Archive for the ‘payroll outsourcing’ category

Moorepay’s Roadmap to Success is in the Cloud

October 4, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

Moorepay is a payroll and employment service provider in the U.K. with over 10,000 clients and it is a part of NorthgateArinso (NGA). Earlier this year I blogged about the launch of its new HR and payroll platform service for the small employer market in the U.K. This week, I spoke with Ann Fitzpatrick, Moorepay managing director, for an update.

In a brief recap, MoorepayHR is a cloud-based SaaS and BPO service built on NGA’s Preceda SaaS platform that is customized for the U.K. market and combined with Moorepay’s payroll and HR services such as employment law and health and safety advisory.

Cloud Opens the Small Employer Market

Most major HRO vendors do not attempt to reach the small employer market, which is just what Moorepay serves. Certainly small employers want professional and modern services, but until the rise of streamlined HRO platforms in the cloud, the costs were unaffordable for both clients and vendors. In the U.S., ADP has had such great success with Workforce Now, it launched a larger version called Vantage HCM. Now, employers in the U.K. can have the same level of service as larger companies at very affordable price points.

The Roadmap to Success

There are three levels of service, each with its own pricing openly displayed right on the company’s website. Payroll is available as an option with each of the service levels.  Approximately 40% of clients are currently adding payroll. In a bit of a nice surprise, ~80% of customers are choosing the highest level that comes with client services, making it a real BPO offering.

A 1Q 2013 launch is planned for the highest level of service, HR Advanced, which will add modules for talent management, recruiting, and remuneration. That will make the service more valuable for employers in the 100-400 range with more complex HR needs.

With its large base of payroll clients, Moorepay will later market the new system and services to its existing clients to allow conversion to the new system and added services.

Finally, Moorepay is receiving good support from the NGA Preceda team and they will work together to ensure the technology development roadmap is completed in the near future, including mobile and tablet access.

The Proof is in the Pudding

The new system has just reached its three-hundredth customer and all of these customers are new to Moorepay. The company now has a solid base of wins and users to move forward with its multi-stage approach to growth.

The small employer market is clearly hungry for such a service. Even before launch, there were hundreds of inquiries, and the number of inbound leads has rapidly increased. You know something is going well when customers are lining up at your door!

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H1 2012 HRO: Who Did What in the Large Market?

August 15, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

There was a good amount of announced HRO contract awards of many sizes and services in the first half of 2012, especially in the large market. A nice volume of new work coming online will provide future revenue support for HRO service providers, where earnings have recently been lower than in 2011.

Learning: finally announced some major deals including:

  • Capita Workplace Services: awarded a competitive win for a £250m contract by the Cabinet Office to manage civil service training services in the U.K.
  • Serco: won awards with the Army in both the U.K. and the U.S.; it won a scope extension valued at $38m by the U.S. Army and a £55m training contract by the British Army
  • Genpact: won  a learning services contract by Johnson Controls, extending its record of recent learning wins; last year, it won a 7 year MPHRO contract with Nissan that included learning and it also won a 5 year content development contract by JobSkills in India.

MPHRO: activity was spread around nicely with ADP, Aon Hewitt, NorthgateArinso, and Logica all bringing in MPHRO contracts. One notable deal was IBM’s multi-tower BPO and IT deal with Cemex valued at $1bn; it includes finance and accounting BPO, HR BPO, IT infrastructure management, application development, and maintenance.

RPO:  continued to see a high volume of new contracts spread across many vendors. There were also two of the largest awards ever in RPO:

  • ManpowerGroup: awarded a $400m five year contract extension with the Australian Defense Force, continuing a relationship that started in 2003
  • Capita: won a £440m 10 year recruiting partnership contract by the British Army; it will also deliver supporting technology for the Royal Navy and the Royal Air Force, partnering with advertising agency JWT for recruitment marketing and with Kenexa for assessment and recruitment technology.

Benefits administration: contract awards were announced by Aon Hewitt, Empyrean, HP, and Xafinity Paymaster. Fidelity Investments reported the highest volume with DC contracts adding 522k new participants to its base of over 15m participants served. It also made major renewals and brought in new competitive wins. This is Fidelity’s strongest first half sales period in the last five years.

