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

The Puzzling Puzzle of HR and HRO

Have you ever had a thought that was hard to express, been at a loss for words to explain something?

Sometimes I find it is helpful to first express what I can and then build piece by piece over time until I arrive at a complete construct, kind of like building a jigsaw puzzle without the picture on box.

Here are a few of the HR and HRO puzzle pieces I am trying to fit together:  

• The increasing use of HR point solutions in an intended “best of breed” mix

• The changing role of a primary multi-process vendor

• The impact platform BPO will have on the market and HR

• The role of business analytics and HR analytics

• Finding the optimum shared services balance of insourced and outsourced services

• The danger in divergent paths for HR services delivery that “free up HR generalists to do more strategic work”

• How to move up the value chain from improving operating expenses to improving the business

• The impact of cost-driven short-term investment decisions on long-term HR transformation

To be a strategic business partner, HR itself must have two strategies. The first is a strategy for how it  will create business impact, which may include initiatives to increase revenues and maximize the total cost of labor. The second is a strategy that answers how HR should be organized, and what capabilities, tools and technologies it needs to deliver results to the business.

One of the advantages of long-term strategies for HR is that they can be guiding frameworks – even when there are delays and needs for modifications due to business and economic realities – without losing sight of the final picture.

In January I introduced the concept of the HR services portfolio manager and the services delivery architect. It is the role of the services delivery architect to build out the service delivery model ensuring it is all seamlessly integrated, managed and provides the required service quality, cost and performance. The implication is that the service delivery model has been developed with both the HR operational and business impact strategies in mind.  

I was just scanning the 2009-2010 edition of Cedar Crestone HR Systems Survey, and it triggered a puzzle connection for me.  Survey respondents, seventy-four percent of which were from HR, were asked where they were spending at least twenty-five percent of their time and budget. Ranking high on both elements were business process improvements, talent management processes, and employee and manager self services. More time than budget was spent on HR systems strategy and business intelligence/workforce metrics. And even less time and budget were allotted to systems upgrades.

How targeted can you be in improving business and talent management processes if the underlying systems capabilities are not present, fully integrated and unfunded?  If there is a full architected HR systems plan, then a detour driven by the economy can be accommodated and interim plans based on existing capabilities. If there is not a plan, then short- term plans and decisions may be building a puzzle with key pieces missing. Do you have all your key puzzle pieces laid out on your planning table?

Linda Merritt, Research Director, HRO, NelsonHall