020 alone, during the first pandemic peak in Europe, companies like Quinyx saw an incredible demand and reported 41 new signed customers, a 46% y/y growth rate.

Given the importance of this topic for the HR function, NelsonHall launched its first Workforce Management market analysis (full report available here). Some new HR themes emerged from this report that aims to help companies develop greater resilience. A couple of exciting developments are outlined below, with my reflections on whether they are likely to be lasting or not.

Democratized HR processes

Facilitated by technology, there is a growing trend for HR processes to be more democratized, enabling employees to have more of a say in defining what work suits them and when. This trend takes employee self-services to the next level of sophistication. For example, in the Workforce Management market, vendors have been increasingly enabling functionality to allow the employee to bid and auction shifts, swap shifts, and choosing when they work or go to the office. An example was a service center team that over 2020 enabled greater flexibility to support employee availabilities while allowing them to care for family members during COVID lockdowns. What used to be a leave process where you place leave requests is being adapted to support new attendance processes to enable employees to juggle work-life challenges.   

My POV:  democratized employee processes will grow. Where employee-to-employee interactions were traditionally managed informally face-to-face, with the backdrop of a larger share of the employee base working remotely, digital solutions are likely to identify opportunities to simplify processes through offering employee-to-employee connections increasingly. It will do this by formalizing what used to be informal interactions through richer democratized processes. These will increasingly appear across more functions and will continue to challenge and expand the concept of what makes up an “employee experience”.

Vendors that offer democratized shift swapping processes include ADP, Ceridian, Infor, Quinyx, SD Worx, TCP, UKG, and WorkForce Software. A number of these incorporate AI-based recommendations to fill the shifts. Shift auctioning is on the roadmap of several providers.

Direct communications

HR systems have traditionally not attempted to support E2E communications as this was the function of corporate emails or other means such as morning huddles. However, the pandemic necessitated a quick means of communication with remote or deskless workers who do not have email (e.g., delivery drivers).  Workforce management systems stepped up to facilitate group communications so that messaging to people assigned to a particular shift or within a special grouping became much easier. The pandemic has raised awareness that direct communication tools are invaluable in a crisis. Many workforce management solutions now enable a click of a button to chat to everyone about to start a shift via a mobile.

My POV: Effective communications are critical for business resilience. The importance of communicating to large groups of employees based on work allocation, projects, location, and various other factors makes HCM and workforce management platforms ideal for offering this capability to organizations. For effective communications, personalization and employee preferences also need to be taken into account. Organizations can refine the level, type and style of communications based on employee preferences, job, location, and E2E needs. We expect HCM and workforce management technologies to increasingly drive a two-way communications approach, data rich and AI-supported across broadcasts, E2E, surveys, and chatbot communications.

IoT integration and data mash-ups

The importance of knowing your employees’ whereabouts in a crisis has been brought to light by the growing number of geopolitical, climate, and pandemic events. IoT and workforce management blended solutions offer the capability to ensure employee welfare while at work with geo-tagging/tracking, BLE tags for monitoring adherence to social distancing guidelines, and access restrictions based on thermometer checks. These are some of the complementary components of workforce management solutions that were implemented across 2020-2021.  In 2020, many HCM providers (e.g., UKG, Workday) offered a new COVID mash-up report which mapped COVID outbreak data with employee locations.

My POV: Buildings have fire plans; to support remote workers, HR systems will increasingly step up and support greater health & safety features using IoT integration combined with external data sources to support significant events. Going forward, expect to see more business continuity functions embedded in HCM and workforce management platforms. A leading HCM and workforce management vendor, UKG, recently launched its Workforce Continuity Hub to support times of crisis with safety check-ins, a personal impact form, vaccine monitoring, and current crisis management where HR teams can create "events” (e.g pandemic/flood etc.) as they arise and track the event impact to enable a rapid HR response.

Find out more

Solutions will continue to evolve to help businesses adapt to a post-pandemic world. To find out more about what is happening in the workforce management market, NelsonHall’s HR Technology & Services clients can download our ground-breaking report in this field here. Alternatively, please contact Guy Saunders.

Buyers can also access NelsonHall’s Vendor Evaluation & Assessment Tool (NEAT) tool for Workforce Management that analyzes the performance of nine vendors offering workforce management technology. It is a suite of "speed-to-source" tools to assist strategic sourcing managers and HR technology executives in saving time and money while enhancing the quality of their workforce management technology sourcing decisions. The following vendors are included in this tool: ADP, Capita WFM, Ceridian, Infor, Quinyx, SD Worx, TCP Software, UKG, and WorkForce Software.

This is the final part 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, with Part Two looking at the managed payroll service providers currently pushing the pace of innovation. Here I focus on the outlook for the managed payroll services market and what to expect as we move forward.

Managed payroll services adoption

The appetite for managed payroll services remains healthy, and the market looks to rebound to its pre-COVID growth rates over the next three to five years, as digital payroll transformation projects are accelerating and firms seek to modernize this critical process for greater continuity, resiliency, and strategic value. And this is particularly true as payroll buyers more commonly require support from managed service providers in undertaking large-scale payroll transformation initiatives. 

The mid-market buyer will remain the largest adopter of managed payroll services globally, while large/enterprise-sized, late adopters of cloud-based core HR platforms will increasingly seek to extend cloud investments with integrated modern global payroll solutions. Small market firms are more commonly seeking payroll services as a core component in broader HCM technology and services solutions and are increasingly finding their footprints creeping to new international markets and require support for multi-country payrolls.

While single country adoption is steady, multi-country service adoption will continue to outpace single country deals by as much as 5x, as firms of all sizes and sectors will continue to see their footprints pulled to new countries of operation, particularly as 'work from anywhere' continues to trend upward, and talent is sourced from new locations. With providers now capable of supporting >150 countries through a single platform, UX, and a tightly integrated operating model – and with the need to modernize and consolidate multi-country payrolls – achieving global payroll transformation through a single vendor solution is more possible than ever.

From a scope perspective, fully managed payroll service adoption will continue to outpace partial services as firms seek to tap into the digital technology vendors have been proliferating in recent years, urging buyers to focus on payroll resiliency (cloud platforms, mobile-first design, on-demand payroll capability, predictive analytics, and dynamic, real-time integrations to bring it together seamlessly).

Additionally, firms operating in fully managed payroll services models during the pandemic had much-needed help in quickly accessing reliable data, interpreting, responding to compliance directives and government support programs, and fundamentally fared better in navigating the unforeseen challenges – further reinforcing the value in managed payroll service engagements. With compliance intensifying and payroll complexity escalating, buyers are keen to adopt fully managed payroll solutions to access best-in-class operating models, vendor advisory in de-risking the critical process, and supporting future growth and scale as requirements change.

Service offerings

The renewed focus, investment, and emphasis on payroll as a critical and core element in the employee experience have created a boom of opportunity for payroll solution providers.  Recent years have seen more new technology-driven entrants and pulled some (e.g., HCM tech providers) deeper into the payroll space, crowding the market with many options. 

Thus, vendors are commonly differentiating their solutions through the employee and client experiences, providing a modern UI/UX, mobile-first design, augmented and personalized support through AI/ML, and analytic insights – all of which is underpinned by a high-touch client experience that focuses on increasing client value by enabling improved payroll outcomes and driving long-term recurring revenue retention.

With buyers focused on cost containment and often varying in their maturity to digest and manage change programs globally, vendors are creating more flexibility for buyers by unpacking solutions to enable more standalone service levels and tiered service options – thus enabling incremental service adoption to accommodate unique buyer requirements, budget constraints, and appetite for change within the organization.

Vendors are also increasingly offering pre-configured, platform-based software and services solutions for smaller/midsized multi-national firms seeking modern, compliant 'core' payroll and HR capabilities to support long-tail footprints, enabling a turnkey multi-country core HR and payroll solution that can be rapidly deployed. 

Lastly, service offerings are expanding to include add-on services to meet buyer requirements and drive increased revenue retention; the top three service additions include treasury and funding services, HR compliance support, and global mobility support and advisory.

Enabling technology

With buyers keenly focused on the employee experience and seeking to align and integrate payroll with their broader HCM tech investments and tap into modern payroll solutions, vendors are focused on advancing and differentiating their UI/UX with roadmaps focused on deeper digital capabilities, including mobile-first design, predictive analytics, and intelligent automation. Modern payroll platforms are now providing practitioners with a single, globally consolidated, real-time view of payroll processing, providing deep transparency, insights, and control over their payroll operations globally.

Providers are also focused on touchless and autonomous payroll enablement – advancing platform automation through RPA, AI/ML/NLP to remove manual, repetitive tasks, detect and address anomalies and data errors in real-time, producing more reliable payroll outcomes (timely, accurate, compliant) while enabling payroll practitioners to focus on value-added analysis and strategic projects and tasks. With payroll holding some of the richest and least utilized data sets in the organization, accessing and leveraging reliable, real-time, globally consolidated payroll insights will be key to payroll pivoting from simple processor to strategic COE and business advisor. Thus vendors are advancing payroll reporting capabilities through real-time analytic reporting, benchmarking, and guided, predictive insights.

Lastly, payroll vendors are increasingly advancing their partnerships to supplement offerings and capabilities, fill white spaces, and offer clients solutions to meet their unique needs through integrated third-party solutions. While formal payroll marketplaces are still somewhat emerging and primarily existent within the HCM technology space, they will become a standard longer-term offering with certified, pre-built integrations to leading HCM technology platforms and a broad range of complementing third-party solutions.   

Key integrated third-party solutions increasing in demand and adoption include certified HCM technology integration and partnerships, as firms seek to tightly integrate payroll (globally) with their core HR investments, followed by earned wage access (on-demand payroll) and integrated workforce management.

Although on-demand payroll solutions are largely trending and adopted most by North American-based firms and workers (due to various social and economic factors), demand is gradually increasing globally and will be a standard offering requirement longer term. While most payroll providers have partnered with fintech firms to offer the capability, look for more payroll providers to enable native on-demand pay solutions as we move ahead.

You can read the rest of this blog series here: Part One, Part Two.

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.

NelsonHall has published its annual payroll services market analysis, Payroll Services: Globalization and Digitalization. The report includes an analysis of two dozen payroll vendors, their offerings, and their buyers' perspectives. The project provided 'behind the curtain' access to many of the major payroll solutions enabling the market today and shaping its path forward.

This blog is a three-part series of my observations from the project and thoughts on what to expect for the payroll services space as we move ahead. Part One features the payroll buyer perspective, including the buyer view of the impact of innovation available today. Part Two continues with a look at the managed payroll service providers pushing the pace of innovation. Finally, Part Three will focus on my perspective on the managed payroll services market's outlook and what to expect as we move forward.

Managed payroll services: buyer perspectives

The past year has seen a renewed interest in payroll as a key transformational area of opportunity for firms across sectors. While many have focused investments and initiatives in recent years toward cloud HR adoption and advancing talent management capabilities, payroll remained somewhat overlooked.

Fast forward to 2021 and payroll is squarely at the heart of the employee experience, with firms realizing that payroll is far more complex, vulnerable, and desperately in need of modern tools to increase efficiency, resiliency and enable the critical process to better support the strategic direction of the business.

85% of buyers interviewed confirmed that payroll transformation was either underway or planned over the next two years for their organizations, with nearly all citing the need for support from managed service providers as they lacked the ability to undertake the transformation alone. With payroll transformation and digitalization in focus and front of mind for buyers, vendor selection criteria (amongst single and multi-country adopters), centered on vendors that can offer proven expertise and qualifications for the countries in scope and enable digital payroll transformation through an affordable platform-based offering.

What has gone well

Collectively, buyers pointed to positive overall satisfaction for their managed payroll services and vendor relationships and further indicated a positive outlook for their solutions to meet their strategic needs over the coming three to five years. 

With the marketplace crowded and differentiation often coming by way of the user and client experience, vendors are underpinning offerings with a high-touch, localized expertise that focuses on enabling value for the client and driving long-term recurring revenue retention.   Buyers showed high satisfaction with their vendors, specifically pointing to the strength of partnership, flexibility, and caliber of personnel as the top aspects of their relationships. 

Further, in recent years, vendors have loosened adoption requirements, unpacking offerings to provide more incremental service options, and filling gaps through integrated partner solutions to meet the unique needs of buyers across sectors and sizes – with buyers pointing to a positive outlook and confidence that their solutions can still meet their strategic needs longer-term.

What can be improved

Despite the innovations of recent years and the work both buyers and providers have done, there is room for improvement. Most notable this year was the appetite for digital enablers to transform payroll, yet commonly buyers were somewhat unclear as to what their provider offered in this regard.

With AI/ML still maturing in the payroll space, many solutions still lack an intelligent technology infusion, with the highest maturity and satisfaction seen amongst the HCM tech platform providers offering managed payroll services. However, buyers commonly lacked understanding of how intelligent technology (AI/ML) can help them automate the complex process, as buyers were often unsure if it was present in their solutions or even offered by their vendors.   

Further, two critical components required of modern payroll operations that are surprisingly lacking in meeting buyer expectations center on integration and reporting. Like many aspects of managed payroll solutions, not all integration capability is equal and must be thoroughly vetted and tested – deploying any solution lacking seamless integration (both in-platform and to/from the platform) will negatively impact the user experience and reporting, as it prevents data from flowing freely across the operating model, and amongst key systems. Specifically:

• Integrations: 40% of buyers indicated not using, not needing, or didn't know if their vendor offered integrations to third-party platforms, with about half of those respondents indicating a need to integrate those systems in the future, including core HR in select cases (often a decision by the business to hold off on core HR integration for undisclosed reasons)
• Reporting: Overall, a mixed satisfaction levels; lower-scoring satisfaction was driven by a lack of maturity in the offering or capability, e.g., only offering Excel-based reports or "basic functionality" lacking in analytic insights, visualizations, or graphical representation. In select cases, buyers choose to conduct payroll reporting outside of vendor solutions, likely leveraging third-party reporting tools or platforms to supplement the lack of vendor capability.

Further, buyers pointed to a clear opportunity for vendors to support them with process reimagination of payroll service and processes. Those citing lower satisfaction pointed to a lack of proactive engagement by their vendors for continuous process improvement. While technology innovation has undoubtedly helped, more can be done to engage buyers with new solutions, tools, and methods for addressing their unique requirements. As with the feedback on digital enablers, there is also a gap in buyer understanding of what vendors can offer and what is possible in terms of payroll transformation and process reimagination.

Vendor opportunities

Buyer lack of strategy or change management plan

In reviewing feedback from both vendors and buyers, there is a clear gap in payroll transformation strategy that puts both parties in a poor position from the start, particularly for multinational firms seeking to enable global payroll transformation. Buyers are often setting out to transform payroll with a limited or no strategic plan, assuming that adopting a particular solution or vendor model will instantly transform payroll.  While this can certainly move the payroll operating model forward, it must be accompanied by a clear strategic path and underpinned by a comprehensive change management plan. I often see buyers deploy the latest solutions (across HR towers) without doing the uncomfortable work of shifting habits and adopting the solution's full potential, only to find that they didn't transform after all.

While payroll vendors have expanded offerings in recent years to include front-end advisory and business case support, change management is often a key element lacking and generally isn't a core competency or service offered by payroll providers. This is an area I think vendors have to do better in supporting buyers, as it benefits both parties over the long term.

Process reimagination and innovation

A key area of opportunity that resonated across buyers and was evident amongst vendors across geographies and solutions was the absence of ongoing, proactive process improvement and service reimagination. Buyers commonly pointed to an appetite for deeper proactive engagement and consultation by their vendor post go-live. Capabilities like design thinking and proactive outreach to introduce and incorporate new innovations and tools into client programs are lacking. Many buyers simply didn't understand what their vendors could offer or how it could be leveraged to meet their specific needs and maximize the value of the relationship.

Payroll service providers can look to HCM technology providers as a model for how this can be improved. The HCM technology firms do an excellent job of staying closely and deeply engaged with their user community, assessing their engagement, satisfaction, and monitoring usage of their systems to proactively help clients maximize the value of their investments and drive the transformation they seek. 

They also do a great job of enabling communication channels between vendor and client as well as client to client. This open collaboration leads to the platform community driving its future through steady user feedback, thereby shaping significant portions of the roadmap and enabling direct impact for users for the challenges they face daily; further solidifying the partnership; boosting the investment in the success of the platform for all parties; and driving long-term recurring revenues.

Part Two continues with a look at the managed payroll service providers pushing the pace of innovation.

Part 1 by Pete Tiliakos & Liz Rennie

This is Part 1 of a 2-part blog presenting an analysis of key trends from NelsonHall's HR Technology & Services team. Part 1 looks at the key outsourcing trends around core HR functions, including cloud HR transformation, payroll, and benefits administration services.

Cloud HR Transformation Services

The drive to digital has kept many cloud HR transformation projects on track, despite some large enterprise signings being delayed. The 2020+ HR challenges look different from those in 2019, with organizational challenges related to workforce safety, workforce productivity, security, cost containment alongside deepening cost pressures, and a need to ensure all processes are digital. Pivotal to success is the agility of HR organizations to drive restructures supporting significant market upheavals across so many industries. Adapting to rapidly changing and compliance needs will also be a challenge.

Cloud HR transformation services are adjusting to a FluidWorkLife era, defined by greater people engagement to support fluid, individual work and homelife needs in a consumer-like way – while addressing higher-speed digital deployment through improved use of automation and technology to better manage the pace of business change and industry consolidation.

Outlook:

Key themes and drivers expected from the Cloud HR Transformation Services market in 2021+ include:

• Managing workforce restructuring and HR & payroll compliance: with unprecedented layoffs and furloughs, in contrast to significant growth in industries such as online shipping, couriers, and communications, HR has played a key role in supporting the business through change. Ensuring timely, accurate, compliant payroll was the top operational priority in 2020 and will remain critical moving ahead
• Workplace tools to support workplace change: with employees working from home, a greater focus on worker tracking to support a safe return to work, enabling touchless workplace services, monitoring social distancing interactions, and supporting contact tracing
• Effective employee engagement is table stakes: employees will have diverse needs and individual personal demands, requiring greater HR flexibility, including where employee solutions might need to be co-created. Enabling tools such as HR chat to support improved engagement will increase in importance, plus more regular employee surveys or pulse-checks
• Security is increasingly important, with more cyber-attacks evident during 2020
• Greater resilience through cost improvements, digital processes, and agility are also key to HR delivery models. Priorities are expected to focus on solutions that help make workforces more resilient, including employee health, voluntary benefits, risk, and cost.  Companies will be looking for greater agility for changing business needs. In the light of COVID-related revenue and cash flow challenges across many industries, it is expected there will be a greater focus on delivering longer-term cost improvements.

Payroll Services

This past year has been a stark wake-up call for many organizations and their payroll operations. The effects of the pandemic strained and exposed operating models up and down market, leaving many firms across sectors realizing investments to futureproof payroll operations for greater resiliency can no longer wait.

At the same time, 2020 has been payroll's 'time to shine', with practitioners stepping up to answer the call and keeping workers around the globe paid on time and accurately during arguably one of the most challenging times in recent history, despite the shortfalls in capability.  