Payroll: deals in the U.K. led the way with awards going to Ceridian, Equiniti ICS, Liberata, and Mouchel. ADP won a multi-country contract from HP and will implement its GlobalView for payroll and Enterprise eTIME system for time and labor management for ~130,000 employees across 40 countries in Asia Pacific (excluding India), Europe, and the Americas (excluding U.S.) over the next five years.

With pipelines still healthy, the second half of 2012 should bring in a year of solid HRO growth and results. Congratulations to all!

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HRO Continues Growing and Going

May 31, 2012

As we near the halfway point, 2012 is going well for HRO. As support, here are choice tidbits from our HRO news coverage and analysis.

First quarter revenues were solid for most vendors. RPO and PEO led the way with continued strong growth in the mid-to-high teens even as new job growth has stalled. Clients are increasingly using HRO services to help manage and balance workforce talent needs. Lower but steady mid-single digit growth is rolling along for benefits and payroll in the traditional HRO service areas.

There was plenty of new business to go around by service line, vendor, geography, and in both the private and public sectors. There was even a very nice smattering of large deals with TCVs in the hundreds of millions!

Logica was awarded a 6-year multi-process HRO contract by BAE Systems to support its 33,000 U.K. employees. Included is implementation and management of a single-tenant, hosted Oracle HR platform, along with payroll, and adminsitrative services in support of talent management functions including recruiting and learning. This is Logica’s second significant sized multi-process HRO win in six months. This is a good indicator of its success as a major preferred partner of Oracle for HRO in Europe.

Speaking of Europe, HP has been awarded a major 15-year multi-process HRO contract by Italian financial services firm UniCredit Business Integrated Solutions SCpA. A major driver for this deal was the need for a platform to support globally standardized HR and payroll processes across the countries in scope (Italy, Austria, plus a third country), serving ~98,000 employees. The HRO services in scope include payroll, time and attendance, workforce administration, learning and development administration, mobility, and ex-pat services.

The U.K. was the hottest area for the public sector. These deals are long wave sales with lots of competition, and there were even incumbent upsets. The services are naturally very important, but the promised cost advantages must be delivered. Lots of hard work and strong partnerships will be needed by the client organizations and the vendors to ensure success.

  • Capita was awarded a £250m contract by the Cabinet Office to exclusively manage the Civil Service’s training services. It will both directly deliver training and manage a competitive network of other training suppliers.
  • Capita was awarded a £440m contract by the British Army for recruiting services. The Recruitment Partnering Project contract is for 10 years and Capita will also deliver supporting technology for the Royal Navy and the Royal Air Force. It will partner with Kenexa for assessment and recruiting technology.
  • Almost at the finish line is CSC as it has been selected as preferred bidder for a £400m, 7-year contract by the MoD to provide pay and pensions administration services to the Service Personnel and Veterans Agency (SPVA) for the U.K. Armed Forces.

Let’s all hope the rest of the year keeps HRO growing and rolling along!

Linda Merritt, HRO Research Analyst, NelsonHall

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HRO Confidence Remains Steady for 2012

May 10, 2012

Every quarter, my colleague Amy Gurchensky surveys HRO vendors for the NelsonHall HR Outsourcing Confidence Index (HROCI), which is then available for our clients and the participating service providers. In normal times, the HROCI does not change drastically from quarter to quarter; it more shows changes in trends over time. In uncertain times, however, it is a timely way to see changes in market perceptions even before disruptions occur in contract values, volumes, and revenues.

It is of some comfort that the HROCI is in a steady state of small changes from quarter to quarter. That is not a sign of upcoming exuberant growth, but it is a predictor that we will continue to see solid continuous HRO growth throughout 2012.

The most recent HROCI shows a vendor confidence level of 153, where 100 represents unchanged confidence and higher scores indicate increased confidence. While 153 is down a bit from 164 in 1Q 2011, it is in line with 3Q and 4Q 2011 at 151 and 147 respectively. Vendor confidence is often based on how current business is going, along with the pipeline. In HRO, growth from existing clients is just as important as new business. Ever since deals got smaller in scale and scope, there has been increased focus on retaining and growing existing accounts, and we see positive vendor confidence here as well.

