HRO SaaS for the Small Business Employer

Linda Merritt, HRO Research Analyst, NelsonHall

SaaS systems for HR administration and payroll have opened up the small business market to the benefits of web-based HR systems with self-service and easier implementations. The rapid uptake by clients is testimony that a ‘sweet spot’ has been reached in cost, ease and value.

MoorepayHR

I followed up with Anne Fitzpatrick, Moorepay managing director, for an update on how MoorepayHR, a cloud-based SaaS payroll and HR administration platform with BPO services, is doing one year after its launch in the U.K. small business market.

Moorepay, a NorthgateArinso (NGA) subsidiary, is already “large” in the U.K. small business market with >10,000 clients. However, past success does not guarantee future success. The company saw the need for an integrated HR and payroll platform and wanted to achieve this in its own way by combining new technology with its existing BPO managed payroll and HR services, including on-hand subject-matter experts for guidance on employee issues, into a business process as a service (BPaaS) service.

At first there was some concern if the market was ready for a SaaS multitenant cloud service. Moorepay quickly found that buyers understand the cloud based on their own experiences as consumers and were actually eager for the new service. By the end of April, MoorepayHR had signed its 1,000^th customer, and this week the entire company is holding a company-wide celebration!

The client base is 80% new and 20% from existing clients.57% of clients add on payroll, and even more select one or more of the BPO options, led by compliance support for employment law and health and safety advisory.

Moorepay will be adding more offerings to the system, including a newly-released ‘lite’ version. Next for the company is the rolling-out of an advanced version that adds functionality for recruiting, performance management and learning. Targeted at businesses with up to 500 employees, MoorepayHR will be expanded to up to 1,000 employees in the near future.

RUN Powered by ADP

ADP first introduced its RUN system nationally in the U.S. in 2010 for the very small market (1-49 employees). More HR features and payroll functionality have been added to the SaaS cloud-based mobile platform on a regular basis. In addition to ease-of-use, RUN offers a 24×7 help desk with certified HR professionals and an online HR library. RUN added its 200,000^th customer in April 2013.

Two Vendors, One Success Story

Both Moorepay and ADP understands that clients of any size have similar needs. As Anish Rajparia, president of ADP’s small business services division, commented: “Small business owners demand flexible tools and resources tailored for them to help manage the risks associated with running their business.”

There are already a variety of options in the market for the small business owner and I am sure we will see many more. One size never fits all, and I am pleased to see that this class of buyer now has HRO choice.

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NorthgateArinso Sets a Cadence for Growth

NorthgateArinso (NGA) recently held its annual analyst day in Boston. Chief Executive Mike Ettling reported that NGA’s revenues have increased 6-7% every quarter for the last six quarters and it had brought in over £500m in revenues for 2011. With very good growth under its belt and its built-out set of services, updated core technologies, and global delivery network, NGA is setting new goals to reach its target of $1bn in revenues by 2014.

The company is defining itself as “an HR BPaaS business enabled by technology, process, and domain expertise.” Business-platform-as-a-service is what many are calling business platforms, and since we are talking about HRO, I call it HRO platforms. From that perspective, NGA is already in the BPaaS business of providing bundled business process services and technology solutions.

NGA has ~8,500 personnel in 35 countries with HR technology, outsourcing, and consulting services in over 100 countries. That will not change. It will continue to offer unbundled technology and software services for payroll and HR. It will also continue to offer consulting services for HR systems and implementation of sand integrations, as both are good revenue streams. What is new is that the company is staking out its direction for future growth as an HRO services company, not a technology company.

How does an already good, solid HRO performer accelerate to outpace its competitors? For NGA, the answer is in structure and cadence.

Structure

Management structure is seen in the cascading goals, upcoming changes in organizational structure and alignment of compensation, the use of metrics, and the top-down involvement in selecting and managing key initiatives, investments, and projects. NGA is continuing to standardize its services into a catalog of selections, standardize implementation, and even standardize the offer to delivery process. It is developing an internal system called ScopeHR, which will standardize and automate the production of all key BPO/BPaaS information and documents to make solution selection, selling, pricing, and contracting easier, faster, and more efficient for both the client and NGA.

Cadence

Timing and pacing are also NGA keys in achieving profitable long-term growth. This includes an understanding of how to migrate and grow client scale and scope over time, to step-by-step refine its robust system for services delivery that includes moving to “mega centers of scale” and plans for workforce development to avoid capability gaps. Components of the service delivery value chain are addressed, cross-checked, and backed up. Continuous improvement is also seen in the use of Lean Six Sigma teams, CCMI standards, and an operational excellence framework to increase capability maturity while growing the business and retaining satisfied customers.

There is still a lot of uncertainty in the economy, which may impact NGA’s plans and timing. Given NorthgateArinso’s track record so far, clear goals, and achievement plans, if it adds in a bit of flexibility, the odds are good that it will hit its target.

Linda Merritt, Research Analyst, HRO, NelsonHall

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