Going Mobile

In early November, my colleague Linda Merritt wrote a blog titled “Mobile Apps Are Ringing Up HRO.” It recognized ADP as one of the early entrants with its payroll app “RUN Powered by ADP” for small business owners, which was launched in October 2010 for the iPhone, iPad, and iPod touch with plans to release Android and RIM-compatible versions this year.  Well, it’s hard to believe it has been this long for those of us considered middle-aged, but 40 years ago, Pete Townshend of the rock band The Who wrote “Going Mobile.” The song was about taking a vacation by riding around in a car with no particular destination, something Pete liked to do.  I don’t think Pete was thinking about processing payroll while riding around in his car, but this week ADP issued a press release with some very impressive statistics noting that there are already 100,000 users for its RUN payroll app.

A comment by one user, Scott McKain, stated “with just a few clicks, we process payroll conveniently and securely… and since transitioning to the RUN Powered by ADP mobile platform, we can now process payroll securely over a mobile device, no matter where our busy schedules take us.” Hopefully, Scott is not processing payroll while driving around in his car on vacation.

The article also references a 2010 nationwide survey conducted by ADP Research Institute that found that small businesses are leading the trend toward increased mobility, with 90% of small business executives out of the office an average of 23% of the time per 40-hour work week.

Since ADP released its app, other providers have announced mobile offerings for HR services as well, which include:

• Raet’s iPhone and iPad app for gross and net payment calculations and accessing jobs and news from Raet (March 2011)
• Manpower’s mobile recruitment app for candidates and recruiters (February 2011)
• Wipro and McGraw-Hill’s partnership to develop “mConnect,” an open-standard mobile learning (m-learning) platform targeted at low-income, rural, and otherwise underserved students and workers in emerging markets (January 2011)
• Buck Consultants’ (subsidiary of ACS, a Xerox Company) two iPhone apps for health and insurance information: Benefits Genie Lite and Benefits Genie, which give individuals the ability to set future appointment reminders and track health and insurance information (November 2010).

Other providers to launch mobile apps include SourceRight Solutions, Kenexa, and The RightThing.

Out of the necessity to provide payroll services, I think we will continue to see increased mobile payroll for processing payslips, viewing payslips, and performing other associated functions such as direct deposit.  In general, mobile offerings for other HR service lines including benefits, recruitment, and learning will be more gradual to take off because they are not as time-sensitive as payroll.  I believe that mobile recruitment will take off but initially more so for hiring managers to approve job requisitions when out of the office and candidates to check on status of jobs they are submitting for.  M-learning will initially be for more self-paced learning to access content and as I stated last fall in my blog I do believe benefits mobile apps will be important for accessing benefits information, including doctors and other medical care providers for such instances when you are on vaction and an emergency arises or as Pete Townshend would say for when you are Going Mobile.

Gary Bragar, Lead HRO Analyst, NelsonHall

HRO Can Help Stem Absence Management Cost Hits – But There’s More

A recent CyberShift survey found that one third of the 1,088 respondents cited absence management as a continuing top priority. Yet 53 percent of the survey participants stated they did not have an automated system in place for absence, leave, vacation and FMLA tracking. This is a pretty scary statistic, especially when, per CyberShift, unscheduled absenteeism can cost businesses more than $760,000 per year in direct payroll costs alone.

At the same time, forward-thinking buy-side companies over the past couple of years have awarded absence management contracts to HRO providers, and the vendors are beefing up their absence management offerings. Let’s take a look.

Absence Management Contracts

• MidlandHR was awarded 10 contracts in the last two years for its iTrent HR and payroll software, including its absence management modules, by the University of Exeter, Capel Manor College, Oxford City Council, NetworkersMSB, Pentagon Investments, Preston College, Which? (yes, this is an actual company name), Manchester Fire and Rescue, Kent County Council and Farnborough College
• Wipro implemented Oracle’s PeopleSoft Enterprise HCM 9.0 for Jammu & Kashmir Bank in India. Modules implemented include absence management and approval workflow
• NorthgateArinso won a five-year contract with Hastings College for its ResourceLink HR platform, which supports absence management
• Convergys entered into a five-year contract renewal for multi-process HRO services with a leading business services company; components of the contract include absence management and leave administration
• Hewitt was awarded several unnamed contracts that include absence management
• Raet won a 10-year contract with OSG for its online HR portal, which includes absence management

Providers’ Enhanced Absence Management Offerings

Just a couple of weeks ago, Capita acquired FirstAssist Services Holdings Ltd. to strengthen its capabilities in health and workforce management, including absence management. In January, Hewitt added participant advocacy services to its absence management offering. In August, Ceridian added Presagia’s employee leave management software to support its leave management services. And Xchanging announced an alliance with absence management specialist FirstCare through which the two parties will jointly go to market with FirstCare’s absence management and occupational health pre-employment screening services and Xchanging’s portfolio of HRO services.  