On the managed services front, the shift to work from home enabled payroll providers to put their digital technologies to the test, proving out the very solutions they had been proliferating in recent years and urging buyers to focus on: cloud platform adoption, mobile-first design, on-demand payroll capability, predictive analytics, and dynamic integrations that bring it all together seamlessly. Additionally, firms operating in managed payroll services arrangements had much-needed help in quickly accessing reliable data, interpreting and responding to compliance directives and government support programs, and they fundamentally fared better in navigating the unforeseen challenges, reinforcing the value in managed payroll services.

Outlook:

While payroll service provider revenues were negatively impacted by the global economic downturn and subsequent job losses, and buying decisions were put on hold, the appetite for digital payroll solutions and managed services is quite healthy and is escalating as we move into 2021. 

With payroll a critical, core element in the employee experience, global footprints creeping, and compliance risks rapidly intensifying, buyers are keenly focused on payroll as a key area of investment moving ahead, and thus service provider pipelines are healthy, signaling a gradual return to the growth levels experienced before the pandemic. 

Five key themes and drivers expected from the managed payroll services market in 2021+ include:

• Compliance is THE priority: quite possibly the leading driver for managed payroll services adoption today and one that will intensify as we move forward;  buyers will focus on tapping into the tools, localizations, expertise, and global capability that vendors can offer at scale in removing risk and ensuring complete and timely compliance as statutory requirements evolve
• Digitalization up and down the process: no process in the employee lifecycle has been historically more neglected or overlooked than payroll.  Vendors will continue leveraging cloud platforms as the launchpad to enabling deeper digital capabilities with a heavy emphasis on automating the highly manual process through RPA, AI, and ML infusion, inching toward eventual fully autonomous processing. With payroll sitting squarely at the heart of the employee experience and wellness, look for deeper mobile capabilities, expanded use cases for AI/ML, and NLP-enabled virtual assistants that augment users and personalize experiences with guided, predictive insights to drive best practice and data-driven decision making
• On-demand earned wage access will be a game-changer for payroll: if the pandemic taught us anything, it's just how vital and impactful the ability to move earned wages to employees in a timely fashion can be. With the employee experience, engagement, and wellness top of mind for HR leaders, on-demand payroll capability helps with each by empowering employees with greater control and insight over their earnings. Look for the solution to continue its hypergrowth trajectory with adoption led by the U.S. and Canada, but increasing slowly internationally
• Payroll becomes a strategic partner: payroll has long been viewed as a simple processor and cost center, often overlooked in key HR decision-making or strategic decisions. Yet payroll controls one of the most critical processes in the employee lifecycle and houses some of the most underutilized and generally misunderstood data sets in the entire organization. With the continued proliferation and criticality of globally consolidated predictive analytics, and benchmarking capabilities, pared with the advancements in digitalization, payroll has the opportunity to truly shift its focus toward becoming a strategic advisor to the business
• Multi-country deals will escalate: with many MNCs operating on legacy, disparate, and often poorly integrated payroll solutions globally, the appetite for consolidating and modernizing global payroll remains strong, particularly with many firms finding their global operating models ill-equipped to handle the next major disruption. With multi-country payroll solutions able to support 100+ countries on average, look for buyers to tap into vendor offerings that can consolidate, digitalize, and automate payroll globally through a single solution.

Benefits Administration Services

Benefits administration providers have continued to focus on expanding benefits offerings to tailor to specific needs, while also minimizing administration by improving processes and technology. Significant changes in the way of working have also impacted the industry. Over 2020, benefits fairs were managed online, a first for many. As a result of the pandemic, technology is the driving force to innovation, with greater focus on homegrown platforms or through managed acquisition and tighter partnerships to support ongoing changing needs and client needs for greater visibility of data.  

Buyers of benefits programs continue to expect greater flexibility to support change, greater automation, customizations of communications, and improved process efficiencies. 

As government relief packages introduced by most major governments greatly impacted health provision and benefits rules, operations had to adapt quickly to apply these changes. As a result, 2020 was a year of increased operational costs for many benefits administrators.

Outlook:

Key themes and drivers expected from the Benefits Administration Services market in 2021+ include:

• Automation and integration: benefits operations will become more streamlined with greater integrations, minimizing risk and manual interventions
• Health costs are increasing in the medium to long term: costs might have reduced in 2020 due to a lower number of medical claims; a high-cost spike is expected in 2021 due to pent up demand for health services
• Keeping up with relief legislation has been challenging, and more changes are expected in 2021: The dynamic nature of the benefits markets will mean more buyers will look to expert providers for guidance and support and bringing greater agility to support compliance
• Compliance, security, and risk management will have growing importance: especially while more processes moved online and electronically, and as companies capture more data about their employees
• Personalization through AI will grow alongside company ethics and brand as it relates to benefits design. AI will increasingly support benefit recommendation engines; personalization will also increase through more fine-tuned communication tools
• Benefit design will have a growing importance in promoting diversity in workplaces and representing the company brand
• Benefits professionals’ roles will change to become more marketeers to communicate benefit programs and be less about interface/error management and processing
• Industrializing and institutionalizing analytics: increasing use of data to support and evaluate program success, employee engagement, cost management, and drive more informed decision making.

In Part 2, Nikki Edwards will look at trends and the outlook for talent management services, including recruitment and learning services.

As expectations of what is possible in the digital world have grown exponentially, Capgemini is aiming to close the widening gap between consumer experience and employee experience.  It is looking to digitalize workplace interactions while keeping the warmth, emotion, and uniqueness underpinning company culture.

It has built a Digital Employee Operations (DEO) practice over the last four and a half years, which brings customer service to a new level in the field of HR. DEO aims to bring everything into one place: knowledge, help, and information through a "one pane of glass" digital window.

This is only possible through tighter technology partnerships which support more robust integrations with more industrialized processes and more standard services.

What's New?

In 2020, Capgemini selected ServiceNow as a strategic partner for its digital employee operations. Importantly, this is not positioned as a call center. Its Digital Employee Operations clients use a digital-first strategy.

ServiceNow brings a case management platform designed for HR with a prebuilt data structure that is HR-centric, combined with prebuilt security. One of the differentiating features is that this product enables not only service agent interactions, but employees can interact and collaborate across the organization; for instance, product enabling managers and employees are able to engage on a case.

Before reaching this partnership, Capgemini supported operational customers in its DEO practice with the ServiceNow platform for a number of years. Its first ServiceNow customer was AECOM, which went live in Q4 2018, and it has built a significant practice over the years. Today, Capgemini's DEO supports more than 20 languages for more than 250K lives in 90 Countries on ServiceNow. The formal partnership now takes this model and approach to a new level.

Applying chatbots in HR and adoption levels

In Capgemini, chatbots have a high adoption rate, with ~20% of its clients leveraging or launching virtual agents/chatbots. Chatbots offer iterative functionality, and Capgemini sees varying deployment approaches across clients.

Some add a virtual agent/chatbot alongside live human chat support. This expedites the learning process for a bot by having a log of live interactions to drive and map intents and responses accurately to employee queries. An alternative approach is where there is no history of live chat. As an input, the bot simply requires more effort and assumption in intents and interactions. This approach involves more humans validating questions and answering questions the bot could not address.

Why a strategic partner?

Having selected a dedicated human resources “hire to retire” services solution, Capgemini can now drive larger benchmarking data sets to evaluate process improvements through comparative trend analysis. Benchmarking is critical for a mature operation that looks for a competitive advantage. Capgemini offers benchmarking in two ways:

• Sharing of knowledge and experiences learned across clients to benchmark what is leading practice, and applying and sharing lessons learned and continuous improvements across clients
• External benchmarking against non-DEO clients less than 15% of its current client base have engaged with that additional offer.

NelsonHall Viewpoint

Its first truly joined-up DEO contract on ServiceNow was 12 months ago. Over the next three years, NelsonHall expects a service approach to HR transformations will be increasingly important as organizations look for more than just an HCM technology deployment and/or support partners.  Organizations will likely look for more robust and holistic service-based HR business cases to ensure savings and ROI are achieved through end-to-end digital transformations. They will likely increasingly assess their own operational capability to drive the change to achieve a digital-first approach to help drive more consumer-like HR services.

Although many organizations have leaped to mobile-first employee experiences through HCM platform deployment, few have addressed the experience of inquiry support and how HR operating models and interactions need to uplift. Rather than treating this as an afterthought, proactive HR directors with ambitions to reshape companies in 2021 are expected to evaluate service delivery models on a more holistic level, looking more at people and digital and how they come together through technology.

Capgemini's offering maturity is evidenced by the fact it now has 30-40 pre-packaged HR services and a deep service partnership with ServiceNow. This puts it is in a strong position to take this maturity to the next level of sophistication.

Like many HR service providers, SD Worx has been supporting its clients over the last six months by continually making updates to the changing legislation and dealing with client queries and operational challenges. SD Worx also launched a study to better understand changing market needs, the findings of which have just been published. The SD Worx study was one of the most extensive European HR COVID impact surveys, across 20 industries and 3,000 companies from 11 European countries, and it found that the highest HR priorities in 2020 are operational, administrative tasks. As part of its thought leadership white papers, SD Worx has also set out a new vision for HR, to enable clients to balance “Stability” and “Fluidity”.

Key study findings

The study confirms HR’s top priority in 2020 was payroll. When asked, “What priorities or projects do you have (or plan to have) within payroll and HR?” the option “To ensure smooth, efficient payroll calculation and payment” scored the highest (#1 priority for 8 out of 11 countries) across 19 different options covering all aspects of HR. Payroll has never been more valued than in times of crisis; payroll administrators are “essential workers”.

So, when will things get back to normal? Nearly half of European companies surveyed were convinced that COVID-19 would have a lasting impact on their business. We will have to radically change the way we work (together) after the crisis. However, the HR study finds that HR directors rate their level of digital maturity as low: only 37% of surveyed organizations claim to have reached a high level of digital HR maturity. So, as many lives and business models have been disrupted, HR agility has never been more important.

The SD Worx study showed that the top three areas companies look at to leverage external specialists and outsource service providers are:

1. HR process automation
2. Regulation expertise
3. Digital transformation.

Other insights from the study demonstrate that besides payroll and HR services and performance, many European country priorities were as diverse as they are homogenous, something seasoned European HR directors are not unfamiliar with. As well as reflecting cultural priorities that might result in different priorities, NelsonHall expect the variations also be partially due to the timing of the different countries' COVID responses. The study was conducted over the month of June 2020 and during this month, many European countries were at a different stage of their COVID19 responses. The impact of the crisis was just starting to be understood and realized. According to most countries surveyed, the three areas that were the lowest priority were HR policy, reward, and contingent workforce.

Employee experience has been a common theme of many HR strategies over the last few years, and many still aim to optimize the employee experience better. With so many employees now working remotely, the employee experience and employee engagement are more critical than ever before and require modern technology to keep employees connected while ensuring timely, accurate, real-time information, and facilitating reliable outcomes throughout the HR delivery model. The SD Worx study showed ~60% of employers are still actively trying to improve the employee experience, either with existing projects or projects planned over the next 12 months. SD Worx defines employee experience as the digital workplace experience and cultural & inter-personal engagement as well as the physical work environment. SD Worx recognizes a trend towards more personalization in HR, with almost half of companies having “flex reward projects” in progress or planned within the next 12 months.

SD Worx response

In response to the HR study, to meet European countries' needs across such a wide range of industries, SD Worx set out its HR service vision. Its vision is to bring stability to HR services alongside a fluid offering, enabling each company to find its own optimal balance.​ The concepts of stability and fluidity are outlined below as well as some examples of how SD Worx addresses these:

Stability is defined by SD Worx as:

• Future-proof HR tech: SD Worx offers cloud-based HR/payroll technology offerings in the core markets of the U.K., Ireland, Benelux, France, Germany, Austria, and Switzerland

• Efficient HR processes; SD Worx recently developed its HR SME digital services platform “SD Worx Buddy”, piloted in Q2 2020 in Belgium. Frictionless tools: SD Worx launched its mySDWorx app for absence, expenses, payslip, internal communications, and a FAQ for HR. It has over 160K installations It uses machine learning to determine the ten most asked questions and is tailored to the client's database. It supports conversations designed for the employees (not for the process). Over 2019 it has rolled out an onboarding assistant to capture more employee data; now released in Belgium and UK, and the next country onboarding to be developed is Germany.

Fluidity is defined by SD Worx as:

• Personalization: SD Worx enables personalized remuneration packages through its reward cloud platform. This lets employees tailor their reward components with voluntary elements. Helping employees to value their rewards can not only boost motivation but also complement a cost-efficient overall reward policy
• Empowerment: SD Worx empowers organizations to be proactive and adapt to fluctuations in the workloads through its workforce planning offerings. It takes each employee’s qualifications, availability, seniority and other requirements into account which could be fulfilled by permanent or flexible staff, through the SD Worx Flexible Staffing solutions
• Autonomy: SD Worx solutions support personalized training trajectories, enabling organizations to boost employee engagement, performance and giving them greater autonomy.

For those who want to get more in depth insights on the research, SD Worx is creating a series of publications that will be published on the SD Worx platform (link). These are the first:

• Payroll: highly valued, hardly optimized
• HR, fluid as Hula-Hoop shaking (publication end of October, webinar at Unleash)

Also foreseen are ebooks on Workforce management and on Digital HR and Employee Experience.

The themes of SD Worx’s vision align well with the benefits Cloud HR transformation buyers look to achieve, according to NelsonHall’s Cloud HR Transformation Services market analysis report. According to the NelsonHall report, the top three were improved compliance, simplified and modernized technology, and improved employee experience. In 2020 and following the pandemic, it is evident that improving employee experience as an HR objective is not disappearing. Its definition and the height of the bar is being raised, moving beyond the realm of just a mobile app offering,  as vendors strive to deliver more frictionless and efficient offerings.

The recent impacts of the COVID-19 pandemic exposed many HR and payroll service delivery models as being unequipped and unprepared to pivot to remote work, access the data needed to obtain government support, and move money to employees in a timely and compliant fashion. The pandemic also accelerated an already intensifying push toward digital HR and payroll adoption, particularly as the “work from home” response has turned into the “work from anywhere” norm.

With so many employees now working remotely, the employee experience and employee engagement are more critical than ever before and require modern technology to keep employees connected while ensuring timely, accurate, real-time information, and facilitating reliable outcomes throughout the HR delivery model.

While cloud HCM technology remains the vehicle for HR digitalization, existing solutions often lack the ability to support the HR service delivery function in-platform. Thus, integrated HR service delivery technology is key to extending the HCM capability and enabling a next-generation delivery model and user experience, one that facilitates critical HR support activities in real time, such as knowledge and inquiry management, document storage, process monitoring, and automation. 

As a result, more organizations across sectors are considering managed HR and payroll services as the lever and pathway to modernizing their HR delivery models and advancing their digital capabilities, tapping into the innovations HRO providers have proliferated in recent years in preparing for the “future of work.”

Here, I take a look at how HR and Finance BPaaS provider and Workday specialist OneSource Virtual (OSV) is leveraging its proprietary service delivery technology, OSVAtmosphere, to differentiate its managed services, providing its clients access to the types of next-generation apps required to enable a resilient, modern HR service delivery model and user experience.

OSVAtmosphere

In line with its mantra and branding, "Make the day more doable", OSV maintains a relentless focus on supporting its clients with integrated solutions that maximize their Workday investments while elevating the HR service delivery experience.

OSV enables its service delivery in support of ~800 clients through OSVAtmosphere, which provides real-time, in-application service delivery capabilities leveraged by OSV resources on the back end for HR and payroll process administration, as well as by its client administrators on the front end. This is key, as both the client and back-office OSV resources remain in lockstep in real time throughout key processing and service delivery activities, enabling OSV to operate as a tightly integrated extension of the client's HR delivery team.

For its client-facing OSVAtmosphere solution, OSV has developed a bundle of web apps aligned to its core managed services offerings (HRO and FAO).  With >500 of its clients adopting its managed payroll services, OSV has focused its recent app development around providing its clients with real-time actionable insights at every step of this critical process through to funding.

OSVAtmosphere currently offers five fully responsive web apps that include support for the following processes:

• Payroll: a centralized control center for end-to-end payroll administration (on and off-cycle), providing client administrators real-time, in-flight updates and push notifications on the status of their payroll(s) as it progresses through the entire cycle, up to employees receiving their pay-slips

• Tax: provides a control center for tax liabilities and remittance processing. Post payroll submission, the necessary tax data, and details are automatically drawn into Atmosphere from the client tenant, providing full visibility into tax activities conducted by OSV on behalf of the client. Clients have access to both summary and detailed tax jurisdiction details with drill-down capability for more in-depth analysis and actionable insights, designed to identify downstream exceptions and errors for proactive client notification and resolution, with correspondence capability in-application. OSV has also enabled the Tax app in support of COVID-19 compliance activities, providing clients with access to details and insights into deferred tax codes, deferred tax liabilities, federal tax credits, and supplemental form data

• Garnishments: enables real-time visibility into the fulfillment and payment side for client garnishment orders and wage attachments across their workforce. RPA and OCR technology automate the loading and interpretation of court orders, as well as the remittance of outgoing letters and payments, including electronic copies attached to the client Workday tenant for reference, resulting in a near touchless process   

• Treasury: provides clients real-time visibility into the timings/deadlines for payroll liability funding and money movement, including activity details and historical check registers for identifying cashed and uncashed checks

• AP Invoicing (for FAO clients): provides clients real-time visibility into their invoice coding and supplier updates to drive invoicing accuracy. The app includes the ability to code and search by keywords, to pinpoint line items within Workday finance, with the ability to code by keywords as well as other standard factors.

Roadmap and future apps

As a central technology to its service delivery and omnichannel support model, OSV is focused on deepening OSVAtmosphere's capabilities and continues to invest in roadmap initiatives that will produce additional next-generation apps.

OSV has plans to expand the solution with additional apps due in early 2021, aligning to its broader HR service offering, which includes dedicated apps for workforce data administration and maintenance and benefits and COBRA administration services, including apps for both client administrators and employees. 

With Workday adoption accelerating outside of the U.S., OSV will enable some of the apps in support of clients in Workday-supported countries beyond North America, including a payroll app enabled for U.K. and Ireland due in early 2021. (OSV's Treasury service is not currently offered outside of the U.S. and Canada.)

Aside from continual UI/UX enhancements, OSV also plans deeper collaboration and correspondence capabilities between the client and OSV across all of its process apps (similar to its Tax app capability) to boost communication and speed issue resolution. It also plans on expanding its back office automation through RPA, which is already present against several critical payroll use cases.

Longer term, OSV plans to explore the infusion of AI in OSVAtmosphere to address key use cases and drive deeper predictive capabilities, as well as adding KPIs for potential benchmarking and process improvement insights and recommended actions.

This past month, NelsonHall released the first market analysis dedicated to the Global Employer of Record (EoR) Services space, an emerging yet largely unknown HR outsourcing service model that enables growing multinational firms to compliantly employ foreign workers in support of global expansion initiatives.

While co-employment service models have historically been U.S. centric, global co-employment offerings have emerged, providing multinational firms with a highly agile, turnkey support model for rapid, compliant international expansion.