Looking at some of the HR lines of service, payroll is once again in the leading position for growth, followed by RPO, multi-process HRO (MPHRO), benefit administration, and learning. MPHRO is expected to perform well in 2012, primarily driven by the need of organizations to standardize HR services across regions and geographies. Vendors such as ADP and NorthgateArinso that previously offered primarily payroll and employee administration services have been very active in acquiring or partnering to extend capabilities to a wider range of platform-based MPHRO functions. In addition, Logica is becoming increasingly successful in this space in Europe.

There is a slight tempering of growth expectations that can be seen in the data, although pipelines still seem solid. I think this is the same kind of hedge-your-bets thinking that is in the larger economy and what we are seeing from HRO buyers. Everyone still has a healthy sense of caution in case things suddenly go sideways.

Luckily, more and more HRO buyers and clients are willing to move ahead and get on with doing business, even if a bit cautiously. Other buyers still suffer from frozen decision-making and unwillingness to make long-term investments. Buyers with clear direction for what they want to achieve through HRO are the most likely to be deal ready – as along as prices are right and there is not too much upfront investment. The earlier service providers can assess readiness, the faster they will be able to fill pipelines with well-qualified prospects.

Linda Merritt, HRO Research Analyst, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

The Seams Matter in HRO

April 13, 2012

To complete our review of HRO’s total cost of ownership (TCO), I want to expand on the factors that can either ramp-up or create a drag maximizing savings. The ADP studies on TCO do more than show the savings that real customers are achieving; the research also looks at why.

First, we need to understand what goes into TCO, which can help create a base case for outsourcing and in tracking the results. Included in the ADP TCO research are:

  • Systems cost for initial implementation, upgrades (both amortized over three years), and system maintenance
  • Direct fully loaded labor costs for associated administrative and IT employees
  • Non-direct labor cost for overheads like facilities and corporate overheads
  • Supplier or outsourcing costs.

Some of the costs are hidden in budgets other than HR’s, including IT, finance, or corporate. Remember that some of the employee costs are also hidden out in the field. We call them the shadow staff—people who support HR processes part-time. It’s important to understand the full cost of providing pre-outsourced services to be able to determine the difference in operating expenses after outsourcing.

There are also costs that result from the “seams.” Seams create gaps and can be found between technologies, processes, and people. These costs are seldom apparent or included in base cases, but they are real and can make the difference in 8-10% savings versus 20-30% savings.

Why does using a single vendor for multiple integrated processes create additional savings? With more services on one vendor integrated platform there are fewer interfaces to maintain, which costs less. When using various separate technologies and vendors, more complexity is in the system, and that generates an increased need to ensure that interfaces are maintained and addressed every time a change is introduced; it also increases the need for customizations and workarounds. When a payroll change was made, I could not understand why it took so long. It was because payroll data touches so many other HR processes that every calculation and interface needs to be addressed, tested, and ensured, many of which touch other suppliers and outsourcers, which adds even more time and cost.

Fewer systems, fewer non-integrated interfaces, and fewer vendors reduce complexity and can further reduce cost. The same concept is true for processes and people. Changing and standardizing internal processes and behaviors across the enterprise is hard. Persistence over time can make the difference in achieving 20% savings and 40% or greater savings.

The good news is that you do not have to do this all alone. Understand what you can expect from your primary HRO vendor(s) and what is included in standard pricing and what additional services are available at additional cost. HRO vendors like ADP, IBM, and Infosys, while specializing in various areas of HRO services, understand the importance of ongoing HRO governance, relationship management, change management, and step-by-step maturity along the way to maximizing the TCO benefits of HRO.

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

HRO Reduces TCO!

April 5, 2012

Buyers, how much will you save by implementing HRO services? Will it be 8% or over 50%?

ADP recently published the results of its latest total cost of ownership (TCO) study, The Hidden Benefits of Human Resources Business Process Outsourcing. The company has sponsored several PwC TCO studies since 2003 comparing the TCO of companies maintaining HR services in-house to those using ADP HR BPO. The 2012 study was completed by Sourcing Analytics and digs even deeper into the patterns established in the earlier PwC studies.

