ADP Puts HRO Strategy into Action

Strategy is not a plan, it is action. A strategy defines what actions a company will take to achieve its goals. With the just announced acquisition of Asparity Decision Solutions, a privately-held supplier of patented employee benefits decision support tools (DSTs) and analytics, ADP provides a good example of strategy in action.

It is part of ADP’s strategy for growth to expand the depth and breadth of its benefits outsourcing services. It is also core to ADP to provide clients “insightful solutions that drive business success,” and “turn knowledge into insight.”

ADP’s acquisition of Asparity is an all around win-win. This is an excellent fit for ADP, which continues to expand its value proposition by enhancing its benefits and human capital management business process capabilities in a manner well suited to its strengths. Together, ADP and Asparity will be able to provide knowledgeable insights into managing the rising cost of health care and link its services to creating broader business value.

Asparity provides web-based proprietary technology to Fortune 1,000 companies and public-sector organizations, including the Federal Employee Health Benefits program. Its interactive DSTs include personalized data to engage and assist employees in making complex health care and benefits selections. All the more important given the changes and challenges in navigating health options and costs that are increasing for employees as well as for employers. Employers receive in-depth data to analyze employee health care actions and conjoint analysis is available to determine prioritized employee preferences, both of which can help employers manage total health care costs.

The addition of Asparity is one more in the steady execution of its strategy. In 2010 it acquired Workscape and its enriched benefits capabilities. Also, ADP has just formed the new benefits Strategic Advisory Services Group to help mid- and large-market clients maximize the value of the in-depth benefits data and analysis that ADP will be able to provide.

ADP is moving into the kind of consultative service arena that can create business results well beyond lowering HR operating expenses, and enabling it to establish itself as a strategic business partner in balancing the total cost of benefits with the impact on talent management and the bottom line.

According to NelsonHall’s 2010 benefits market analysis ADP including Workscape is among the top ten providers in both participants and revenues. These new strategic moves, if well executed, should strengthen ADP’s growth in a very competitive benefits outsourcing market.

Other HRO vendors that continue to think of ADP as “only” a payroll provider may well be surprised when it pops up as a serious competitor in their market. How aligned are your actions with your strategy?

Linda Merritt, Research Analyst, HRO, NelsonHall

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