Global EoR services at a glance

Global Employer of Record services, also commonly referred to as Global PEO or International PEO services, facilitate international expansion by leveraging vendor-established legal entities and pre-defined country-specific contracts to employ workers in new countries of operation, where the organization lacks the proper business base, expertise, and capability to operate in full compliance. Contracted workers are thereby employed compliantly, in-country under the provider’s/partner’s established entities, while the client maintains full day-to-day control over workers’ activities and performance.

The service provides a comprehensive, highly localized HR and payroll support model for workers throughout the life of the contract and remains purposely decoupled and un-integrated from the organization's broader HR infrastructure and service delivery model.

While large multinational organizations are leveraging the service, the model is particularly well suited toward small and midsized firms operating in high-growth sectors, which often lack the resources and knowledge (time/cost, attorneys, expertise, infrastructure) to execute on a global expansion effort in-house.

The solution offers a lower risk, cost-effective, time-saving alternative (often deployable within days) to navigating the lengthy and complex process of establishing legal entities in-country, or simply deploying contract workers, which are often misclassified under local laws exposing the firm to fines, penalties, and compliance risks.

By design, the service model is particularly effective at enabling HR with greater speed and agility in supporting strategic business initiatives, leading to a competitive advantage for growth-focused multinational firms seeking to expand their footprints globally, test emerging markets, or access talent outside of their home country of operation.

Global EoR market outlook

Despite the recent global economic impacts of the COVID-19 pandemic, buyers interviewed overwhelmingly indicated that global expansion remains in their plans in the coming few years, as borders re-open and economies restart. While North American-headquartered firms will remain the predominant target and adopter of global EoR services, Europe and Asia will provide strong pipelines for new client/new worker growth, as the top targets in focus for expansion by both external and regionally-based firms.

Further, with organizations of all sizes increasingly finding their brands expanding internationally, and the intensifying need across sectors to access top talent globally, particularly as the 'Work from Anywhere' trend continues breaking down talent access barriers, the demand for agile, compliant global HR and payroll operating models will continue to intensify, accelerating the global EoR services market size toward more than $1bn by 2024.

While buyers confirmed that the global EoR service enables HR with greater agility in supporting international growth strategies, its ability to transform operations is less impactful at this stage, partly due to the lack of digital maturity present in the market, but also the narrow scope, low volumes, short durations, and temporary/contract nature inherent to the global EoR service model. 

However, look for enabling technology platforms across the global EoR services marketplace to mature in the coming 12 to 24 months, particularly as differentiation in the space is commonly centered on the volume of entities under vendor control and in-country expertise, and the overall customer/worker experience. 

Despite global EoR workers being purposely unintegrated from the broader HR infrastructure and operating model, it is critical that employers provide the same level of employee experience expected by a traditional employee. Therefore, expect to see increasing vendor investments in maturing, developing, and offering digital enablers and capabilities including mobile-first design, deeper process automation, infusion of AI, and analytic insights.

Looking ahead, as the solution gains traction and adoption, expect to see a deeper focus by vendors in cultivating a technology-enabled, 'one-stop-shop' of global expansion enabling solutions. Marketplaces of integrated partner services and technology aren't there just yet, but I expect to see these gradually take shape as vendors seek to fill the white spaces within offerings and extend client value beyond their core service offering.

I’m excited to see this service mature as I believe it is an exceptional lever which HR leaders of emerging, growth-focused firms have available to quickly execute and deliver speed and agility for their business. With vendors in hyper growth mode and currently investing in advancing their capability, technology, and offerings, I will be keeping close watch on the space as it heats up and matures!

For more information, or to access to the Global EoR Services market analysis report, contact Guy Saunders.

Since its IPO in early 2018, Ceridian has remained focused on reaching its goal of achieving $1bn in revenues. A key pillar of its growth strategy toward achieving that goal is the continued adoption of its Dayforce HCM platform by large multi-national buyers across key verticals, and expanding its adoption globally by enabling and offering integrated core HR, workforce management, payroll, and talent management to targeted countries, particularly the U.K. and Australia (which both helped it achieve 150% y/y growth outside of North America in FY’19).

To that end, Ceridian set out to expand its native global payroll capability, targeting ~20 countries over the next few years, and has quickly enabled Dayforce to support seven countries: U.S., Canada, U.K., Ireland, Australia, New Zealand, and Mauritius. Today, it supports nearly 4m users across >60 countries and this is growing rapidly. 

Ceridian’s global payroll capability received a huge boost last month when it announced it would acquire Singapore-based Excelity Global, a leading APJ-focused HCM technology and managed services provider producing ~1.2m pay-slips monthly. The move now positions Ceridian as one of the largest and most capable HCM technology and services providers in the APJ region.

Further, with its September 2019 acquisition of APJ-based workforce management solution provider RITEQ, Ceridian now has a highly competitive, combined core HR, WFM, payroll, and talent offering, specifically localized for the APJ region. 

Excelity’s impact on Ceridian’s capability

Not only does Excelity bring with it a proprietary cloud technology localized across 13 major countries in APJ, but it also brings a strong managed service offering, expertise, and delivery presence in the region supported by six primary centers, a key differentiator over other firms Ceridian evaluated. 

From a technology perspective, Excelity has cultivated a strong proprietary native payroll capability and recently launched an HCM technology offering in 2019, including:

• EPay: PaaS payroll solution targeted to employers with >500 employees and configured for gross-to-net calculation in 13 countries (Australia, China, India, Indonesia, Japan, Hong Kong, South Korea, Philippines, Malaysia, New Zealand, Singapore, Thailand, and Taiwan)
• Ezpayroll: SaaS payroll solution targeted to employers with <500 employees and configured for gross-to-net calculation in 12 APJ countries (Australia, China, India, Indonesia, Japan, Philippines, Malaysia, New Zealand, Singapore, Thailand, Taiwan, and Vietnam). As well as an integrated third-party digital wallet through its GCash partnership in the Philippines
• Excelity HCM: cloud-based integrated HCM platform technology.

It also brings a well-adopted managed payroll services offering that currently supports >300 clients with operations in multiple countries across the APJ region, including several notable brands such as Forbes, Volvo, Uber, and Mondelez, enabled by an in-region delivery footprint and capability that spans five countries (India, China, Singapore, Malaysia, and the Philippines), a key factor in supporting Dayforce’s continued adoption in the APJ region, and boosting Ceridian’s global presence.

The combined organization’s global footprint significantly enhances Ceridian’s “follow the sun” capability in support of service delivery, as well as its further development and innovation of future HCM technology.

Ceridian’s outlook

With the Excelity deal now closed, Ceridian has begun the process of merging and integrating the two organizations and capabilities, which is always the top challenge to any acquisition, particularly with two organizations at opposite ends of the globe.

While Ceridian doesn’t have a deep history of acquiring its capabilities, the complementary nature of the Dayforce HCM platform, combined with the strength of Excelity’s APJ experience and capability, should fit nicely, boosting its product offering, targeting, and adoption by firms in the region, as well as among North American and European based multi-national firms with operations in the APJ region.

A key decision for Ceridian will be deciding how to best leverage the additional technology Excelity brings. Will it be necessary to keep both Epay and Ezpayroll? And what becomes of Excelity HCM now that Dayforce is the parent flagship HCM platform (particularly as it seeks to shift Excelity’s client base to Dayforce)?

Ceridian plans to immediately leverage its global connectors to bring the Dayforce HCM platform and Excelity’s payroll technology together, en route to an eventual full integration. It further intends to enable Dayforce with localizations aligning to the set of countries covered by Excelity, with more expected to come longer-term through its roadmap.

While APJ is well in focus and adoption increasing, Ceridian has its sights set on deepening its global presence and capability. Late in June, it launched localization for Mauritius, with its first client, (IBL Group, a large multi-national firm with ~27k employees in 22 countries), as well as Germany, and Mexico planned by the end of 2021. It further supplements local payroll through its partner network to support broader EMEA and LATAM, and provide payroll coverage for 157 countries.

With Dayforce maturing steadily through its roadmap, including recent capabilities like Dayforce Wallet (U.S. only, with Canada set to launch in 2021), Dayforce Intelligence, Dayforce Safety Monitor, and deeper talent management capability (e.g. AI-driven recruiting), Ceridian is well positioned to gain continued adoption, particularly from strategic-minded, multi-national firms seeking next-generation HCM capabilities.

Earlier in the month on the NelsonHall HR Quarterly Buyer Market Round-Up session, many buyers agreed that compliance is going to be a bigger issue in 2020 and beyond than it was before.  Before it was just table stakes, now it is about survival, and with the new WFH (Work from Home) structures, the risks are higher.

I had this in mind when I joined ADP’s Analyst Day last week. ADP shared how HR priorities are changing and how, as one of the largest HR and payroll providers, they have responded to the many shifting priorities and also staying close to clients to support their changing needs. Here are a few takeaways from the ADP Analyst event, through the lens of Liz Rennie.  I consider these to be the most significant as they relate to HR in the pandemic recovery world:

• HR has been focusing on employee safety as the number one priority like never before – this we all recognize and is not news
• 10 years of job growth in the U.S. got wiped out in one single month – and an impact is job insecurity is heightened. HR teams know employee health and wellness, as a result, can indirectly affect productivity
• Employees working on the front line in COVID-19 crisis response industries do not need the extra stress of not being paid on time
• Compliance is now more than table stakes – navigating the relief opportunities offered by the governments in a timely way has meant the difference between a small business surviving or folding.

And just in case you didn’t appreciate your payroll provider enough, this is a glimpse of how ADP responded over the last months and how they are planning to help clients in the near term:

• ADP saw a 50% increase in clients reaching out to ADP the first few weeks of the pandemic compared to normal call volumes
• Implemented 1.4k feature changes from 2k legislative articles across 60 countries
• Responded within three days of the CARES Act passing to support small businesses with the implementation of its Paycheck Protection Program (PPP)
• Enabled 400k clients to run 2m SBA loan application reports, representing a value of $115bn
• Over $600m tax credits processed for 473k employees across 38k clients
• Partnered with Volunteer Surge. ADP’s Workmarket product helped onboard 1k volunteer health workers across 45 states within two weeks
• Offered free trial access of Employee Assistance Programs to clients through LifeCare to support workplace stress - 550 clients signed up in the last two months.

Three clients joined the ADP Analyst Day session to share their experiences of living through the pandemic using ADP services. All were very complimentary of how they had full confidence in the service. They also shared that ADP offered extended support, to the extent that if the client struggled to run a payroll internally, ADP offered to step in and run the payrolls on the client's behalf in the short term if that was needed.

Finally, it is great to see many wider initiatives to help the industry. ADP is assisting the industry through the following methods, which, if you’re not an ADP client, you can also benefit from:

• ADP Research Institute Labor Market Summit 2020:  you can still register here
• COVID-19 microsite with employer tools launched 19 June 2020: www.adp.com/Forward
• Collaborated in key research such as The U.S. Labor Market during the Beginning of the Pandemic Recession see: https://www.nber.org/papers/w27159
• Creating thought leadership through the Marcus Buckingham Company with The Feedback Fallacy, Harvard Business Review’s most downloaded article in 2019
• ADP research Institute headed up by Dr. Ahu Yildirmaz produces some powerful insights, my favorite is this one: ADP Workforce Vitality Report – subscribe here

So what’s next for ADP? Don Weinstein, CVP Global Product and Technology, shared the ADP Workplace toolkit to help get employees back to office spaces. So what is good about this?

• Employees that state they are ready to go back can register as such through a survey
• HR organizations can accordingly plan, communicate and prepare the offices for specific workplace returns–  allocating employees to different days of the week to enable staggered and rotational returns of different employee groupings
• COVID-19 health surveys regularly sent before returns to support attestation and screenings
• Touchless ADP mobile apps supporting entry on site
• ADP DataCloud  to enable reporting and analytics and if needed, contact tracing based on attendance on site

With regulations regarding workplace safety around the world changing all the time, compliance now has a whole new meaning. Corporate manslaughter is an area that no clients want to have to face, but staying out of touch and out of the offices for long periods is also likely to bring its own compliance issues. 

One caution, otherwise I wouldn’t be an analyst. The much anticipated new ADP product Next-Gen HCM developments might be somewhat delayed given all of the above, but I won’t hold this against ADP.

As independent analysts, we need to keep things factual. However, in the spirit of showing empathy in these unprecedented times, I want to extend a big thank you to ADP and all the other payroll and HR providers for helping clients, ensuring the livelihood of many employees during the crisis (which fundamentally includes paying people on time and assisting many businesses to get the relief they needed to survive) and also for supporting the wider industry in providing valuable insights into the impact COVID-19 has had on people, which has helped shape relief efforts and responses.

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.

Ultimate Software recently held its annual Ultimate Connections client event in Las Vegas, drawing over 4.5k client and partner attendees from across the UltiPro HCM ecosystem. Attendees’ interest had been piqued by the announcement a few days before that Hellman & Friedman-owned Ultimate Software and Kronos plan to merge, forming one of the largest global cloud technology providers with a combined enterprise value of $22bn. Kronos CEO Aron Ain will be CEO and Chairman of the new company. The merger is expected to close in late March.

In his keynote speech, Ain highlighted the strong alignment between the two award-winning “culture obsessed” technology firms, also their complementary HCM and WFM technology capability. Ain assured Ultimate’s employees of his commitment to sustaining and building on the legacy of Ultimate’s People First culture and approach, and emphasized to clients the new entity is “here to stay, here to improve, and here to grow” with the UltiPro HCM platform at the foundation of that future growth.

And the new organization has ambitious growth plans, starting by doubling its revenues to $6bn within five years. In support of this, it intends to add around 3,000 jobs over the next three years across all segments of the business.

What’s new for UltiPro HCM?

From a roadmap perspective, 2019 was a productive year for Ultimate, which delivered >700 new platform features derived from >410 client ideas. 

In 2020, Ultimate launches multiple new HCM features, each aligning to the various stages of the ‘life-work journey' which for most is often in flux and continually evolving throughout their careers. Notable features announced at Connections include:

• On-demand pay, through integration with Rapid!: provides workers access and control to earned wages prior to the pay-cycle end. We noted that Rapid!’s booth was crowded throughout the event, a reflection of the interest by employers in offering employees broader digital financial wellness solutions to help ease or avoid hardships
• Privacy Manager: a dashboard enabling employees to manage personal data, which can be erased, or downloaded for portability through the new data management tool
• Ulti-Giving: (from end March 2020) facilitates philanthropic donations through payroll deductions, including on mobile
• Continuous Performance (Q3 2020): AI-infused performance development tool which gives real-time coaching to leaders to provide ongoing, meaningful feedback to their employees in order to drive performance improvements; also includes interactive meeting and goal-setting capabilities. 

While the future roadmap for UltiPro is mostly under NDA, it will center on three pillars, all leveraging AI, ML, and NLP:

• Mindful AI, bringing together the capability of ‘Xander’ (sentiment, emotion, and intent insights) and ‘Aimee’ (business insights) to drive improved HR outcomes and address key use cases
• Expansive Accessibility, enhancing the suite to be more nimble, inclusive and adaptive,  partnering with digital accessibility company Level Access (an UltiPro client since 2017)
• Culture Inspired UX, improving personalization and in-context support. 

What’s next for the new organization?

Although Kronos has made significant strides in recent years with its HCM offering (Workforce Ready and Workforce Dimensions), the more mature UltiPro HCM will become the flagship HCM platform for the new company, with Kronos Workforce Dimensions being the flagship standalone WFM especially for enterprises.  The two offerings will be tightly integrated and will fill the advanced scheduling gap in UltiPro’s functionality. This HCM+WFM combined offering will play more toward the middle market and enterprise buyer. It further plans to retain and position Kronos Workforce Ready for small and mid-sized firms with less complex talent management and workforce management needs. Work on integrating the technology is already underway, with the plan for the combined Ultimate HCM + Kronos WFM offering to go live as soon as the merger completes in late March. 

The two companies have differed historically in their go to market, with Kronos taking a highly verticalized approach, an approach that Ultimate can benefit from. While Kronos has often targeted the operations side of the business with WFM, being particularly experienced with large complex manufacturing, retail, public sector, and healthcare firms, Ultimate has typically sold directly to the HR function without a vertical slant.  A vertical GTM approach for UltiPro HCM should help expand opportunities with new buyers. 

The joint client base has >23k organizations, with few shared clients: potentially, there are significant cross-selling opportunities.

Growth plans for the new organization also include international expansion. UltiPro HCM currently supports users in 175 countries. The integration of Kronos WFM with the PeopleDoc HR service delivery platform offers a gateway to multi-country clients.

Bringing two very strong brands and technologies together in what is essentially a merger of equals obviously has its challenges. Both are well-respected brands in HR technology; both have rich and admired cultures. The merger will take careful navigation, execution, and strong leadership. 

Clients with whom I spoke at the event expressed cautious optimism about the merger. UltiPro users are keen to tap into the WFM capabilities and innovation offered by Kronos, and of course they are interested in future innovations coming from the marriage. But naturally, clients are waiting to see how the merger will impact their engagement with Ultimate. Notably, all expressed confidence in Aron Ain's ability to lead the new organization to the next chapter. 

The new Ultimate/Kronos entity comes at a time when both firms are experiencing strong adoption and steady recurring revenue growth. Together, Ultimate and Kronos offer a very formidable combined HCM and advanced WFM offering and capability that will increasingly compete for larger, more mature global clients. We expect to see rapid innovation coming out of the new company, innovation that will help fuel continuing growth.

Having stepped back into an HR analyst role at NelsonHall, it’s clear to me that we can’t emphasise enough the increasing importance of talent and the need to leverage more technology in the HR function to be competitive. These two themes are unlikely to surprise. Over the last six months, I’ve heard how big companies such as large IT firms are experimenting with shrinking recruitment sourcing teams and building talent intelligence teams instead. How is this changing the shape of the HR ecosystem? And what’s next?

NelsonHall recognises four key components of the HR ecosystem. These relate to Talent Services, Talent Technology, HR Operational Technology, and HR Operational Services, with talent being at the core as the primary driver of organizational growth and competitiveness.

As we enter the new decade, the two most significant changes to the shape of the HR ecosystem are:  

• The growing importance of Talent Services: Talent shortages mean that talent-related services are becoming more important to drive organizational competitiveness and growth. As a result, the services supporting talent have seen more focus on employer branding and building strong cultures
• Technology’s focus on experience: As the labor market tightens, employee experience becomes more relevant and employees become true consumers. All activities that impact the employee experience can have an impact on the bottom line.  Onboarding, benefits, engagement, recognition, and even payroll, can play a part.

The technology-experience focus needs to be tempered with an acknowledgment that employee experience is also as much about human engagement and rapport building in a company. However, HR undoubtedly has an active part to play in ensuring smooth employee onboarding and ensuring employees feel appreciated through effective practices and leadership development.

As a result of the increasing importance that talent vendors and buy-side organizations are putting on building the best experience, new partnerships with employee engagement companies such as Qualtrics (example here) are forming. Further, we are seeing candidate experience and employee experience now firmly at the heart of many HR technology roadmaps. Leveraging social platforms that provide on-demand learning for employees and recruitment marketing and social media listening tools such as TalkWalker and Crystal Knows are also ways that companies are innovating to stay ahead of the competition for talent. As mobile-first and omni-channel processes are adopted through the latest HR technology releases, the HR operational function will accordingly also need to adapt. The HR functions themselves are at risk of being the weakest link.

What’s next? The convergence of marketplaces

Challenged to keep up with technology innovation in the marketplace, traditional HR service providers have placed greater emphasis over the last five years on technology innovation than service innovation. Technology and service providers are beginning to build stronger technology partnerships supported through API connectors and developing marketplaces for additional services. The market has also seen a significant number of senior CTO appointments announced as well as the set-up of technology innovation hubs by providers.

Buyers are similarly challenged to keep up with technology innovation to the extent that they are relying on their providers to deliver greater technology guidance across the wide array of solutions, demanding stronger technology consulting and integration services than before.

Further, traditional outsourcing providers are beginning to focus on digital outsourcing solutions that look at end-to-end processes and process efficiency to help clients knit together the different technologies and plug the technology gaps and work-arounds, clouding the distinction between BPaaS and traditional outsourcing.

Alongside these technical developments, it is worth noting that, as the employee value to an organization grows, the demand for high-quality service and, in some cases, a white glove HR service, for employees still lives on and is not expected to disappear. The challenge will be which service providers are adequately able to fulfill both the technology challenges and service innovation in a joined-up way? How many vendors still give attention to end-to-end service and not just the technology?

Earlier this month, Kronos held its annual client event, KronosWorks, in Las Vegas, drawing >3k attendees from around the globe. 

Much of the attention at KronosWorks centered on the launch of InTouch DX, an intelligent time clock offering that incorporates advanced digital capabilities including an LCD with touch-enabled access, facial recognition, and integration with Kronos Workforce Dimensions for workforce management insights. However, many attendees were there to learn what Kronos has planned for its HCM platform offering.

If you are familiar with Kronos, you likely know their long history and body of work as a workforce management software provider. It offers an extensive time & attendance and scheduling capability that is not only leveraged by thousands of clients of all sizes and industries globally to address complex workforce management requirements, but the solution is also leveraged or resold by several leading HR services and technology providers as their "go-to" integrated, advanced WFM solution (e.g. SAP/SuccessFactors, ADP, etc.)  

However, over the past three years, Kronos has also been quietly developing two cloud-based, next-generation HCM platform solutions that are now serving nearly 4k clients globally and have experienced a sizeable adoption increase of >30% in 2019 (a growth rate comparable to its HCM technology peers in the space, many of which focus exclusively on HCM and launched solutions several years prior).

Kronos HCM offering at a glance

Kronos' HCM offering includes two cloud-based platforms, both localized and targeted to organizations headquartered in nine countries: U.S., Canada, Mexico, U.K., France, Belgium, the Netherlands, Australia, and New Zealand. Together, the platforms now support >3m HCM users and an additional >35m users on its WFM solutions. The Kronos HCM platform offerings are:

• Workforce Ready: generally targeted to organizations with <5k employees, but with the capability to support organizations >5k
• Workforce Dimensions HCM: targeted to organizations with >5k employees; generally, those operating in industries with high populations of hourly workers or having a complex workforce management requirement (e.g. unions, global presence, etc. – which may also include organizations below 5k).

The two HCMs have aligning infrastructure and are built on the Kronos D5 cloud platform enabled by Google Cloud technology. Therefore, both platforms share essential functionality and capabilities (currently >90%) across their HCM modules.  

A key element to the Workforce Dimensions platform, and where its capability differentiates from that of the Workforce Ready platform, is its complex workforce management and planning capabilities. Kronos also offers this as a standalone solution and is often adopted by users of both Kronos' HCM platforms, as well as integrated with other leading HCM solutions. Workforce Dimensions (WFM) is currently configured to support 17 languages. Additionally, the platform offers deeper functionality to support key requirements inherent to operating in industries such as healthcare, manufacturing, retail, staffing, distribution, government, banking, and education.

What’s new and next

Kronos continues to push hard on the advancement of its HCM offering, directing a sizable portion of its annual R&D spend toward its HCM platform development. In addition to advancing its HCM capability, Kronos is also investing in a significant marketing blitz aimed at shifting its brand awareness from that of a WFM technology provider to a provider of comprehensive, platform-based WFM and HCM technology solutions.

Central to the Kronos HCM roadmap and platforms’ future is the infusion of AIMEE, an artificial intelligence and machine learning engine that provides predictive and prescriptive guidance for employees and managers. AIMEE supports tasks and insights such as predicting employee "flight risk", identifying employee success potential, measuring employee fatigue, and supporting succession planning by analyzing employee trends. 

At the event, Kronos launched a new Advanced People Analytics offering powered by AIMEE. The offering, which is available now for Kronos Workforce Ready and due in 2020 for Kronos Workforce Dimensions clients, provides access to three data science tools for decision-based actions:

• Insights Powered by AIMEE: enables strategic data views in planned areas such as absence management, flight risk, leaves, onboarding, performance, and recruiting 
• Insights Explorer: a data exploration tool that simplifies the dissection of data from across the employee lifecycle, leveraging a descriptive analytics engine to “connect the dots” between engagement, performance, and productivity with multiple datasets 
• Insights Dashboard: provides visualizations through Insights Explorer to provide leaders with a single view of critical people insights.

Moving ahead, Kronos is focused on enabling deeper user personalization and insights across both platforms’ suite of modules and will do this by expanding the use of AIMEE AI to address additional use cases and tasks with predictive and prescriptive guidance – as well as leveraging NLP technology and chatbot capability to address a wide set of everyday HR tasks.

Kronos plans the continued expansion and development of its vertical solutions to address use cases unique to buyers of key industries such as retail, manufacturing, and healthcare. It also plans to expand its native payroll capability beyond the U.S. and Australia (integrated through Payroll Metrics Australia) to include Canada in 2020.

Further, Kronos is committed to rapidly expanding its network of integrated partner solutions to address white spaces and extend the value of their platforms beyond HCM. Recent examples include PayActiv for on-demand payroll capability, Unum Group for leave management administration, and integrations with Cornerstone OnDemand's talent management solutions.

The outlook for Kronos’ HCM offering

With its HCM platforms currently supporting employees in ~85 countries (and quickly expanding), the company is looking to the U.K. and Australia (Australian Payroll is now available through a partnership with Payroll Metrics) as part of its international expansion plans to drive further HCM adoption, where it has a sizable WFM client presence and is already seeing strong HCM adoption in line with its U.S. growth trajectory. To support its international growth plans and help it scale, Kronos continues to rapidly expand its network of global implementation partners that can deploy its HCM platforms on its behalf.

The challenge for Kronos will be increasing its cloud HCM technology "at-bats" with potential buyers seeking to modernize their HR operating models. Kronos is betting on its media blitz to help address this issue, including targeted TV and radio ads, sponsoring professional golfers from the PGA and LPGA (some of which were at KronosWorks), and conducting field events and tradeshows, while also building out its advisory and broker alliances. Further, Kronos will also look to its base of >8k Workforce Central and other legacy WFM clients globally as potential converts to its broader HCM platform offering.

As Kronos heads into 2020, it brings with it strong momentum for its HCM platforms, which remain distinctly positioned in the space against competing HCM-centric peers, offering one of the only fully-integrated, vertically-enabled HCM and WFM solutions available from a single technology provider.  

This past week Workday held its 13^th Workday Rising client event in Orlando, Florida. The platform’s annual event continues to grow substantially, with more than 13k in attendance this year, up from ~10k attendees in Las Vegas at the 2018 event.

The growth in attendance points squarely to the continued steady adoption of the Workday platform, which is now supporting >2.8k HCM and >700 Finance adopters, and 40m users globally across a client base represented by 40% of the Fortune 500 and 50% of the Fortune 50, with 70% of its clients live and operating at a 97% CSAT rating. Recent newly live client examples include Lowes, Quicken Loans, and Renault.

This year, Workday extended its innovation keynote to 120 minutes to accommodate the depth of new features being launched across HCM, Finance, and Planning. Workday introduced multiple new HCM features, each geared toward supporting businesses and their workers in navigating the changing shape of HR and supporting the future of work. Central to Workday’s roadmap and future is the infusion of machine learning (ML) across the platform to augment users, personalize their experience, automate tasks, and deliver deeper insights in context and in the flow of work.

New HCM key features

Workday People Experience (March 2020): a new user interface which leverages ML to enable highly personalized support for the user’s unique journey, designed to enable employees to conduct day-to-day HR activities without needing to know exactly where to go in the platform to complete a specific task.

The new Workday People Experience includes the Workday Assistant, an NLP-enabled personal assistant, and is integrated with leading collaboration tools like Slack and Microsoft Teams to support employees “where they work”.  Additionally, Workday introduced a new case management and knowledge management tool, enabled with a case solver capability to support timely case management, resolution, and issue prevention.

Workday People Analytics (available for subscription in 2020): an AI and ML-enabled augmented HCM analytic offering designed with predefined business metrics and KPIs set around key workforce trends and topics delivered through a story view (a capability enabled by Stories.bi which Workday acquired in 2018). Additionally, Workday has also enabled Discovery Boards, its drag-and-drop data discovery capability for all HCM clients as part of their standard subscription.

Skills Insights & Talent Marketplace: leveraging its previously launched ML-enabled Skills Cloud (>200 client adopters and taxonomy of >200k skills), Workday introduced two key talent management capabilities. First, Skills Insights, which enables HR to assess existing skills and identify skill gaps within the organization through real-time insights; plus a new Talent Marketplace, which provides a platform for talent mobility, enabling workers to match their skills to roles, projects, and gigs, as well as being identified for opportunities where their skills are a fit.

Workday Credentials: a blockchain-enabled credentialing technology that is designed to address the historically manual and time-consuming process associated with verifying employee credentials (e.g. work experience, education, certifications, etc.). Further, Workday introduced the WayTo mobile application, which empowers users with capability to manage and share their verified professional credentials as and when desired throughout the application and screening process.

WFM & Payroll Updates

Although much of the product news centered on UX, talent management, and analytics, Workday highlighted multiple key features shaping its next generation workforce management (WFM) capabilities, all designed to drive greater user efficiency and effectiveness by leveraging automation, AI, and ML.  

Most notable was Workday’s demonstration of the progress it has made towards its “zero touch” payroll capability, which was met with highly positive approval from the payroll practitioners in attendance. The solution pairs a continuous gross-to-net calculation engine (which processes payroll results 24x7) with Smart Payroll and Smart Retro processing capability which automatically processes retroactive actions and only processes payroll for workers with payroll impacting changes. Smart Audit rounds out the capability to compare payroll results and surface exceptions for review automatically.

Workday expects to expand on its payroll capability with Instant Pay (2020) which provides an on-demand payroll capability allowing workers to request payment incrementally for hours worked and approved. Additionally, Workday demonstrated a new RPA capability (2020) enabled through partner integration with Automation Anywhere, which is aimed at reducing the historically manual efforts for key payroll inputs; initial use cases including payroll input automation and stock administration automation are both due in 2020.

Looking ahead

Clients I spoke to throughout the week (varying sizes and industries, many of which have been operating on the platform for a few years) indicated high satisfaction and value realization overall. I noticed this year there were many more full-suite adopters with both HCM and Finance in place, some of which were deploying, or at least considering adding, Planning to the mix in the near term. Those without full-suite adoption expected to expand their use to include more HCM, most commonly on the talent management side, but also some considering adding payroll where it has been left to an outsourcing provider and not yet on the platform.

Not surprising was the fact that many Workday clients I spoke to still haven’t solved (or even begun addressing) global payroll yet, a clear opportunity for Workday’s global payroll partners which I noticed maintained highly active booths all week, as this issue is clearly front of mind for many cloud HCM adopters.

However, maintaining its rapid platform adoption and historically strong revenue growth ($2.82b, +31.7% y/y for FY’19) is now the challenge for Workday which is driving towards a target of $3.59b in total revenues in FY’20. To maintain its strong adoption and growth results, Workday continues to invest heavily in platform features and innovations, dedicating ~30% of revenues annually to R&D compared to ~15% on average by its legacy and peer cloud competitors.

Workday leadership emphasized its commitment to “doubling down” on ML as the game changing technology it expects to drive its platform innovation, client value, and platform adoption in the future, innovation that will enable value for users by addressing the key HCM and business challenges organizations face today. While Workday and its peers are pushing out advanced capabilities faster than ever, the challenge now will be in helping clients keep pace with the level of change, digesting and adopting practices that put these advanced capabilities to use.

This past week ADP held its annual analyst day event at its innovation lab in Chelsea, NY, where its executive leadership provided updates on the progress of its latest portfolio of next-generation HR and payroll solutions. The event was noticeably more crowded than in previous years, not only from a strong analyst community turnout but also from the growing ADP product leadership team, which is indicative of its focus and commitment to developing next-generation technology products.

Commitment to HR technology & innovation

If you weren’t already aware, ADP is serious about becoming an HR technology company, and to that end has quietly made significant investments in advancing its cloud HR and payroll platform capabilities in recent years.  According to their FY 2018 annual report, it allocated $1bn (up from $863m in FY17) toward systems development, maintenance, and purchases of new software and software licenses.

Its commitment to technology and innovation was further emphasized earlier this year when ADP launched a new branding campaign, introducing a new tagline and mantra of “always designing for people”, underscoring its focus on designing solutions that enable a “better way of working” to support organizations and their human capital to reach their full potential.

Recent investments aside, ADP has a legacy of innovation in the HR space, from inventing payroll outsourcing, and delivering the first payroll automation, to the introduction of the first mobile HCM app (ADP Mobile), and the first app marketplace (ADP Marketplace). Looking toward the future, CEO Carlos Rodriquez emphasized that ADP is "all-in on HCM, and on becoming a technology company".

Over the past three years, ADP has been developing two new "next-generation" cloud platforms: a highly extensible, AI/ML and predictive analytic embedded HCM platform called ADP Next Gen HCM which has been purpose-built for the dynamic team structures rapidly evolving in workplace today, and  a new policy-based, event-driven payroll engine which is capable of supporting both traditional employees and freelance gig workers.

ADP has made substantial progress bringing both platforms to life and has been piloting each over the past year, and is now live with a select group of early adopters like Golds Gym which just went live on ADP Next Gen HCM this past month. ADP reached its goal of 15-25 North American-based clients live on Lifion by the end of FY’19 (July), with plans to reach as many as 75 in FY’20. Further, it expects its next-generation payroll engine to be supporting a “few hundred” clients by the end of FY'20. 

Driving adoption

With its next-generation platforms now in place and ready for primetime, ADP’s challenge will be driving adoption for its new HCM technology. Its first challenge will be targeting and convincing new clients to consider ADP Next Gen HCM over other well-known HCM platforms in the marketplace. Further, it has the mammoth task of convincing its  ~810k existing clients to consider migrating to ADP Next Gen HCM as well.

However, as it continues to add early adopters and enable transformational outcomes that drive referenceable clients, adoption should follow; at the event, ADP announced it had already signed a new ADP Next Gen HCM client (its largest to date) for a North American transportation company with ~65k employees.

ADP is also leaning on the design of ADP Next Gen HCM to differentiate the platform and drive adoption; first, with what ADP calls “extreme personalization” enabled through an “AI anywhere” approach leveraging AI/ML and NLP, and underpinned by the depth of the ADP Data Cloud, for a prescriptive and predictive user experience throughout the platform. Next, ADP plans to enable clients to comingle external business data with HCM data for deriving holistic workforce analytic insights.

To personalize the experience further, ADP is betting on "mini-apps" enabled through its flexible, low-code architecture and design. ADP has empowered clients to build apps and tools to expand their capabilities to fit their unique needs and HR environment.  ADP demonstrated the ease of configuration for its mini-apps, which incorporates a drag-and-drop style experience. ADP currently has ~115 mini-apps in production and growing rapidly, with plans to expand this to third-parties longer term.

While ADP has been keenly focused on advancing its platform technology in recent years, its HR and payroll services remain at the heart of its offering and brand, and will need to play a significant role in driving adoption for its new platforms. I expect adoption for ADP Next Gen HCM to initially be driven from new HR services clients seeking both modern next-generation technology as well as a managed services engagement. 

With a comprehensive HR services portfolio that spans the entire employee lifecycle and can support clients through a single vendor solution, enabled by next-generation platforms and paired with one of the deepest and most robust sets of human capital management data in the world, ADP is poised to gain momentum with HCM technology buyers, and I expect will likely exceed its adoption goals in FY’20.

Last October at Workday Rising in Las Vegas, OneSource Virtual (OSV) introduced RPaaS, a Robotic Process as a Service offering, and the first HR-focused robotic process automation as a service solution targeted toward the mid-market buyer.

RPaaS is a 'turnkey RPA solution’ that eliminates the need for adopters to make substantial investments in developing advanced automation capabilities, making the emerging capability more affordable and accessible to midsized organizations seeking to leverage the technology to enable digital HR transformation. (For more background on RPaaS, see my blog dated November 2018: 'OneSource Virtual Delivers Turnkey RPA with RPaaS.com’)

With Workday Rising 2019 weeks away, and marking the first anniversary of RPaaS' introduction, I checked in with OneSource Virtual’s executive leadership to see how the offering has progressed so far, and its roadmap and future plans moving ahead.

RPaaS progress

In June, OSV announced it had finalized its selection of an automation platform for RPaaS, engaging Automation Anywhere as its go-to-market partner for RPaaS. 

Since its launch last year, OSV has been quietly piloting the RPaaS original library of bots to support HR use cases for payroll data validation, timekeeping, life event monitoring, and 1099 data scrubbing. Over a multi-week timeframe, four early RPaaS adopters from OSV’s client advisory board piloted the bot capabilities.

With the success of the initial pilot and increasing demand from both its existing client base and prospective buyers, OSV released a soft launch of RPaaS for general availability beginning September 1^st, with a more formal launch to occur by the end of September. 

The initial launch will include five clients for RPaaS, all Workday adopters, derived from a mix of middle and large market organizations, and all new client labels for OSV. The initial five clients will begin working with OSV later in September to roll out the bot library against select use cases for operation by their internal HR team.

The future for RPaaS

OSV is also planning to roll out the RPaaS capability for use within its own delivery model, in support of its existing clients. It will work with clients to opt-in (requires security access for bots to client Workday instances, similar to that of a traditional back-office resource), and begin rolling out the capability by the end of October to client adopters.

OSV will also begin rolling out bots in support of its managed garnishment services offering, an inherently high-touch, complex, and compliance-impacting process. The bots, combined with optical character recognition (OCR) and machine learning, will scan and extract garnishment order details for processing. OSV will begin using the capability with ~10 clients by October, with plans to roll out the capability against all managed garnishments clients’ longer term. 

From a roadmap perspective, OSV will continue to develop its RPaaS capability, aiming to address key repetitive HR and payroll tasks and inquiries through automation. OSV plans to expand its bot library, with the target of delivering ~100 bots and use cases by the end of 2020.

RPaaS’ next wave of use cases will center on automating repeatable HR and payroll audits to eliminate rework, drive compliance, and allow practitioners more time to focus on value-added tasks.