Here’s my take. Leveraging software and services for absence management tracking is a great step in the right direction when it comes to stemming costs. But equally, if not more, important is drilling down into the why’s of non-authorized and non-sick absences. This maps to blogs I’ve written over the past year that focus on rampant employee dissatisfaction. Unhappy employees are more inclined to call in sick simply because they don’t want to go to their jobs. Get to the heart of employee dissatisfaction, fix what is truly broken across the enterprise, and absenteeism will decrease. Strong leadership and performance management training is invaluable in helping determine the root of employee discontent. Corporations lacking internal training programs of this type can leverage offerings from both full-scope and pure-play learning services HRO providers.

Gary Bragar, Lead HRO Analyst, NelsonHall

HRO SaaS Uptake – What, How Much and Where?

As a follow-on to my July 7 blog titled, “SaaS More Than Just Catching On,” let’s today look at what types of HRO SaaS clients are buying, the size of awarded contracts and the industries in which HRO SaaS has had the greatest penetration to date.

The What

By rank order of the most commonly purchased software applications/modules:

• Payroll

• HR administration

• Benefits administration, including benefits planning, health and safety, claims submission, absence management and occupational health

• Employee and manager self-service

• Talent management, including recruiting and learning

• Workforce planning

• Compensation/salary administration

• Employee development for career pathing

• Travel  

The reasons behind the rankings, especially at the top of the list, are pretty self-evident. Payroll leads as it is the most visible and frequently used (and arguably, the most important) service. And HR administration really ties into employee and manager self-service, as one of the primary drivers of SaaS implementation is self-service for cost reduction and employee satisfaction.

The Size

As I noted in my July 7 blog, the mid-market is proving to be the ripest for HRO SaaS. Using Netherlands-based HRO provider Raet as an example – and a good one at that, as it in the past six weeks inked seven new SaaS contracts and one renewal – client company size is ranging from 250 to 12,000 employees. This uptake in the mid-market makes perfect sense, particularly on the lower end, as companies in this space need access to HR technology to enhance their operational efficiency but frequently lack the budget to invest their own capital in purchasing it. In terms of contract sizes, we’re seeing a length range from four to seven years, with an average of five years.

The Industries

In looking across all HRO SaaS contracts awarded thus far in 2010, education is the top industry, followed equally by local government and retail. I don’t necessarily believe there’s any secret sauce as to why these are the top three ranking industries, as organizations in virtually all – including healthcare, media, manufacturing and financial services – may be challenged with a preponderance of multiple divisions and locations, and often have several disparate systems for HR and payroll that do not communicate with each other, causing extra administrative work and duplication of effort, etc. Thus, the driver for most existing and upcoming HRO SaaS contracts is the ability to have one singular system for HR and payroll in order to achieve standardization, data accuracy, cost savings, self-service, timely processing and data, and employee satisfaction.

Due to all the inherent advantages, I believe we will continue to see a growing number of HRO SaaS contracts in the mid-market, across all industries. In addition, but to a lesser extent, I believe we will continue to see combined SaaS and outsourcing contracts such as the one announced on August 10 between MidlandHR and Swan Housing Group. Under this contract, Swan Housing will internally host MidlandHR’s iTrent software – which provides a single platform for HR, payroll, talent management and workforce planning. Swan Housing will simply provide the payroll data via iTrent, and MidlandHR will do everything else, from the structuring of pay and deduction calculations, through to payslip printing and distribution. The advantage of these hybrid-type contracts? Economies of SaaS scale coupled with outsourcing of processes for which internal resources and/or knowledge may be lacking.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Top HR Issues by Geography: The Same, But Different

In blogs earlier this month I addressed: 1) increasing use of SaaS; and 2) cost reduction as a top HRO driver based on data from NelsonHall’s recently published HRO buyer report, “HR Issues and Outsourcing Intentions.” Now let’s talk about the top HR management issues by geography.