I touched on this topic last year, but it is well worth a second look because the research supports common HRO advice and counsel.

The good news remains: HRO of services including payroll, time and attendance, workforce administration, and health & welfare reduce TCO over in-house services.

The bad news is that HRO is not a quick financial fix and first year savings are usually modest. It takes time and hard work to transform HR operations and service delivery, but there are companies that have reduced TCO by 50% with 20-30% being possible for most over time.

Often, one or more HR services are outsourced with the focus mostly on the technology and transactions and may include more than one service provider. While there should be many benefits in new service features and functions and improved processing, the TCO impact is likely to be low, perhaps only 8%. To get both full value and full savings, more is needed.

Here are some of the building blocks that can be used to further increase your HRO TCO:

Technology and process

  • Use one vendor for integrated payroll and time and attendance to bump up savings a bit
  • Move to SaaS-based technology platforms to reduce technology costs the most
  • Make it real BPO, include contact center services
  • Multi-process HRO (MPHRO) saves more than best-of-breed services managed in-house, can significantly ramp up savings.

Process and people

  • Support initial transition, adoption, and utilization
  • Adopt standardized and centralized best practice processes across the entire enterprise
  • Follow through and reduce or re-deploy the retained organization
  • Keep working on it together; it may take up to five years to achieve maximum TCO savings as maturity is attained and more and more of the building blocks are added.

How much a particular client will save depends on a number of choices and options that are largely within the control of the client. In addition to great HRO performance, top-notch providers will be able to support each client in their journey to attain the most savings possible.

Next week, we will take a look at some of the factors and actions that shape the HRO journey.

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

Moorepay and NGA get even more SaaSy in the U.K.

March 14, 2012

The one question that I always have after acquisitions is, “How does it work out over time?” Some M&As put emphasis on “synergy” (i.e., consolidation and cost recovery). Others focus on skills and footprint in new geographies. NorthgateArinso (NGA) is one of the HRO service providers that use acquisitions in new markets as one type of growth strategies. Moorepay is a payroll and employment service provider in the U.K. with over 10,000 clients and it is one of those NGA acquisitions.

Growth through accretion of revenues and clients in new geographies – along with the access to in-country knowledge to service MNC clients – is a good rationale for M&A. But does the overall vendor system become stronger? Are new capabilities leveraged across opportunity areas? I have lived the life of trying to create change, fighting against the not-invented-here syndrome in the corporate world. This is one of the more subtle reasons for using HRO—to circumvent this internal tug of war.

Now back to Moorepay and NGA. Moorepay just released its newest service on March 12th, a SaaS HR and payroll platform that it will use for the small-employer market. I asked if the underlying technology was based on SAP or Oracle. The answer is “neither”; it is based on Preceda, a proprietary NGA system stemming from the 2010 acquisition of Neller in Australia. Preceda is already in use for ~4,000 clients and 500,000 participants in Australia, Philippines, and New Zealand, and now it is expanding to the U.K. Yeah, synergy, re-use, and leverage to improve capabilities and services for the underserved small-business market halfway around the world!

HRO SaaS is a proven cost-effective alternative to fully customized systems. Its very nature lends itself to offering needed benefits to the small and midsized employers (SME). SaaS brings the illusion of customization through configuration at an affordable cost. These are important attributes, especially important for the employer with less than 500 employees.

Moorepay is fully using the benefit of configuration to launch the new service with four pricing levels from the most basic HR and payroll that gives the option to easily turn on additional services like time and attendance, recruiting, and learning modules.

HR and payroll platforms also bring self-service for employees and streamlined HR processing for managers. According to Ann Fitzpatrick, Moorepay managing director, existing and prospective SME clients are asking for the same level of services that have been in the market for years for the large-employer market.

If the launch goes well, and Moorepay turns the rising demand and its first-mover advantage in the U.K. SME market into new and profitable growth, expect to see new NGA Preceda-based SaaS HRO offerings pop up elsewhere around the world.

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.