OSV envisions enabling RPaaS with 'digital workers', which leverage a group of 5 to 8 task bots that can be aligned to a specific set of activities commonly managed by humans. Examples include a 'payroll digital worker’, focused on automating repeatable activities throughout the payroll process, including pre-processing, gross to net processing, and post-processing reports, audits, and validations. OSV is also targeting enabling a 'HR compliance auditor' to automate auditing the full employee lifecycle of activities that can trigger compliance-related risk. Longer-term, OSV sees an opportunity to enable deeper automation for repetitive activities associated with benefits and recruiting administration.  

Looking ahead, the success of RPaaS not only can provide OSV with a new revenue stream; it also has the potential to enable a pipeline of potential managed services buyers. By engaging an organization with a standalone offering such as RPaaS, OSV can expand the relationship longer term to include a range of managed HR, finance, and Workday support services, as the client grows, or its needs shift.

Longer term, OSV  may have an opportunity to further its RPaaS reach and brand recognition by enabling the solution for potential consumption through the application marketplaces of its key partners such as Workday and Automation Anywhere.  

The challenge for OSV lies in navigating the inherent difficulties associated with launching and commoditizing next-generation solutions like RPaaS as an early entrant.  However, given OSV's history of disruption in the HR services space, I expect RPaaS will be a success and should provide OSV with deep expertise it could leverage longer term to establish a consulting practice and offering aimed at helping organizations navigate and establish digital HR centers of expertise.

OSV is already seeing increasing interest in the offering from both existing clients and external Workday buyers seeking to leverage intelligent automation within their HR delivery models.  I expect OSV will see its RPaaS adoption steadily escalate in the coming 12-18 months, driven by organizations continuing to invest in digital transformation enablers.

This past week the payroll services market experienced yet another consolidation of major vendors, with Alight Solutions (‘Alight’) announcing its intent to acquire multi-country payroll specialist NGA HR.

Although the deal terms were not disclosed, once approved (expected by Q4, possibly Q1 2020 at the latest), the acquisition will bring together two leading HR BPaaS providers with highly complementary capabilities and footprints. Once combined, the new Alight organization will have around 14.5k employees, and provide a range of health, wealth, and HR services to >3k clients and ~50m lives globally.

NGA’s impact on Alight’s HR services offering

Currently, Alight has a comprehensive HR services capability, supporting clients with consulting, deployment, and ongoing support for HR platforms and services, including a managed payroll services offering which processes >24m checks annually.

Alight's payroll services experience dates back to 2004 when it entered the multi-process HR outsourcing space through its acquisition of Exult. Since then, Alight has developed deep expertise in delivering payroll administration services to large, complex organizations leveraging leading HCM platforms, including Workday, SAP, and PeopleSoft. But its payroll capability has geographically focused on North America and the U.K. and it has lacked multi-country payroll capability.  

With NGA HR, Alight will gain major multi-country capability, expanding its presence and delivery capability, particularly in Europe and Asia Pacific, and notably in Latin America where Alight lacks a local delivery center. Additionally, NGA HR brings its euHReka and hrX platform technology.

While the crown jewel from the NGA HR acquisition is certainly its global payroll capability, it also brings to Alight a very complementary HR BPaaS offering, with an aligning consult-to-operate model designed around major cloud HCM platforms including Workday and SuccessFactors. 

While both organizations currently maintain partnerships and support clients on these cloud platforms, Alight’s expertise and client base has slanted heavily toward Workday. Alight has a partnership with SAP SuccessFactors, but has historically not taken on deployments of the HCM platform, choosing to focus only on post-deployment services instead.

Conversely, NGA HR brings to Alight experience in deploying and operating on the SuccessFactors platform. NGA HR is also a partner with Workday and supports several clients on the platform, but does not currently take on Workday deployments.  

A win-win for both organizations

In NGA HR, Alight fills some key capability gaps, gaining very extensive multi-county payroll capability, expanding its global footprint and presence, and further enhancing its cloud HCM consulting and deployment practice.

With the addition of NGA HR’s SuccessFactors practice, Alight will be able to target and support a much wider set of cloud HCM buyers seeking broader HR transformation, and offer multi-national organizations a truly end-to-end HR BPaaS solution that can support a multi-country payroll spanning 188 countries.

The acquisition likely helps the case for Alight’s eventual IPO, which its owner Blackstone announced it would pursue in late 2018, but placed on hold in March of this year. Although the timeline for revisiting an IPO has not been disclosed, we expect the addition of NGA HR will only serve to boost Alight’s long-term value, particularly once the organizations have fully integrated and are leveraging their combined capabilities.

While Alight is gaining a solid capability boost, NGA HR may be the bigger winner in the deal.  As part of Alight, NGA HR will be finally breaking away from over ten years of private equity ownership, gaining a parent company that operates in and understands the HR technology and services industry, and that will invest in and cultivate its capabilities for the long term.

Once the deal is confirmed, the challenge of integrating the two organizations will begin. Both sides are M&A veterans in this space, having navigated mergers and acquisitions multiple times throughout their histories. This, combined with the highly complementary nature of each provider’s portfolio of services and existing footprints, should enable a successful transition.

While the two organizations will operate as separate brands for the foreseeable future, re-branding for NGA HR is likely in the longer term, though with a strong brand recognition in key regions such as Europe, it’s more likely we will see a co-branded offering longer term.

Overall, this is a win-win acquisition for both organizations, and combined, Alight and NGA HR create a very competitive, globally capable HR BPaaS offering for companies seeking digital HR transformation through a single vendor solution.

This past week I had the opportunity to attend a private event hosted by Safeguard Global at Crewe Hall in the U.K., where the company celebrated its continued success in the global payroll space and made a major announcement that aims to fuel the company’s continued growth and support its vision for enabling simplified, compliant global expansion for multinational businesses.  

Safeguard announced it has secured funding from private equity partners Accel-KKR (AKKR) which invests and manages a portfolio of innovative mid-market software and tech-enabled services companies. The investment is for a minority stake in Safeguard Global and will provide Safeguard with the funding and support needed to fuel investments in its platform and expanding capability to drive future growth.

With this new funding, Safeguard has acquired Workfor, a Pan-European based provider of technology-enabled human capital management services, including employer of record solutions (EOR) and managed payroll capability.  

Background to the acquisition

The two companies are no strangers to each other, having partnered since 2013, with Workfor supporting Safeguard as an in-country partner for its Global Employment Outsourcing (GEO) offering through Workfor’s EOR solution.

Workfor brings a portfolio of technology enabled HR services that is specifically designed around country domain experience for both local payroll and the employer of record model. Their regional footprint enables them to provide pay and expansion solutions, including managing registration, payment, and compliance in eight European countries where it has a local presence.

It also brings to the table a proprietary platform technology called AdminMe. The AdminMe platform is a SaaS solution capable of supporting payroll, employer of record, and time for all of the regions they support. A key capability for the platform is native gross to net payroll engine functionally for five of the eight countries it operates in, with plans to expand this to more countries in the coming 12-24 months, with France due later this year. Additionally, through the AdminMe platform, Safeguard also gains time and attendance functionality – a capability that other global employer of record providers currently lack as part of their payroll technology solutions.

Last, and possibly most impactful in the short term, Workfor brings with it valuable in-country presence, with ten offices in eight major EMEA countries: Switzerland, France, Spain, Portugal, Moldova, Greece, Italy, and Romania.

What this means for Safeguard

The investment by AKKR is a vote of confidence for Safeguard, its leadership, and the solution it has brought to market. During his speech to the Safeguard team, CEO and founder Bjorn Reynolds cited Safeguard’s legacy of innovation and disruption in the global payroll space, stating “…the next phase of Safeguard Global is going to be ambitious…”. The investment gives Safeguard the resources to double down on advancing its technology and building out its highly successful GEO capabilities and delivery model.

The AKKR investment also comes with leadership and guidance (including board representation) from a PE firm that is no stranger to the HR services and technology market, with a history of investing and owning similar firms. This brings both an outside advisory perspective on the industry, but also the potential opportunity to partner with these providers in the longer term.

While Workfor’s EOR installed client base is similar in size to Safeguard’s (with some overlap due to the partnership), the acquisition is by no means a simple ‘fold-in’ to boost client numbers or market share. The addition of Workfor’s EOR capabilities immediately compliments and expands Safeguard’s existing GEO offering to include candidate sourcing and time and attendance to provide a holistic, turnkey compliance model for enabling agile global expansion.  

The addition of AdminMe to the portfolio is possibly the big win here for Safeguard, which gains platform capability that compliments its own Unity platform, adding gross to net payroll capability in select countries, but also a strong time and attendance capability that Safeguard can now incorporate into its offering. While the platforms are currently connected, the first challenge will be fully integrating these two solutions to maximize their capability.  Safeguard also plans to build out the AdminMe capabilities through continued investments.

The expanded in-country presence and resources in several major EMEA countries is also a nice add for Safeguard.  By gaining these in-country resources, Safeguard can reduce its dependence on third-party ICPs within its payroll delivery model, increasing its control over its payroll processing in these countries, which can increase its speed of delivery, reduce its operating costs, and improve its margins as a result.

Lastly, Safeguard gains the ability to create more flexibility in its offering, and engage a wider range of buyers, by being able to engage them with point services and solutions vs. an all-in managed services arrangement. This could include standalone services, and the potential to license its platform for use by clients in-house.

Overall, I like this move by Safeguard, as I think it complements them well and creates plenty of new opportunities to grow and build on the momentum of its GEO offering. It also comes at a perfect time – NelsonHall’s recently published Next Generation Payroll Services report finds that a key trend driving global payroll outsourcing adoption is that managing payroll compliance is more complex than ever, and more commonly organizations of all sizes are being pulled in to new international markets, creating significant risk if not executed properly and within compliance. The ability to tap into a turnkey HR solution for global expansion is very compelling when you consider the alternatives.

Safeguard has enjoyed rapid growth and adoption for GEO to date. However, the solution and even the concept is still somewhat overlooked by uninformed buyers. While I expect this strong adoption to continue given the current state of the market and the results GEO is delivering, Safeguard could benefit from more aggressive marketing of the GEO solution to inform the market of its successes and potential.  As one of only a handful of vendors offering this capability, and solid investments to support its roadmap, Safeguard is well positioned for growth.

(For a deeper dive on Safeguard’s GEO model see: SGWI’s GEO Employment Model: Enabling Agile Global Expansion (May, 2018).

This past month, NelsonHall published its annual Next Generation Payroll Services report, which found that buyers and clients of managed payroll services are keenly focused on engaging ‘next generation’ technologies that can enable payroll operating model transformation. Thus, organizations are increasingly seeking out managed payroll services providers that can provide access to these modern technologies and optimized operating models.

New technologies are making a real impact on payroll. Modern cloud platforms, seamlessly connected by advanced APIs enabled with AI, and robust analytic reporting capabilities are collectively transforming the way payroll operates from kickoff to close. And more importantly, they are providing deep insights into some of the richest yet underutilized data sets in the organization. This data is where the real story lies and where the real impact can be made for payroll transformation, assuming the data is reliable and interpreted appropriately.

While managed service providers and the payroll practitioners they support are gaining access to powerful reporting tools and robust data sets, many continue to take a very legacy approach to how they measure payroll, often focusing mostly on timeliness, accuracy, and various other ‘surface level’ metrics alone. 

However, CloudPay, a leading provider of payroll services globally, is aiming to disrupt the way practitioners, and the industry at large, view payroll performance by launching a new Payroll Efficiency Index (PEI).

CloudPay’s Payroll Efficiency Index (PEI)

With the PEI, CloudPay is seeking to help practitioners push much deeper into payroll performance analysis, to truly understand how payroll is performing globally – overall, but more importantly at the macro level, to identify the core failures and opportunities at the source.

The PEI is based on five core Key Performance Indicators (KPIs):

1. First Time Approvals: % of gross-to-net calculations approved upon initial review
2. Data Input Issues: % of data errors caused by incorrect or incomplete input of employee data
3. Issues per 1k Pay-slips: Number of data issues identified for every 1k pay-slips processed
4. Calendar Length: Number of days required to complete payroll processing (lock to approval)
5. Supplemental Impact: % of payroll runs completed as supplemental runs.

CloudPay has enabled the PEI benchmarking capability by way of its unified data model and standardized workflows and leverages a rich global payroll data set derived from across ~2.5k global entities and >1m pay-slips processed on the CloudPay platform (all anonymized, of course). The PEI provides benchmarking data against the five KPIs, including country-level performance details for over 130 countries where CloudPay operates and supports its client base. Most importantly, clients can make an “apples to apples” comparison to benchmark within their industry, size, and global footprint to truly benchmark their performance.

CloudPay plans to launch the first iteration of the PEI report as part of global payroll week (week of April 29^th) which will provide data derived from calendar year 2018. Moving ahead, the complimentary report will be published each year in Q1 for the prior year. Additionally, CloudPay plans to launch quarterly versions of the report throughout the year, which will focus on deeper dives and analysis into specific geographies and regions.

Clients of CloudPay are already benefiting from the PEI as an embedded methodology within their managed services programs. Every CloudPay client has access to a full suite of analytics tools that help them understand their payroll data – including predictive, descriptive, and diagnostic data combined with the same benchmarking capabilities leveraged to derive the PEI. 

Clients can customize their payroll diagnostic dashboard to include the five KPIs and other metrics, including the ability to drill deeper into each one for valuable insights into the process performance globally. Further, CloudPay is incorporating these same five KPIs into every client contract and engages each client (monthly) to address key opportunities based on the KPIs – a practice CloudPay has seen high client adoption for since the launch of its benchmarking capability in Q1 2019.

Putting CloudPay’s PEI into Context

Historically speaking, payroll has struggled to truly leverage and engage the totality of the data it produces, and at no fault to the practitioners that operate in the space. Too many legacy solutions have been derived from disparate systems that lacked integration, automation, and the advanced reporting capabilities we see today. 

However, despite the payroll services market making massive leaps forward, not all solutions are delivering the transformation desired. NelsonHall’s Payroll Services Client Perspective Report (publishing soon) finds that a leading area of dissatisfaction for payroll services buyers is the lack of overall innovation to drive process improvements from their providers.

CloudPay has addressed this issue by developing a next-generation payroll technology ecosystem (one that incorporates a modern cloud platform, with seamless APIs that move data in and out of payroll), and paired that with standardized workflows, embedded analytics, and processes augmented by RPA, to enable reliable global payroll reporting and KPIs on demand. This technology ecosystem, purpose-built for global payroll, is CloudPay’s differentiator, and its benchmarking capability and the PEI output is a direct derivative of that ecosystem.

CloudPay’s transparency around the PEI report is certainly unusual. While the initial data points are mostly slanted toward client-derived issues, I can’t recall a payroll vendor that has ever released this level of insight into its operations, which I believe demonstrates the confidence CloudPay has in its solution and further validates its effectiveness in delivering payroll transformation to its clients.

Further, I believe the PEI is a step in the right direction to helping the industry begin to think differently about how payroll effectiveness is measured and viewed – helping shift the mindset away from surface level metrics and SLAs and starting to leverage modern technology to question and analyze a deeper set of KPIs that digs further into why payroll performs the way it does, and supplies practitioners with the insights they need to take transformative action. 

With the digital economy pushing businesses to pivot and reimagine the way they operate, HR is under considerable pressure to support new business models and shifts in strategic direction.  Further, the workplace and the way we work is rapidly evolving, adding to the complexities and challenges HR must navigate to compete for today's top talent. As a result, organizations of all sizes are embarking on HR transformation journeys that will ‘futureproof’ their operating models, enabled by emerging digital tools and technologies.

The growing need for HR transformation has created a significant opportunity for HR service providers to deliver the innovation required to help organizations address critical challenges in human capital management today. Thus, HR service providers are investing heavily in digital capabilities that will provide the next wave of innovation and enablers to support the future workplace.

One such example is Singapore-based Excelity Global, a leading APAC-focused HR services and technology provider. While Excelity’s heritage is deeply rooted in multi-country payroll delivery for the APAC region, it has gradually built itself into a multi-process HR services and technology provider, supporting a range of HR processes including payroll, workforce administration, benefits administration, and extended talent management.

Excelity has cultivated its entire portfolio of HR solutions to be ‘digital by design', steadily investing (~20% of revenues in 2018) in bringing to market HR capabilities that can enable the digital transformation organizations are seeking and require to remain competitive. Below I highlight some of the digital solutions Excelity plans to launch in 2019.

Excelity HCM

Central to Excelity’s offering is its proprietary technology which it leverages exclusively in the delivery of its managed services. In May 2018, it expanded its technology offering by launching Excelity HCM, a cloud-based HCM platform (also available as a PaaS offering) targeted to small and middle market APAC buyers. Since launching Excelity HCM, the platform is now capable of supporting core HR, compensation, benefits, recruiting, onboarding, performance management, and learning administration, as well as integration to Excelity’s workforce management (WFM) platforms for time and attendance, leaves, and payroll.

While Excelity HCM has over 20 clients live on its HCM platform, (most with <1k employees), it is already seeing those volumes steadily increase. Its largest client user has ~5k employees operating on the platform (which it expects to scale to ~20k longer term), and it is in progress with an implementation for a large organization which will support ~12k employees once live later in 2019.

To support its steady adoption, and differentiate the solution, Excelity has enabled a rapid deployment approach, cutting deployment times down to weeks vs. months, allowing buyers to capture ROI much sooner. By leveraging its investments in RPA, Excelity can bring its HCM platform live for a client with ~20k employees in under four weeks compared to more traditional platforms and methods which can typically bring ~1k employees live in about six months.

Over the next 12 months, Excelity expects to continue expanding its HCM capability, with its roadmap focused on further enhancing its existing modules, deepening its mobile capability, embedding AI, ML, and NLP into the platform and expanding its analytic reporting capability, including a report builder tool. Additionally, it plans to launch (Q1 2019) a workflow-as-a-service option, whereby clients can configure (drag and drop) the HCM workflow rules and functionality specifically for their organizations, including access to workflow design tools and chatbot capability. 

Excelity also plans to launch an HCM marketplace offering in 2019, to provide clients with a range of add-on, connected solutions through APIs. Through its HCM marketplace, Excelity expects to enable the expansions of its service offerings through integrations with key partners and providers.

Excelity’s Digital Marketplace: PaySure & Payroll to PayOut (P2P) Platform

Building on its managed payroll and benefits service capability and offering, Excelity will launch a new digital benefits marketplace branded PaySure in Q2 2019. The PaySure offering provides clients and their employees a centralized marketplace for purchasing both insured and non-insured voluntary benefit and wellness products (including the ability to view and manage policy documents, submit and track claims, etc.). The digital marketplace provides prebuilt APIs for integration to benefit carriers and providers and can be configured for clients’ unique requirements within about two weeks.

Further, in collaboration with leading digital wallet providers across the APAC region, Excelity will also introduce a ‘digital wallet’ solution called Payroll to Payout (P2P), offering its clients and their employees alternative mobile payment capability for receiving payroll disbursements. The P2P solution leverages the combined technology of Excelity and that of its digital wallet partners to enable a seamlessly integrated UX for employees to manage their compensation and spending through the digital wallet marketplace, while providing employers with greater flexibility in supporting the growing demand for digital payment solutions.  

PaySure is currently being piloted with clients in Singapore and the Philippines, with plans to expand availability across its APAC country scope in the coming 12 to 18 months.  

Daily Pay

To round out its digital marketplace offering offering, Excelity will introduce (Q2 2019) an on-demand payroll functionality branded as Daily Pay. The Daily Pay solution, which is integrated into Excelity's payroll platform, provides clients with the ability to support and offer on-demand payroll capability. In particular, the capability aims to support the growing gig worker populations in APAC, allowing for payment requests to be submitted, processed, and paid as and when work occurs.

Outlook

With a well-established workforce management (WFM) capability which includes technology and services to support payroll, time, and benefits, coupled with the launch of an integrated HCM platform offering, Excelity is now able to provide a holistic, cloud-based HR solution to the emerging small and middle market APAC buyer. While I expect Excelity to continue to drive new business by leaning on its strength and brand awareness in the payroll space, the ability to now engage buyers with both enabling technology and services creates an attractive option for emerging APAC businesses seeking to advance their HR capability. 

Since its launch in 2018, Excelity HCM adoption has been primarily by small market buyers; however, Excelity is already seeing its client sizes gradually increase with middle market buyers.  The addition of new digital solutions like PaySure, P2P, and Daily Pay, creates further opportunity for Excelity to engage larger, more sophisticated buyers, particularly those seeking to enable more ‘future of work’ capabilities. 

Excelity remains focused on advancing its offering to deliver more digital HR solutions and capability to its clients in the coming year, with a roadmap that places heavy emphasis on maturing its HCM functionality, advancing its platform integrations, and further enhancing and supporting new digital HR offerings. 

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. 

Organizations of all sizes continue to pursue digital HR transformation to achieve an optimized HR delivery model – one that enables their leaders to focus their efforts on strategic activities associated with attracting, developing, and retaining top talent for the business rather than spending valuable time on repetitive administrative tasks. To a large extent, this is being acheived through advances in self-service, mobile HR apps, and a fundamental shift in workers taking more ownership in managing their data and careers. 

However, despite the significant strides brought about by today’s HR technology, there is still a great deal of opportunity for process optimization within HR, payroll, and finance delivery models, where teams working in these areas have traditionally operated in a manual, labour-intensive, and inefficient process environment.  

Advancements in RPA and AI are having a major impact on the efficiency of HR organizations, and the progression of automation in HR is being driven by outsourcing firms who seek to offer clients “next generation” HR technology, solutions, and digital transformation enablers.  

RPA as a Service

NelsonHall’s research finds that while demand for intelligent technology capabilities is steadily increasing across organizations of all sizes, many are still uninformed of the possibilities and capabilities of RPA and AI and their potential impact on HR. Further, unless an organization is fairly large, with deep sets of data, pools of FTEs, and with the capability and funding to support internal RPA programs, deriving a business case for investing in automation for unique HR use cases is unlikely to happen.

However, last month at the Workday Rising event in Las Vegas, OneSource Virtual (OSV) introduced Robotic Process as a Service (RPaaS), which aims to solve this issue by delivering a turnkey RPA solution. The offering eliminates the need for buyers to make large investments in developing automation capability or sustaining deep data sets to support AI progression. This makes RPA more affordable and accessible to the middle market buyer.

With RPaaS, OSV will develop robots to support a library of processes that address common, high-volume tasks for HR and finance. OSV clients (all of which operate on the Workday system) can license the bots through a SaaS model directly from OSV, immediately benefiting from the automation capability integrated within Workday, as well as OSV’s patented service-enabling technology, Atmosphere.

The bot library, which OSV is building and leveraging internally, begins with use cases derived from OSV’s experience delivering payroll and tax services for its clients. Items such as data validation, invalid address formatting, invalid SSNs, negative wages, or invalid characters present in HR data are all targets for RPA robots in the early days. Further, at Workday Rising, OSV conducted the first of a series of brainstorm sessions through RPaaS.com, where its clients can weigh in and vote on future use cases and shape OSV’s bot development – a process which mirrors that of Workday’s engagement with its customer community for future platform enhancements.

The roadmap & outlook for RPaaS

By January 2019, OSV plans to have ten use cases in its library when the offering becomes generally available to its client base for subscription. Looking further ahead, in addition to ongoing development of its bot library and use cases, OSV will seek to engage its existing client base with the solution, with plans to expand this to non-clients as a standalone offering in the next 18 months. While the solution is currently purpose-built for Workday, OSV sees the potential of expanding this to include integration with additional leading cloud HCM platforms in the longer term.

Over the past ten years, OSV has established itself as a disrupter in the HR services space, becoming the first HRO provider to anchor its services entirely to a major cloud platform in Workday. And OSV is again disrupting the space with RPaaS – the first HR-specific Robotic Process-as-a-Service solution targeted toward the middle market buyer. With a deep set of tech savvy Workday customers willing to leverage next generation technology in their HR delivery models, OSV should see solid demand for the new solution. 

Further, with the rise in demand for open platforms and marketplaces for apps and extended solutions through APIs, OSV’s RPaaS is well-timed. With the ability to offer the solution via the partner marketplaces of technologies such as Workday, the range of customers it will have exposure to can greatly increase its brand awareness and connect OSV to a deep pool of customers seeking to enable digital HR transformation through RPA and AI.

As organizations of all sizes continue to re-evaluate and address legacy HR and payroll systems and processes en route to enhanced digital operating models, cloud-based applications are increasingly being selected as the vehicle for HR transformation. With the introduction and increasing prevalence of advanced APIs, buyers are being afforded the ability to leverage a “best of class” mix of platforms and solutions that meet their unique technology needs, while offering a tightly integrated, unified cloud landscape.

Regardless of the HR technology selected, a critical factor and component in successful global payroll transformation today is the ability of HR and payroll applications to integrate and exchange data seamlessly, in real-time. However, NelsonHall’s recent Payroll Services Client Expectation Analysis report found that while payroll buyers are most often operating on newer cloud systems, only about 40% of those surveyed currently have an integrated HR and payroll solution in place. The absence of this deep integration commonly results in a poor user experience, an inability to derive complete HR/payroll data and, more importantly, reliable analytic insights globally. As a result, this leaves payroll continuing to manage data manually and in an outdated way.

However, this is where APIs with dynamic integration paired with automation are truly transforming global payroll delivery – by fundamentally changing the way payroll data is gathered, processed, and handled by payroll operations. Thus, payroll providers are investing in and building these dynamic integrations to connect their solutions to leading cloud platforms and the various systems leveraged by HR today. An example of this is CloudPay’s Connect 2.0.

Legacy file-based payroll integration

Historically, payroll has been a very file-based operation, with legacy client HR technology ecosystems leveraging multiple file types, shuttled by SFTP servers with limited automation capability – requiring payroll teams to constantly manage multiple inbound and outbound interfaces to move critical data to and from the payroll system with each pay cycle.

More specifically, payroll has long relied on various Excel file types as the preferred vehicle for delivering the critical data required for payroll processing, with inbound payroll files often containing thousands of lines of data for processing (depending on the organization’s size and complexity). 

In the past, legacy methods processed and treated these files as if they were a single data point, meaning regardless of the number of lines of accurate data present amongst the thousands, any anomaly or failure meant the payroll team had to correct the data, reproduce the file, load, and process until no errors were detected. This manual process often adds days to payroll processing cycle times and magnifies the risk to on-time and accurate results.  

Next generation payroll integration with Connect 2.0

Last year, CloudPay introduced Connect 2.0, dynamic integration enabled with asynchronous syncing and intelligent automation, that leaves legacy file-based processing behind in favor of a record-based processing approach and provides clients with greater flexibility, visibility, and control over how their payroll data is processed.

Connect 2.0 offers an advanced integration that acts like a database for moving payroll data to and from CloudPay’s global payroll platform. As data files are submitted for processing, the data points are extracted from each source and housed in integration stores, where they are validated automatically.  Employee-level errors are isolated for resolution, allowing all other correct data to process while payroll resolves the invalid data on an exception basis, vs. reproducing and reprocessing full files.

Clients can customize their validation parameters to suit their unique needs, and leverage custom validations at the business, country, and individual payroll level. More importantly, it allows them to send data to CloudPay in the format of their choosing, e.g. API, XML, CSV, XLS, etc. With payroll historically leveraging Excel file formats in their daily operations (which have forced legacy file-based data movement), Connect 2.0 overcomes this by converting legacy files to enable record-based processing capability. In turn, this enables future improvement opportunities through payroll automation.

CloudPay is focused on reducing the payroll cycle times and improving data validation results for its clients and continues to roll out the capability to its client base with strong results. In one example, Connect 2.0 enabled a Fortune 500 global financial services firm to automate its payroll data input and validation processes, reducing its payroll cycle time by 20% while reducing post-processing (gross to net) errors by 90%.

The outlook for Connect 2.0

Connect 2.0 has become standard for new payrolls onboarded to CloudPay’s payroll solution and will continue to be rolled out for existing clients when they are ready to make the switch based on their unique technology landscapes and needs.

Connect 2.0 strengthens CloudPay’s value proposition, particularly against traditional payroll vendor aggregator models which often rely on legacy middleware and connectors to stitch together a global payroll landscape. By offering a dynamically integrated, unified, cloud-based payroll solution enabled to cover over 100 countries, including certified APIs to leading cloud HCM platforms such as Workday and SuccessFactors (with others in progress), CloudPay is well positioned for growth, particularly with multinational corporations seeking next generation global payroll capability and solutions.

Pete Tiliakos presents a round-up of the latest developments from Workday and the key discussion points from the Workday Rising annual user conference held in Las Vegas, Nevada.

This past week, I attended two HR events at opposite ends of the Las Vegas strip: HR Technology conference and SuccessFactors’ SuccessConnect client event. Together, they attracted ~14k HR leaders, practitioners, vendors, analysts, thought leaders, and clients, and had the common theme and purpose of showcasing the latest HR technologies and innovations that are enabling employers to compete for, engage with, and maximize the impact of today’s top talent – in a vastly different workplace than we knew just five years ago. 

Here are my key takeaways on the HR technology trends showcased during the past week.

Advances in employee UI/UX

Not only is the employment market starving for skilled workers and top talent, there is a sharp focus on bringing about innovations that fundamentally reshape the way HR manages its human capital and engages with employees. HR applications are being developed with a ‘user first’ focus, whereby the employee experience is heavily influencing and shaping roadmaps for future enhancements.

At both events, the drive toward more consumer grade HR applications came through consistently. Each vendor I spoke with is laser focused on delivering robust HR capability, but also a world class UI/UX that will provide employees with experiences that match their personal life experiences and offer preferred channels of connection to the organization (particularly mobile).

HR tech vendors remain steadfast in their efforts to create a simplified, guided, and prescriptive user experience. AI, machine learning, NLP, and prescriptive analytics have become table stakes in today’s HR tech, and are driving advancements in UX design and performance.

Example:

SAP introduced a new digital assistant for SuccessFactors. Leveraging the SAP CoPilot Web application bot framework and SAP Leonardo machine learning, the digital assistant learns and comprehends user needs and acts accordingly. The digital assistant is further enabled to support conversational interaction with the HCM platform by leveraging NLP, allowing users to engage the platform through verbal commands. Further, the assistant integrates with popular collaboration apps Slack and Microsoft Teams and is mobile-enabled through Apple and Android apps.

Talent management technology

Without doubt, the key priority for many organizations today is competing for, acquiring, developing, and retaining top talent, in what has become a highly competitive marketplace. Thus, organizations are focused on boosting their talent management technology, with an emphasis on talent acquisition, performance management, and learning management. Providers are bringing to market broader, more capable talent management solutions and insights into their platforms and offerings.

Examples:

• Paychex launched a new LMS (Learning Management System) module, further deepening the talent suite of their Flex HCM platform. In addition to hundreds of pre-loaded learning modules, clients can upload their own learning content, create new content, and import content or materials from external sources (e.g. YouTube). Further, the learning application is available in full native form by mobile
• Infor introduced an update to its Talent Science solution and Predictive Talent Analytics, which supports recruiters and managers in sourcing top candidates by leveraging machine learning and predictive analytics. By leveraging behavioral and performance data, the application uses a data-driven process to identify success drivers within the business and identifies internal and external candidates who share those success drivers.

App marketplaces are rapidly expanding

While all modern HCM platforms currently offer robust APIs (integrations) which connect critical business applications to the HCM platform and extend its capability, the demand for more robust options for connecting solutions, services, and applications is in high demand. 

Open platform approaches are becoming standard with HCM providers, allowing for clients, partners, and third parities to connect APIs for consumption through a marketplace/app store-style delivery system. This open approach is allowing for integrations to a deep pool of external solutions that extend the power of the HCM platform, allowing clients to connect the apps that make the most sense for their unique business needs and user population.

Examples:  

• SuccessFactors announced that it intends to triple its marketplace apps in the near term. Additionally, it launched a new HR community which builds on its existing SAP App Center and offers connected partner solutions around six key areas: well-being, pay equity, real-time feedback, unbiased recruiting, predictive performance, and internal mobility 
• Namely launched the Namely Connect Marketplace, which offers its clients access to partner solutions for recruiting, learning management, employee feedback, identity management, etc. and includes vendors such as Okta (identity management), Greenhouse (applicant tracking), CultureAmp (employee feedback platform), and Vestwell (401k).

Not everyone is sprinting to the cloud

Throughout the week, I spoke to companies of different sizes and complexities, and from various industries. Most were either in the process of moving their HR to the cloud or were planning the move in the next 12 months.  

However, what stood out is just how many companies still haven’t made a move to a cloud-based HR solution or are doing so with a modular approach (but are not starting with core HR). For example, I spoke with a handful of mid- and large-sized enterprise employers who said they had deployed a mix of cloud-based modules across their landscape, most commonly talent-focused modules. When asked what they use for core HR, the response was often “a leading on-premise platform”. When I asked why they hadn’t done so for core HR or payroll, the response was often “I’m not sure” or “We plan to get there… eventually.” 

This is consistent with findings in NelsonHall’s recently published market analysis, Cloud & Multi-Process HR Services: Journey to the Cloud and Beyond, which reveals that only ~40% of the multi-process HR services market is operating in a cloud environment. This could be attributed to client apprehension, but also to vendor solutions being geared to incremental moves to the cloud rather than a single shift. For example, SuccessFactors’ Upgrade2Sucess targets its on-premise customer base, enabling a move to the cloud, but as and when it makes sense for the business. This modular approach allows the client to reduce risk and realize ROI incrementally along their transformation journey.

HR innovation is no longer just for “HR companies”

Human capital management has become a very profitable market in the past several years, and only seems poised to continue its growth as organizations become more talent-focused. Historically, innovation in the HR space was left up to the HR vendors and tech providers themselves (e.g. ADP, Ceridian, Kronos, etc.) – i.e. those directly serving the HR practitioners with services and solutions.

However, this has changed as the largest, richest, and most capable software companies in the world (e.g. Google, Facebook, Microsoft) are targeting, developing, and selling human capital management solutions and stepping up the competition across the industry. 

Examples:      

• Google Hire: an AI-enabled talent acquisition platform for G-Suite
• Workplace by Facebook: Mobile-enabled tool for workplace communication, collaboration, including groups, chat, and video call capability. With integration to HR platforms including, ADP, Kronos, and Paychex Flex
• Microsoft Teams: Workplace collaboration tool which combines chat, meetings, notes, and attachments with integration to Office 365 and leading HCMs (e.g. SuccessFactors)
• Microsoft Dynamics 365: cloud-based ERP and CRM solution with HCM capabilities, including Core HR, talent acquisition, and onboarding.

As part of NelsonHall’s recent Next Generation Payroll Services market analysis, in addition to interviewing 20 of the leading payroll services providers globally, our research extended to a survey of the vendors’ clients. We met clients of different sizes, from a variety of geographies and industries, and covering a range of services in-scope and levels of payroll sourcing maturity. The interviews enabled us to gain a comprehensive understanding of the attitudes, perspectives, and satisfaction levels of current payroll services clients. Here I present an overview of some of the findings.

Overall client satisfaction with current payroll processing services is positive (with an average vendor rating of 4.1 out of 5), due to simplified, compliant, and reliable service delivery results. And clients show similar confidence in their vendors’ ability to meet their future needs, and are highly likely to recommend them, resulting in an overall average vendor NPS of +24.   

However, clients cite concerns in three key areas that are central to driving payroll transformation: 

• Technology integration
• Process improvement
• Overall vendor innovation.

Technology integration gap

Clients’ critical future requirements center on technology improvements: they desire a simpler HR/payroll infrastructure landscape as they drive standardization and improvements to UX, integration, reporting, overall ease of use, stakeholder engagement, and the ability to scale to support the business (e.g. by M&A, organic growth).

Technology and platform features are the top vendor selection criteria, as clients are focused on enablers to payroll transformation. Clients indicate that technology is the leading priority for their payroll operations, while many are seeking more robust capabilities (e.g. mobile, self-service, additional HR modules). However, while ~95% of clients leverage cloud platforms with positive satisfaction ratings, clients are less satisfied with the level of integration achieved to date.

Clients point to a lack of integration across the HR/payroll landscape, which negatively impacts reporting and the user experience. Less than half of participants have an integrated HR and payroll solution, and of those that do, most feel that integration is adequate (or did not know enough about it to comment). Those recording lower scores indicated that integration was in place but was not ideal; e.g. employees may be unaware, but behind the scenes connections are lacking, or integration was seen as positive initially, but ongoing vendor support for the integration is poor.  

Clients expressed the need to gain access to their entire workforce, across all regions and countries. However, overall benefit delivery is lacking, as vendors are not delivering the consolidated reporting promised. This can be partly attributed to the integration inconsistencies which clients cited, plus vendor capabilities not aligning to expectations set in the contracting phase (overselling and underdelivering).

Process improvements are not progressing fast enough

Clients indicate that process change management and overall digitalization of the payroll process are critical in terms of future importance. However, most feel that while their vendor supported these initiatives strongly at the start of the relationship, during implementation, they are not always keeping up momentum in delivering process improvements.

Another area where vendors are falling short of client expectations is collaboration. Clients want to see vendors more engaged and collaborative when it comes to maintaining service levels, but more importantly, in improving the process going forward. Clients are seeking vendor guidance on how to help them move closer to an optimized delivery model, through consultation and best practice sharing. They also want to see more “next generation” features rolled out more quickly.

Clients are seeking automation to drive out manual processes and improve efficiency overall. However, they still feel there is a higher than expected level of manual effort in the vendor process, limiting transformation progress. Nearly all clients see automation as an opportunity to improve processes, but most have no idea of vendor automation programs or how they are being used now or planned to be used in the future. On the up-side, the clients who do have visibility of vendor automation programs, though in the minority, feel optimistic that they will be deployed and will deliver process benefits.

Mechanisms for innovation are seen as reactive

Clients feel that vendors are mostly reactive in this area, and that innovation approaches are largely informal. Clients want vendors to be more proactive in bringing innovation initiatives to the table, and feel that vendors are not keeping them abreast of market changes, including how they are handling new solutions, and how the client could benefit from them.

Clients find vendors’ mechanisms for delivering innovation to be primarily centered on regular monthly/quarterly/yearly strategic meetings with account leadership. However, clients indicate that these calls are generally not focused on innovation. Few clients cite the existence of customer advisory boards, vendor conferences, and portals for feedback. Clients often indicate that their suggestions are not acted upon or documented. Approximately 12% are unaware if any innovation mechanisms are in place.

Example vendor initiatives

With buyers keenly focused on innovative managed services and no longer accepting of a simple bureau-style offering, payroll providers clearly have some work to do in delivering on the promise of global payroll transformation. That said, I speak to and track the leading global payroll and HRO providers on a regular basis and I see them investing heavily to deliver innovation that will execute on that promise. In closing, below are examples of innovations that are making an impact, addressing some of the concerns identified in the client survey:

• “Dynamic” integrations with payroll that allow open formatting or “data your way”, and automatically validate results, identify errors, isolate them for resolution (communicated through a chatbot), and continue processing (e.g. CloudPay’s Cloud Connect 2.0)
• Advanced analytic payroll reporting that provides global payroll insights; benchmarking across a wide variety of industries, sizes, and complexity; executive- and manager-level insights and drill-downs; alerts based on thresholds being exceeded, with push notifications; historical and trend information with graphical views; AI and ML to deliver prescriptive guidance to users (e.g. ADP DataCloud)
• In terms of process improvement, HRO vendors, including payroll providers, are investing in and pioneering the use of RPA and AI in HR. They are looking to improve HR and payroll outcomes and drive the innovation buyers seek in the process model. And payroll providers are focused on automating what has historically been a complex and manually intensive process, to the largest extent possible – with vendors like NGA HR seeking to achieve a fully autonomous payroll process in the near future.

Subscribers can access the report ‘Payroll Services – Client Expectations Analysis’ here. To find out more, contact Guy Saunders.

In September, NelsonHall will begin research on the next annual ‘Next Generation Payroll’ market analysis, which will be published in Q1 2019.

I recently attended Neeyamo’s analyst event in Atlanta, where I discussed the company’s cloud transformation practice with its leaders, and specifically the announcement of UnBox HR for SuccessFactors.

Over the past 10 years, Neeyamo has developed its HR offering with the goal of “addressing the white spaces” in HR technology and services and focusing on supporting clients through their global HR transformation journey. With this focus, Neeyamo offers a consult-to-operate model capable of providing front-end consulting (including change management), application deployment, and post-deployment services for both cloud applications (including SuccessFactors and Oracle HCM) and HR and payroll service delivery.

Neeyamo’s SuccessFactors practice

Neeyamo is a longstanding SAP/SuccessFactors partner, and itself an early adopter of SuccessFactors, which it deploys to manage HR for its own employees. Key facts about the practice include:

• A SuccessFactors COE in India has ~100 consultants with a mix of certifications across all modules
• There are >50 clients to date, with 60 cloud projects completed
• The practice deployed Employee Central + Performance Management for payments firm Ezetap in <21 days
• It provides several levels of SuccessFactors application support, including pre-deployment consulting, deployment, post-deployment optimization, and post-deployment AMS
• It deploys the payroll cloud platform PayNComp, with the ability to provide native payroll to ~30 countries (and growing) with certified integration to SuccessFactors.

While a key challenge for organizations is overcoming and successfully navigating the impact of change to operations from a cloud-based HR transformation initiative, the lack of a successful business case that shows ROI is often a roadblock that many such initiatives do not easily overcome.

An additional ROI-related roadblock to cloud conversion is that, with subscription-based cloud platforms, the client is paying for the software from day one of the contract. This means that until the client is live on the application, the ROI is unrealized. However, UnBox HR takes an alternative approach, enabling incremental change, phased transformation, and quicker ROI realization.

How UnBox HR works

With a traditional system implementation, requirements are gathered, configured, tested, and then go live, meaning all the modules being deployed need to be ready prior to go live (depending on the scope and roll-out approach). By contrast, UnBox leverages Sprint iterations (Agile development methodology) to break the platform modules into portions, virtually unpacking the platform to make the move incremental rather than all at once.

This incremental approach is much easier to digest from a change perspective, enabling a ramp-up based on the client’s specific needs and tolerance to change. Further, by making a business case for incremental installments, ROI achievement is less challenging and realized in line with each installment. 

The UnBox HR offering includes four core packages which progressively ramp up the SuccessFactors modules and capability in scope, as shown here:

Looking ahead

Neeyamo will continue to build on both its SuccessFactors capability but also its extended payroll and multi-process HR services offering. It is investing in more SuccessFactors certified consultants to support demand and expects to reach ~140 this year. Additionally, it will expand its set of tools and enablers to reduce deployment times, as well as extending its global payroll capability and integration to include more countries (it is targeting ~70 native in PayNComp over the next 3 years).

Neeyamo recently announced it had completed a cloud deployment for Sony Pictures Networks India Pvt. Ltd. (SPN), including Employee Central, plus the Performance and Goal Management modules of SuccessFactors for Sony’s 2k employees across five APAC countries. And Neeyamo and SPN are inflight with the deployment of recruiting and onboarding, and will add benefits administration in the longer term.

Neeyamo is already seeing strong interest in its SuccessFactors offering, and I expect UnBox HR to be an attractive option for prospective clients struggling to make the move to the cloud.

For further insight into Neeyamo’s broader HR services capability, see Neeyamo Addressing the White Spaces in HR by Gary Bragar.

Pete Tiliakos reports from Cornerstone Convergence 2018 on topics including the talent management company’s strategy, latest product developments, and extreme focus on CX.

As businesses today are increasingly operating at a global level, they face inherent complexity and compliance hurdles. Indeed, a recurring finding in NelsonHall’s annual payroll market analysis is that compliance is a key driver for organizations outsourcing payroll. And new regulatory directives such as GDPR are placing yet more compliance pressure on the HR and payroll leaders of multinational organizations.

While traditional payroll outsourcing arrangements have enabled businesses to plug in to a compliant global delivery model, what they do not provide is the front-end due diligence and legal structuring required to establish a business presence in a new country. Yet this is a critical first step to compliant global expansion, one that is often ignored by new entrants, and is commonly a cause for deterring new market entry altogether.

SafeGuard World International (SGWI) has developed an offering called GEO (Global Employment Outsourcing) in recognition of the needs of growing multinational organizations. The aim is to provide compliant payroll solutions that can scale and pivot as the business expands, to support non-traditional employment arrangements, and to reduce barriers to entry.

How GEO works

Similar to a PEO (Professional Employer Organization) co-employment model in the U.S., businesses can use GEO to tap into a near turnkey HR delivery offering which combines elements of a co-employment model with global payroll outsourcing services and a traditional staffing arrangement. Leveraging its extensive global payroll infrastructure, SGWI is able to provide GEO clients with end-to-end HR support for workers in over 175 countries. 

Take the example of a U.S.-headquartered organization that wants to expand operations to Europe by establishing a small team of workers in France.  Once the client has sourced its talent in France, SGWI assigns a local delivery team and a dedicated HR expert to the client to begin supporting its in-country HR and payroll needs. This begins with SGWI preparing an employment contract between client and worker, which ensures compliance with local employment laws, and also transfers the worker (legally speaking) to SGWI’s business entity within that country.

From there, SGWI will process all payroll, taxes, and the subsequent payment remittance for the client and provide regular check-ins with both client and employee throughout the life of the contract. Additionally, SGWI provides HR management services for the workers, up to and including separation should that become necessary.  

Key benefits of GEO

Through the GEO model, employers are able to become agile in their global expansion efforts and do so with lower employment-related risk than might be the case otherwise. Some of the key benefits of GEO include:

• Flexibility: it provides employers with a mechanism for compliant global expansion (both short and long term), that can be engaged across 175 countries
• Low barrier to entry: clients can enter, test, and expand to new markets as and when ready without needing to establish a legal presence in the targeted country
• Rapid start-up: clients can be live in as short as two weeks (once talent has been sourced)
• Reduced risk: it ensures proper classification of workers (e.g. employee vs. contractor), a common pitfall that often results in penalties during global expansion efforts, and provides for compliant handling of workers throughout the relationship to ensure ongoing compliance with local labor laws.

Looking ahead

SGWI has seen steady uptake for its GEO offering, with demand in line with its traditional outsourcing model, and quickly increasing. To date, it has more than 400 GEO clients with employees operating in over 120 countries. Going forward, SGWI will focus GEO investments on enhancing its technology to support more capability for contingent workers, including expanded HR and payroll analytics, and incorporating complementary HR capabilities (e.g. recruiting board, etc.) to support mixed talent pools. 

The GEO model is well-timed, with only a few other vendors playing in this specific space currently. With organizations continuing to expand globally, coupled with increasing contingent labor use, SGWI is in a strong position to grow its GEO adoption in the coming year.

Pete Tiliakos, Principal HR Technology & Services Analyst, talks about his recently completed global research project on ‘Next Generation HCM Technology’, which features analysis of 18 cloud-based HCM platforms from 16 leading vendors.

NelsonHall’s most recent Next Generation Payroll Services market analysis reveals that payroll service buyers are focused on access to transformation-enabling technology. The use of automation has become commonplace, with payroll vendors leveraging RPA, AI, and machine learning capabilities to eliminate manual effort in the payroll process. And payroll service providers are investing heavily in automation capabilities that will not only increase efficiencies and reduce operating costs, but also position them to compete against their peers for clients seeking ‘next generation’ payroll and HR innovation.

Recently I had a briefing with CloudPay (identified as a leader in our 2017 Next Generation Payroll Services NEAT evaluation) to see how they are approaching automation in payroll services.

CloudPay’s automation roadmap

CloudPay currently processes over one million pay slips annually (nearly $4bn in payments) across 120+ countries and in ~10 currencies, and has invested heavily in enabling technologies. In addition to its foundation platform which is entirely cloud-based, enabled with dynamic connections to essential applications, and predictive analytic capability, CloudPay is focused on incorporating automation throughout its service offering.

CloudPay’s automation roadmap is supported by ongoing investments of ~15% of its annual revenues. Its progress began well over a year ago, and is focused first on RPA to address two historically troublesome and highly manual processes that are critical to accurate payroll results: data movement, and data validation. Ultimately, CloudPay is targeting ~40% process automation over the long term, enabled by its standardized global process.

Automated data movement through dynamic integration

Historically, when payroll files are submitted to the vendor or payroll team for processing, any issue within a file (be it one data point or a hundred data points) required manual effort to first detect the issue and then perform rework to produce a new file containing corrected data; the process was then repeated until clean files are received and processed without issue.

CloudPay has developed its Connect 2.0 integration, which eliminates the need to constantly reproduce data files to correct errors, and the need to manually validate them, shifting its approach from a file-based process to a record-based process.

Connect 2.0 (which began rolling out in 2017) is an API and database for moving payroll data in and out of CloudPay’s platform from external systems; it includes asynchronous synching, which allows data updates from HR systems and sends data to CloudPay as it becomes available, instead of pending scheduled syncs.  It allows clients to choose how they want to integrate (e.g. XML, API, XLS, SFTP, etc.) and can handle all formats in one protocol.  

Data that is synced to CloudPay is automatically validated before coming into the payroll processing lifecycle (preventing bad data transmission); if bad data is detected, Connect 2.0 will isolate it in real-time and provide instant feedback (leveraging chatbots) to the client HRIS on how to fix it. While a client’s team is fixing the error, CloudPay Connect will continue to accept correct data. 

Automated data validation

CloudPay has automated its payroll data validation process, another traditionally manual, yet critical process to ensure that payroll output is accurate and within control limits based on policy and internal audit guidelines. CloudPay is leveraging RPA to automatically validate payroll data before, and results after, processing.

Examples of automated validation include validating that pay code results match configuration, and that results are as expected. It makes sure that complete data is in place for each employee to allow for processing of payroll results, and conducts pay period-over-period comparisons to prevent over or under payments, etc. All exceptions are flagged for review and correction (rather than manually auditing).

The program provides for a framework that can be customized at the individual payroll level (e.g. each entity or country) meaning its clients can customize thresholds to align tolerance levels to meet corporate policy, business nuances, and ensure control and compliance to prevent invalid payments.

Looking forward

Over the next year, CloudPay will continue with its automation roadmap in the following ways:

• Rolling out updates to Connect 2.0 with capability to support XML file formats, and enabling XLS and Workday PICOF formats, in April 2018. Workday PECI formats will be enabled by the end of 2018, and by year-end, all clients will be live on Connect 2.0
• CloudPay has already begun implementing the RPA-led validation process and is rolling the program out across its client base in a phased approach, with all clients expected to be live by May 2018
• Next on the roadmap (and in-flight) is the incorporation of mini bots to automate basic tasks and transactions and AI-driven virtual assistance to provide users with a simplified, wizard-style, guided experience within its platform.

CloudPay is actively measuring pre- and post-automation roll out results and KPIs across its operations and clients. Stay tuned for an update later this year, as I plan to check in on CloudPay’s progress and results of its automation initiatives, and also to discuss its latest payroll innovation and progress in the global payroll space.

NelsonHall continues to assess the impact of intelligent technologies on the HR outsourcing space, engaging with leading vendors across all towers of HR services (e.g. benefits, payroll, recruiting, etc.) to understand the latest innovations that are transforming the way providers are delivering their solutions and services, and what buyers seek when selecting vendors. Later this year, NelsonHall will publish a major global market analysis focused on RPA in HR services. 

Last week I attended ADP’s 14^th annual ReThink multi-national client event in Monte Carlo, where the theme was ‘Transform the Way the World Works’. The lineup of guest speakers included journalist and media figure Tina Brown, who shared themes from Davos (including the importance of restoring trust and gender equality in the workplace), former British Prime Minister David Cameron, and the youngest ever Nobel Prize winner, Malala Yousafazi. Here are my reflections on the business updates provided by ADP.

User experience updates

ADP highlighted enhanced user experience features across all of the service platforms for its employee portal, global time and attendance, payroll, and benefits, complimented with business insights through its DataCloud analytics offering and benchmarking capability, which enables its ~700k clients to understand their performance within their market size, industry, country, etc.

ADP provided an update on Global Cloud Connect (GCC), which will be generally available from June 2018. GCC is ADP’s simplified global HCM integration solution, with ‘bring your own data’ and ‘drag and drop’ data mapping capability, complete with audit control, dashboards, and prebuilt connectors to enable a simpler global payroll and HR infrastructure, and considerably reducing interface volumes and set-up effort. This was illustrated by a design partner client (a multinational nuclear energy provider), with 13k employees across 18 countries, who is planning to reduce its complex payroll integration landscape from 80 interfaces down to just 3 using GCC. Also highlighted was the fact that GCC circumvents the need to involve IT in revising functional specs and updating system tables, with data mapping updates being handled within the HR/Payroll team, saving time and reducing costs to maintain.

Talent management

Last month, ADP announced the acquisition of WorkMarket, a SaaS-based platform enabling organizations to manage their talent ecosystem in a simpler, more intuitive manner. WorkMaket provides the client with a single platform to support assignments and projects through labor pools, which sources freelance workers based on skill sets and desired capability.

The platform creates a marketplace of sorts, allowing workers (contractors, freelancers, and vendors) to submit their profile in consideration for active assignments. Further, the platform supports the end-to-end process, from sourcing through integration (with applications including SalesForce, ServiceNow and Workday to name a few), through to payments for contingent workers.

With WorkMarket, clients with high volumes of contingent workers (e.g. news media, consulting, etc.) can support their critical freelance population and gain visibility into their entire workforce – something traditional HCMs lack.  WorkMarket is loaded with the next-generation capabilities of today’s cloud systems, including analytics, automation, certified integrations, and mobile capability. It also supports IoT connectivity that can accommodate automatic assignment creation and sourcing of assignees; for example, in support of client system outages or ticket backlogs, where skilled resources are needed to address the issue for the business. Client users have seen significant improvement in the freelance process: one large technology client reduced their time to payment for freelancers from eight weeks to just eight days, significantly increasing the satisfaction and retention of key talent for future projects.

Automation update

ADP further emphasized its investment in cognitive, machine learning, AI, facial and image recognition, chatbots and virtual assistants and, longer-term, blockchain for payroll. ADP is also continuing to progress its RPA development: it currently has ~140 robots in process, with the goal of doubling that by end of FY19, and achieving a payroll process that is over 50% automated. ADP also hinted at what it’s calling ‘project Lifion’, essentially a next-generation HCM platform incorporating the innovations mentioned above. I expect this time next year we will hear a lot more on its progress.  

Client focus & successes

The event also featured several strong customer success stories, some of which are in-flight but are already delivering value to these organizations. Clients I spoke to pointed to ADP’s capability, depth and scale, speed, and agility as important attributes for them, but the features of their relationship with ADP most often mentioned were flexibility and partnership. ADP’s capability and depth are well documented, and their steady investments are driving the speed and agility clients need to support growing global businesses. However, ADP was not always known for its flexibility – in fact, some might argue that its rigidity was key to its delivery model of the past. However, this has clearly evolved. An example of a long-term partnership is Honeywell, who has extended its 10+ year relationship with ADP, selecting them to provide global payroll services for two new public companies, spanning 25+ countries each, with >20k employees combined.

Looking ahead

ADP has invested heavily (~450m in FY17 alone) in innovation that is providing clients with next-generation technology to support the changing workforce and transform the way work is done. Further, with acquisitions like WorkMarket and last year’s acquisition of The Marcus Buckingham Company’s StandOut talent management solution, ADP’s comprehensive portfolio of HR solutions and services is well positioned to support continued growth. 

I expect ADP will see solid adoption for WorkMarket by its current client base, and opportunities to cross-sell ADP solutions as well. Additionally, as ADP continues to enhance Global Cloud Connect and show more use cases, its already strong global payroll offering will provide many multinational companies with a compelling case for simplifying global payroll integration.

Pete Tiliakos reports from the SD Worx InspireEurope 2018 conference, where topics under discussion included the shifting global workforce and HR transformation, and SD Worx demonstrated some of its latest HR developments, including the use of AI and predictive analytics in payroll and recruitment. 

With digital transformation continuing to disrupt and force change across industries, cloud technology is at the heart of that disruption and is providing business leaders with the vehicle to transform operations. And this trend has trickled down to HR, where leaders are challenged with more change and disruption than most can accommodate, given their current legacy HR infrastructure. This includes the need to support the strategic initiatives of the business, compete for top talent, engage and grow a workforce that spans multiple generations, maintain compliance with increasingly challenging regulations, optimize delivery models to support the organization as efficiently as possible, and ultimately reduce operating costs.  

The HR transformation imperative

It’s no surprise that HR leaders are keenly focused on HR transformation and the need for a move to a more “future proof” cloud-based HCM platform – one that can provide the vehicle for achieving the HR transformation and change needed to compete for, retain, and develop top talent.  

But organizations are not exactly abandoning legacy on-premise systems and sprinting to the cloud. In fact, only about half of current HRO deals are being delivered on cloud systems (per NelsonHall’s 2017 Cloud-Based HR Services report). This is also evident in the recent announcement by SAP/SuccessFactors regarding a new solution they have branded Upgrade2Success; essentially an offering targeted at its on-premise customer base that enables a move to the cloud, as and when it makes sense for the business. This essentially utilizes a modular approach as opposed to an all-in shift, allowing the business to reduce risk, and realize ROI with each step along their transformation journey.

As more organizations set out on their cloud journeys, they will need systems integration partners who can guide them through the process of moving to leading cloud platforms like SuccessFactors; these are vendors with proven capability to support organizations, from initial consulting through to implementation, and in some cases, in post-deployment support.  

One such vendor is Infosys, a global SAP services partner since 2008, which established its SuccessFactors practice in 2013, and has conducted over 250 HCM implementations for some of the largest companies globally across a diverse set of industries. 

Infosys leverages SuccessFactors to enable HR cloud transition

Infosys’ approach to SuccessFactors begins with its “consult to operate” model, which is capable of supporting a wide range of customer sizes, industries, and complexity – from initial consulting (e.g. cloud readiness assessments, system selection process, change management, etc.), through implementation of SuccessFactors Employee Central and the various HR modules selected within SuccessFactors, as well as the capability to support the customer with post-deployment managed HR services. 

Through this experience and its partnership with SuccessFactors, Infosys has developed several key enablers that it leverages to make the move to the cloud easier and faster, and provide the transformation and ROI required by its customers. Examples include:

• Design Thinking is at the core of Infosys’ approach to driving innovation in its SuccessFactors practice, and Infosys sees it as a key enabler for deriving innovative solutions to address challenges in HR transformation
• Industry-specific process framework for HCM to speed implementation, which includes prebuilt, industry-specific templates for accommodating the various nuances and challenges unique to certain industries. Currently, Infosys has developed templates for Manufacturing, Retail, Finance, and the Automotive industries, with plans to add Railroad, Airlines, Logistics, and Insurance in 2018
• Accelerated Cloud Transformation (ACT) Methodology is Infosys’ end-to-end cloud implementation methodology, which begins by helping an organization to define its implementation roadmap (including public, hybrid, and private cloud environments), and is inclusive of strategy definition, guided implementation, and training and change management – which are critical elements of any business transformation initiative
• Value Realization Methodology (VRM) – with ROI key to cloud transformation success, Infosys leverages its VRM methodology, which defines, tracks, and ensures value realization is measured and monitored throughout the conversion and through go-live to ensure value delivery
• A key risk to any system conversion is data quality and readiness prior to migration. Here, Infosys manages this risk through its Infosys Data Services Suite (IDSS) tool, which prepares, cleanses, harmonizes, and readies customer data for conversion and migration management
• Leveraging analytics, automation, AI, and machine learning to support the conversion process where possible – a good example of this is the use of NIA (Infosys AI platform) for test script execution.

Future plans & investments

While these tools and enablers are easing the move to the cloud for its customers, Infosys sees opportunities to improve further. For example, it completed an Employee Central conversion for a global auto manufacturer, (~1.6k employees in 19 countries, supporting ~10 languages) in under 14 weeks.  Infosys is now targeting similar conversions in under ~11 weeks and expects to achieve this in the coming year.

To support these improvements and market demand, Infosys will continue to invest in and grow its SuccessFactors practice in the coming year in the following ways:

• By investing in people. Infosys plans to add 30 certified SAP/SuccessFactors functional consultants per quarter over the next six quarters, with plans for additional consultants with domain expertise to support transformation engagements. This includes plans to extend consultant coverage to support targeted growth regions like APAC and Europe. Infosys has made significant investments in local technology hubs with an emphasis on local talent hiring and training in locations including Indiana, North Carolina, Rhode Island, and Croatia
• Continued focus on building and enhancing its toolset and capabilities. Historically, Infosys has made several key fold-in acquisitions with emphasis on value-added tools to complement its offering – e.g. Panaya, an automation platform for cloud migration; Skytree, a machine learning application; Noah Consulting, information management consulting for the Oil & Gas sector; and BrilliantBasics, a digital innovation and customer experience studio.

Furthermore, the Infosys Innovation Fund (launched in 2015 and supported by $500m) is focused on investing in startup companies that develop innovative technologies, which Infosys can strategically leverage in its business lines. Infosys will look to continue adding complementary tools and capabilities through acquisition, in the areas of automation, AI, analytics, and niche SuccessFactors tools that enhance the user experience.

Infosys will also continue to invest in applications that are integrated with and specifically designed to enhance user experiences in SuccessFactors; Infosys currently has SAP-certified applications focused on analytics which it intends to continue to expand. Plus, there are planned improvements to various cloud-based tools expected in Q2 2018 for document management, policy definition, vacation bidding (a transportation industry-specific feature), and data migration. Additionally, Infosys plans to expand the use of Infosys NIA to incorporate more AI and machine learning into its process – specifically for testing and data migration.

In summary

Looking ahead, with SAP’s recent announcement that it will extend support for its on-premise solutions through 2030, it’s possible that late adopters of cloud HCM platforms may drag their feet a bit longer, but a move is inevitable and the clock is ticking. Systems integrators like Infosys present a strong case for making the move much more palatable and lower risk, given their proven experience, key enablers and accelerators, low-cost delivery locations, and overall value proposition.  

A key finding from NelsonHall’s recently published Next Generation Payroll Services market analysis is that buyers are now much more focused on automation and other forms of transformative technology that will drive digitalization of their HR operating models. In payroll, as elsewhere in HR, this increasingly takes the form of automating manual transactional tasks and increasing the level of employee and manager self-service.

Therefore, it’s no surprise that the top three drivers for payroll services center around cloud, automation, and cognitive technology, namely:

• Access to leading cloud technology
• Process efficiency through automation
• Analytic insights and easy access to historically rich payroll data.

As a result, leading vendors are focusing their investments in technology and innovation; on average, vendors are pushing ~16% of revenues into technology and value-added features that drive innovation in service delivery. One such vendor is APAC-based Excelity Global, which has historically placed strong emphasis on use of new technology to enable “next generation payroll” delivery. Excelity’s vision is to provide the leading proprietary payroll platform offering in APAC, and has supported this by making consistent annual investments of ~25% of its revenues.

At the core of Excelity’s offering is ezpayroll, its cloud-based payroll platform targeted at small-market customers seeking advanced payroll technology. Currently, ezpayroll is configured to support 12 APAC countries (expanding to Korea and Vietnam in 2018), with specific templates tailored to support the needs of industries such as banking, manufacturing, and IT services.  Additionally, ezpayroll is delivered with pre-built integrations to leading HCM platforms, including a certified integration and partnership with Workday. 

In addition, Excelity has recently launched complementary technology which integrates with ezpayroll and provides its customers with value-added features that drive efficiency by simplifying everyday processes. Examples include WiFi TimeSheets and Excelia.

WiFi TimeSheets

This is a SaaS-based time and attendance (T&A) tracking and compliance system. With Wi-Fi TimeSheets, customers can digitalize the time and attendance tracking process, eliminating paper and manual effort for employees, while improving attendance tracking accuracy to prevent payroll leakage, through automation of the time tracking process. It does this by connecting employees to the system through an app (available on iOS and Android), which tracks employee location through one of three methods: WiFi connection, geographical tagging through mobile, or beacons (which can be purchased separately and installed on worksites.)

With each method, WiFi TimeSheets automatically clocks employees in and out based on their location and provides employers with mobile-enabled dashboards and real-time data, including a GPS map of employee whereabouts and worksite/location tracking. 

WiFi TimeSheets then uses this data as the basis for comprehensive reporting to identify hidden costs and track project performance via analytics, forecasting, and benchmarking. The application is integrated with ezpayroll but offered as a stand-alone solution, supported by pre-built APIs to customer systems and existing time clock technology. 

Excelia

Excelia is a cognitive chatbot assistant for supporting employee inquiries with on-demand and personalized responses. With Excelia, employees can obtain assistance with common daily HR tasks such as onboarding, information requests such as viewing payslips, and training. The bot draws on core HR and delivers personalized assistance through a conversational interface, providing users with inquiry support in seconds (as opposed to traditional methods involving calls, emails, and ticket creation which typically took hours to complete).

Excelia has been deployed across 250+ India-based customers to date, achieving ~40% reduction in inquiries reaching Excelity’s tier 2 support.

Looking ahead

Excelity’s roadmap for WiFi TimeSheets includes expansion beyond India, to China and Singapore in January 2018, with other key APAC countries coming onstream by May 2018. Additionally, enhancements planned include expanded administrator features for broader benchmarking, forecasting, and enhanced reporting features for mobile users. Similarly, Excelia will be rolled out globally by Q1 2018, with plans to incorporate additional data elements from Excelity’s platform.

With the payroll services market in a very mature state and more focused on transformation than ever, vendor differentiation is key. 2017 has been a strong year for Excelity in launching value-added payroll technology solutions. This should position Excelity for strong growth in the coming year and beyond, in support of its goal of becoming the leading APAC payroll platform and provider. 

As globalization of the workforce continues its evolution, HR leaders today face the challenge of managing a more diverse, dispersed, and technology savvy human capital environment than ever before. Thus, acquiring, integrating, managing, and paying a borderless workforce is a major challenge for many multinational organizations today, driving the need to transform and digitize global HR and payroll delivery models.

NelsonHall’s recently published Next Generation Payroll market analysis finds the pursuit of digital transformation has created a convergence for HR and payroll to address technology jointly, in an effort to achieve an optimal delivery model and transformation globally. As payroll seeks to leverage technology in line with the digital transformation initiatives of the broader organization, technology-based managed payroll services are in demand. The study finds that multi-country payroll services continue to grow at more than twice the rate of the overall payroll services market. 

With technology-based managed payroll services in high demand, “next generation” payroll outsourcing is being built on cloud platforms and complemented with intelligent technology. As a result, global payroll service providers are investing heavily (on average ~16% of revenues) in payroll innovations that bridge the gap between global and local, and leverage technology to eliminate boundaries.

One such vendor driving innovation is Neeyamo, who positions itself as a specialist “long-tail country” HR and payroll services provider. It targets global organizations who tend to have the largest portion of their employees based in home and secondary countries, with the remaining population distributed in small numbers across multiple locations, constituting a "long-tail" of countries.  

Recognizing that the market continues to lack a single global payroll technology platform that covers the entire globe, Neeyamo has focused its offering on filling those gaps. Its long-tail approach is addressing these gaps by leveraging technology and automation to enable cost-effective service to smaller, traditionally cost prohibitive countries, often those traditionally avoided by many large HRO players.

Neeyamo has introduced a framework it calls Global Payroll Hyperloop, which is driven by its proprietary, cloud-based global payroll platform, PayNComp, and paired with complementing technologies and automation features to reduce delivery time, eliminate manual processing, and provide comprehensive global compliance support. Key elements of Neeyamo’s global HR and payroll solution include:

• Incorporating advanced automation features and bots throughout the payroll delivery model, eliminating over 70% of routine payroll administration activities and speeding payroll processing, with the capability to process gross to net calculations, lending itself to real-time payroll processing for “payroll on demand”
• Chatbots for payroll inquiry management support, collaboration tools, and analytics for global payroll reporting and insight
• HR Compliance Plus, a global HR compliance system with intuitive, wizard style, cloud-based platform for HR compliance monitoring, that includes an analytics dashboard to track compliance globally
• Benefactorz, a global cloud-based HR benefits management system which is integrated with PayNComp and designed with an intuitive user experience, and advanced controls and analytics for benefits management.

Not only has Neeyamo’s innovation focus made an impact on its payroll delivery capability, but it has also shown a positive impact on its client base as well. As part of NelsonHall’s Next Generation Payroll Services market analysis, Neeyamo’s client reference interviews yielded above average client scores for innovation (compared to the combined average of its peer vendor participants): 

(1 = very low satisfaction, 5 = very high satisfaction)

Additionally, Neeyamo plans to continue driving innovation across its payroll delivery model in the following ways:

• Continued investments and enhancements to PayNComp, which is currently natively configured in ~30 countries and supports payroll in 150+ countries. Neeyamo's roadmap will take this to 70+ native countries supported within the next three years
• Further investments in automation, including incorporating artificial intelligence and machine learning capabilities throughout the payroll process, predictive analytics, and early-stage development of blockchain technology for HR and payroll service delivery.

As a result of its proven global payroll capability and innovation approach, Neeyamo has recently signed its largest client to date: a Fortune 100 corporation with employees across more than 80 countries – a true test for Neeyamo’s Global Payroll Hyperloop.

With payroll buyers focused on best-in-class technology-enabled services to drive global HR and payroll transformation, they will seek vendors who can deliver not only tactical HR and payroll management, but innovation that drives value creation. Going forward, I expect that Neeyamo’s Hyperloop framework will position it well with multinationals seeking a proven global HR and payroll solution and a provider that is capable of driving value through innovation.  

For many organizations today, technology, and more specifically the internet, has changed the way business is conducted, and having the agility to pivot with the change is critical to remaining competitive and surviving.

While the introduction of next generation technology has created a critical inflection point for many businesses, it is also providing HR leaders with new challenges. HR now has technology at its disposal to truly transform the HR operating model, which is being driven by cloud-based HR technology and cloud-based HR services. The need for a move to a more ‘future proof’, SaaS-based HR platform is pressing, and for many, it’s the key to achieving the transformation desired.  

NelsonHall’s 2017 cloud-based HR services market analysis estimates that the global cloud-based HR services market is set to reach $20.6bn by 2021, growing at a rate of ~6.3% CAAGR (with cloud HCM implementation accounting for the largest portion of the market, at ~44%).

The report reveals that the top reasons why clients are continuing to seek out cloud-based HR systems and services are:

1. To streamline and standardize existing HR processes to a more manageable model, and allowing HR to focus on strategic business initiatives
2. To improve the user experience throughout the HR delivery model – including mobile capability to support the global, mobile workforce
3. To improve compliance and risk management
4. To gain access to analytics and robust reporting capability for real-time data-driven decision-making
5. To shift to a SaaS-based subscription cost model for predictable HR operating costs.

The E.W. Scripps Company (Scripps) is a good example of how technology created an inflection point that was critical to its survival. As a 139-year-old media organization, for many years, its primary business centered on print media (newspapers), an industry heavily impacted by the internet. Recognizing a need to transform its business, Scripps went through multiple shifts over the past 10 years.  Starting in 2008, when it spun off its cable networks business, to 2011 and 2012 when it expanded its broadcast and footprint. In 2015, Scripps fully exited the newspaper business altogether and picked up additional broadcast properties and continued its expansion into the digital space while streamlining its business to a lean ~4k employees.

In 2007, while still in the process of transforming its business, Scripps was also at an inflection point from an HR perspective. Recognizing a need to improve a highly manual HR and payroll delivery model, a lack of standardization across its business units (e.g. 27 different payroll cycles with ~5k job codes for less than 10k employees), a highly inefficient payroll process which required >40 FTEs to process payroll for less than 10k employees, and an outdated HCM that lacked the key features to acquire and manage top talent and drive efficiencies through technology, Scripps turned to ADP to transform its HR technology and delivery model to one that would support standards to help enable growth and scale as their business transformed.

As a result, Scripps was able to move its HR and payroll processes to a cloud-based outsourcing solution which delivered consolidation, standardization, and access to the rich data needed for HR to become a more strategic business partner. Subsequently, in 2013, Scripps renewed its contract with ADP as a result of its success.

Key to the success of Scripps initial transformation initiative was the ability to recognize and proactively manage the change impact to operations (a leading inhibitor to both cloud-based HR and payroll outsourcing services, per NelsonHall research). Hence, it engaged outside guidance for managing that change. Scripps brought in consulting for guidance on sourcing advisory, organization design (including determining the skill sets required to manage an outsourced model), retained team scoping, and governance design – all of which, Scripps considers pivotal to the success of the project and long-term success of their partnership with ADP.

Recognizing the need to continue its transformation and establish a more future proof solution, Scripps sought a fully-integrated ERP solution that could provide best in class cloud technology with integration across HR, payroll, and finance. Scripps recently selected Workday as its ERP platform, and as a result made the decision to continue with an outsourced model, looking for an outsourcing partner with proven Workday experience. Their search ended with OneSource Virtual (OSV) as the incumbent provider, as a result of their extensive Workday experience and innovation, and its ‘consult to operate’ model exclusively for Workday.

Over the next year, OSV will implement Workday for Scripps (to be live January 2019), including core HR, benefits, payroll, recruiting, compensation, talent acquisition and management, as well as finance (later in 2019). Once implemented, OSV will provide comprehensive managed payroll services, and provide ongoing AMS services in concert with Scripps’ technology team.

For more on the Scripps HR and payroll transformation journey, NelsonHall’s Buyer Intelligence Group members can view a recording of the webinar featuring myself and Kevin McDonald, VP of BPO and HR Operations for Scripps at the BIG website – or contact Vicki Jenkins for details.

With many organizations turning to cloud-based ERP and HR systems to replace legacy, on premise systems, and more importantly as a means to enable organizational transformation, the demand for cloud-based HR services continues to grow. NelsonHall’s Targeting Cloud Based HR Services market analysis estimates the market to be ~$15bn in 2016, growing to ~21bn in the next five years.

Thus, as cloud-based HR platform adoption has grown, the shift from traditional on-premise systems to cloud-based HR platforms has created demand for post-deployment application services and a growth opportunity for HR BPaaS providers. Our market analysis found that vendor support for cloud systems or Application Management Services (AMS) currently makes up ~14% of the cloud-based HR market, is growing at a rate of nearly 12%, and is estimated to reach ~3.6b by 2021. The study found that nearly all vendors are currently offering AMS services of varying scope in conjunction with their other HR BPaaS offerings (e.g. workforce administration, payroll, etc.). ~80% of vendors offer AMS on at least one of the major HCM platforms, with 40% offering multiple systems.

Because cloud technology has become far more dynamic and “intelligent” than its legacy predecessors, a key driver with many organizations seeking AMS is the realization that they lack the skill and resources internally to maintain cloud systems properly. Furthermore, buyers need to optimize the configuration of cloud systems to achieve the full value of their investment, as well as maintaining the system for peak performance.

This has many organizations recognizing that supporting a cloud system (likely) isn’t core to their business and is best left to providers with proven experience in implementing, optimizing and maintaining them. As a result, cloud-based HR service providers are seeing AMS as a gateway service offering, leading to broader HR outsourcing service adoption, with a quarter of vendors indicating AMS is the leading source for new clients. With demand for post-deployment AMS a leading gateway to new clients for vendors, many now offer AMS services on multiple systems, and most (~70%) now offer AMS as a standalone service or plan to in the coming year.

Looking forward, with an estimated ~40% of legacy HRO deals operating on cloud systems, there is strong growth potential for vendors to retain and transition existing customers to the cloud. Additionally, those organizations who were early adopters of cloud solutions will remain strong candidates for AMS support services. Vendors whose offering includes a comprehensive cloud HR offering, including consulting, implementation, AMS and broader HR BPaaS services, will benefit from offering a complete solution that showcases their experience with leading cloud HCM platforms.