HRO Proof Points

There is always a need for evidence of HRO success. Proof points are needed for new sales and for the expansion of existing services. Many HR clients need assistance with developing business cases for new deals and ROI or cost/benefit analyses for new projects and investments, as well as to set realistic expectations for ongoing effectiveness and business outcomes.

I support HRO vendors showing industry leadership and expertise in every form and fashion available, including research, blogs, newsletters, white papers, etc.  Tout that you know, share what you know, and then use what you know.

Therefore, I often reference HR studies and illustrate the relationship to HRO. Last week it was the ADP sponsored study: PwC’s 2011 Total Cost of Ownership (TCO) Study.  To learn more, I called ADP and had a conversation with Terrence McCrossan, Division Vice President of Marketing – National Account Services, and members of his team including Chris Schmidt. Here are some of my takeaways.

ADP does not just sponsor research. It uses the results internally. ADP worked with its Client Advisory Board to offer the study to its U.S.-based Comprehensive Outsourcing Services (COS) clients with two or more services. The results were then compared to the overall TCO study results and in-house models.

In review of its own clients, ADP found account maturity is also a factor in attaining maximum savings and benefits. Clients continued to reduce TCO over the five year period reviewed. The good news is that the predicted savings of roughly 20% to 30% can be achieved or even exceeded. The bad news is that it takes time and a lot of hard work to get there.

Especially intriguing was data comparing the top 20% in TCO reduction to the bottom 20%. How do the TCO leaders save ~25% more than the lagging group when the costs were the same to both and both have access to the same structured ADP services and processes?  The answer is where a good portion of the time and hard work comes in – change on the client side.

ADP builds in the cost of basic change management support into its base pricing. Clients are assessed pre and post implementation and periodically throughout the life of the relationship to see how improvements can be made and how well the client’s internal TCO reductions are going.

Service providers like ADP understand the challenge is across the full span of the contract, not just during implementation, and the more they help the client, the more successful the client is likely to be in achieving its goals.

Moving from opinion research to assessment of actual costs is a stronger HRO proof point. Being able to directly see where you are as a client to the real costs of others is even more powerful. Do you have your HRO proof points?

Linda Merritt, Research Analyst, HRO, NelsonHall