Posted tagged ‘software as a service’

HRO Inflection Points

June 28, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Everywhere around us inflection points are occurring. Inflection points are a sign that change is occurring that will create a new order of things. Whether we see them, understand their long-term implications, and leverage them to our advantage is another issue.

Social Inflection Points Impact HRO

Today the U.S. Supreme Court ruled on two issues impacting marriage law that will change who is entitled to marriage-related federal benefits.

Major social change invariably impacts HR and HRO services, and the marriage law rulings by the U.S. Supreme Court will have wide-ranging implications for workplace benefit plans in at least 12 states.

The long-term implications may take many years to become clear, but leveraging in the short term has already begun. ADP was the first HRO vendor I saw tweet about the court’s ruling by announcing an upcoming webinar on the changes to the Defense of Marriage Act (DOMA). Mercer quickly followed with a ‘benefits administration alert’ letter.

Technology Inflection Points Impact HRO

As a disruptive technology, SaaS has started a global “cloud war” that is only just beginning. HR and HRO are just a small piece of the IT landscape and we will see skirmishes as new entrants and long-term leaders battle for market share, industry leadership and shareholder value as they transform not only technology offerings, but revenue streams and business models.

Oracle’s Larry Ellison has been in the news for the last two weeks reporting on earnings that were already impacted by SaaS and the cloud war. Here was one of the industry’s titans comparing Oracle’s SaaS revenues (annualized at ~$1bn) to comparable revenues posted by perennial competitor SAP and upstart Workday!

Upgrade or rip-and-replace decisions are becoming imminent for HR clients and HRO services providers. Many vendors, including Ceridian, Mercer and Talent2, are already developing integrated service platforms and more cloud offerings for organizations of all sizes.

Client Inflection Points Impact HRO

To identify current trends in HRO customer requirements I reviewed current (2013) sources, including NelsonHall’s Targeting Payroll BPO market analysis and HR Outsourcing Confidence Index, and also HRO vendor discussions. Further, I reviewed a research survey by Mandy Sim, a University Teaching Fellow with the Business School at the University of Nottingham Malaysia Campus, entitled the HRO Adoption Survey Report 2012, which identified key Asia-Pacific HRO practices based on a survey conducted on delegates who attended the HRO Today Forum APAC 2012.

Following are my findings on what today’s HRO clients, across service lines and geographies, are wanting from prospective vendors:

  • Value for price, balancing cost with improved outcomes and business impact
  • Standardization of processes and technologies
  • Advanced subject-matter expertise and best practices
  • Scalability across services and geographies
  • Access to new tools, technologies and services.

Ready or not, change is coming to HRO. Are you ready for how will it impact you and your organization?

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HRO and Innovation – Getting Practical

May 31, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Innovation in multi-process HRO (MPHRO) has been a topic of discussion, and some contention, since the early mega-deals that created the modern MPHRO market more than ten years ago.

Even in the early days there was a desire for innovation, but there was also a lack of common definitions and mutual understanding, along with difficulty in articulating innovation in contract language.

There was an even greater barrier – systems spaghetti. Early MPHRO clients had highly-customized ERP infrastructure, aging legacy systems, and third-party applications, much of which may have been non-centralized and non-integrated. Each major customer was in their own bubble of services and systems. It quickly became apparent that it would be hard to add new and different innovations within the constraints of the contracts and the technologies.

Platforms for Innovation

Major MPHRO service providers now have global multi-client service delivery and data centers with sophisticated workflow processes. Early clients have been moved bit-by-bit into the common support infrastructure, even if they remain on their own, licensed ERP systems.

Many HRO clients are ready for increased standardization and multi-client platforms to reduce cost and to improve performance. Innovative cloud-based SaaS and services platforms are opening up new services to the mid-market and parts of the large client market:

  • Clients on a shared service platform benefit from ongoing incremental improvements
  • Clients benefit from access to new products and services without paying a significant portion of the R&D needed for a one-off innovation.

Some tension between continuous improvement and innovation is natural, as the line between an “included enhancement” and what is “new and different to be added as an extra charge” looks very different depending on whether you are a buyer or a supplier.

Collaborative Innovation

Client user groups support both HRO improvement and innovation. Vendors were originally reluctant to let clients communicate with each other (partially because the clients might “gang-up” on the vendor – and sometimes they did!).

Companies like IBM and Xerox were leaders in developing client advisory boards. These interactive groups provide feedback on the services, give input into common needs, and even offer guidance on parts of the vendor’s development roadmap. They are not just “the voice of the customer”; they are also a built-in base of beta testers. Willingness to put some skin into the game is also a great way to test market viability and further strengthen relationships.

Infrastructure of Innovation

Buyers can develop their processes for HRO innovation in the following ways:

  • Assess vendors for innovation capabilities as part of the selection process
  • Develop the language and mutual expectations for measurable innovation upfront and include in the terms of contract. Include who pays, and when, determine if there will be vendor incentives, and clarify the client’s role
  • Use the governance process to jointly monitor, manage, and measure improvements and innovations over the course of the relationship.

The good news is that we are beginning to build the HRO infrastructure for future innovation; common language, standardized multi-client platforms, and client user groups.

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.

HRO SaaS for the Small Business Employer

May 3, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

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 1,000th 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 200,000th 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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HRO Gets SaaS-y

May 18, 2009

A recent study we conducted on behalf of the NOA (National Outsourcing Association) found that seven percent of organizations think SaaS will assist in improving business costs, and nearly 100 percent believe that SaaS plus BPO services will reduce business costs. In HR, a key enabler of this business cost reduction is the implementation of self-service for processes ranging from payroll to learning to benefits to wealth management.

So it’s no surprise that ACS just launched SyncHRO, a multi-pronged, Oracle-based self-service portal for companies with 4,000+ employees, and joined the ranks of other HRO providers like NorthgateArinso, Logica and ADP, whose existing SAP-based portal technologies are giving them good traction in the transactional multi-process HRO space.

Self-service’s value proposition for HRO buyers and providers alike cannot be underestimated. Buyers can save up to 20 percent annually by driving employees to an online portal rather than a people-staffed call center. And providers – whether onshore, nearshore or offshore – can increase their margins through the economies of scale enabled by self-service…and doing so is critical for profitability purposes.

My recommendation to the provider community? Develop and deliver a robust, one-to-many HR portal for your HR outsourcing services today, or whither away and die (indeed, some already have in cases in which one-to-many models have proved elusive.) Yes, doing so will consume some development and marketing resources. But the pay-off, for you and your clients, can be enormous. In fact, it can be life saving, and the time to invest is now.

Until next time, happy sourcing!                     

Helen Neale, Research Director, Human Resources Outsourcing, NelsonHall