On a 1 – 5 scale, with 5 being most important:

Asia	Importance
Low consistency of HR processes across the organization	4.8
Difficulties in obtaining consistent single view of the employee	4.4
Need accurate and consolidated workforce information and reports	4.3
Continental Europe	Importance
Difficulties in obtaining consistent single view of the employee	4.4
Corporate requirement for reductions in costs of HR administration	4.3
Need accurate and consolidated workforce information and reports	4.1
U.K	Importance
Corporate requirement for reductions in costs of HR administration	4.2
Need accurate and consolidated workforce information and reports	4.1
Need to improve identification of high performers and succession management	4.0
U.S.	Importance
Corporate requirement for reductions in costs of HR administration	4.2
Need to improve identification of high performers and succession management	4.2
Need for improved talent management capability	4.1

While the relative rankings vary a bit from geo to geo, and although there are a couple of outlier line items, the cited HR management issues can pretty much all be addressed by outsourcing core HR technology. Not surprisingly, this was identified as the number one HR service to be outsourced in our HRO buyer study, and its validity is bearing itself out as evidenced by recently-signed HRO contacts that are either for technology or technology plus HRO services. Let’s look at a couple of examples:

•  In just the last two weeks, Netherlands-based Raet has been awarded five SaaS contracts for its HR portal, RaetOnline, to leverage one system for HR and payroll, standardize to achieve improved efficiency, data accuracy and cost savings from elimination of systems and/or what may have been manual processes, and gain self-service capabilities 

•  Infosys is implementing a platform-based HRIS and global payroll platform for a leading Australian insurer, using PeopleSoft 9.0 to enable the client to have one standard integrated platform, eliminate disparate technologies, drive up process consistency, increase data accuracy and reduce costs

Tangentially, I found it interesting that cost reduction didn’t even make it into the top three HR management issues in Asia, while the U.S. and U.K. cited it as the primary issue, and continental Europe ranked it second. This made me think about my prior background in quality, long before I started working in HRO, and the work of Dr. Deming and Dr. Juran who trained Asian workers and managers on the importance of quality for three decades following World War II. Their tenet was that if you first focus on process and quality (of data), reductions in cost will follow. Cost reduction is of course important in Asia, but there’s clearly a different mindset in how to achieve it. Rather than my views on the principles of management, let’s engage. Where do you think cost reduction should fall in the “fix HR issues” equation?

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

HRO Total Contract Value Jumps 38 Percent in 1H10 – Where are the Gains Coming From?

During our Quarterly BPO Index webinar last week, NelsonHall CEO John Willmott reported that HRO total contract value (TCV) revenue increased 38 percent in 1H10 in a year-over-year comparison to 1H09. While HRO’s gains weren’t as great billions of dollars-wise as other BPO segments such as multi-process or industry-specific BPO, it is good to see the start of an upturn.

So where are these gains coming from? Forty-five percent of the contracts were signed with North American organizations, 43 percent were awarded to European enterprises (of which two-thirds were based in U.K.), and organizations in Asia Pacific accounted for the remaining 10 percent. And by service type:

• Recruiting – 32 percent of deals – including contract wins by Hays, Manpower, Kenexa, OchreHouse, Pinstripe, CPH Consulting, Alexander Mann Solutions, The RightThing, KellyOCG and PeopleScout

• Payroll – 22 percent of deals – including contract wins by Capita, MidlandHR, Raet, NorthgateArinso, ADP, TDS and Ceridian

• Benefits Administration – 20 percent of deals – including contract wins by Workscape, Aon, Secova, Mercer, Convergys and Xafinity

• Multi-process HRO (MPHRO) – 14 percent of deals – including contract wins by Accenture, Ceridian, ADP, Xchanging and Hewitt

• Learning – Eight percent of deals – including contract wins by Edvantage Group and General Physics

• Other HR – Four percent of deals – including talent management-related contract wins by Kenexa

Overall, I was not surpised with the above breakdowns as they were very consistent with the predictions in our June 2010 quarterly HRO Confidence Index.

Digressing a bit here to add to the buzz about Aon’s acquisition of Hewitt…while much written and water-cooler discussed has been about benefits administration, a sizeable amount of Hewitt’s revenue comes from MPHRO. A good example of this is Hewitt’s five-year contract renewal with International Paper, announced in April 2010.The renewal will support 40,000 International Paper employees with payroll, workforce administration, health and welfare administration, recruiting support, SAP application support and help desk, call center and HR manager support, learning administration and flex staffing management services. Given the amount of revenue coming from Hewitt’s MPHRO client base, I believe Aon will not only happily want to continue to support these existing clients, but also want to continue to grow the MPHRO business.

Although most new MPHRO contacts will likely not be the mega deals of yesteryear, reducing the number of suppliers in the outsourcing portfolio continues to grow in appeal among buyers. If buyers are satisfied with their MPHRO deals, they will continue, albeit in smaller fashion, to benefit both buyers and providers.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall