Ceridian Has a Whole New Feeling

Linda Merritt, HRO Research Analyst, NelsonHall

Ceridian just held its annual sales kick-off meeting and according to Jayson Saba, vice president of marketing strategy and analyst relations, there was “a whole new feeling of excitement.”

Ceridian Made a Big Bet

Ceridian is a mature service provider having been in payroll and HR services since 1932. So, what is causing such excitement in 2013? The answer is Dayforce HCM.

Ceridian began partnering with Dayforce in 2010, which soon led to investing in the company, and then to purchasing the company in early 2012 and forming a new business unit, Dayforce, led by David Ossip, Dayforce’s CEO.

This was a major strategic bet on SaaS as the new direction for a large portion of an already successful company with an estimated $1.5bn in revenues. How big a bet? Well, in late 2012, Ceridian made the decision to realign its sales and marketing efforts behind Dayforce HCM in North America, the company’s largest customer and revenue base!

The company will continue to support clients on its current systems and will not force migration. In fact, it will continue to invest in adding more features and functionality in key areas. Its other service lines will also continue including international payroll, benefits administration, EAP, and stored value solutions (electronic cards with preset or refillable financial value).

Dayforce HCM is a Party of One

Dayforce is a cloud-based platform built as a single application with one record, one rules engine, and zero interfaces. Real SaaS can eliminate the need to enter data in multiple systems, manage complex interfaces, and confusion about who to call when multiple vendors are involved, and it provides easier implementations.

Dayforce HCM includes:

• Payroll and tax: view, edit, fix, and preview payroll in real-time
• Workforce management: plan, schedule, and forecast labor requirements, and time tracking and compliance
• Benefits: manage enrollment, calculate eligibility, and support an unlimited number of benefit plan types
• Human resources: forms and workflows for managers and employees to manage work and life events
• Mobile: access, manage, and change schedules and other aspects of employee records including shift trading, availability, and time-off requests.

The system can scale for small, mid, and large market clients with a sweet spot in the 1,000 to 10,000 range. Ceridian already has several deployments of 15- to 30,000+ employees. Major retail clients include Aéropostale, Pier 1, and Crate & Barrel.

With a Clear Roadmap for the Future

The new system already has hundreds of clients and is available in the U.S. and Canada, and NelsonHall predicts that it will soon be expanded to the U.K. as well. We estimate Dayforce will become  the HR system of record for all of Ceridian’s HCM customers including managed and international payroll services and eventually become a global HRIS offering.

Ceridian is also working on new additions for talent management (performance management, compensation, and recruiting) and other social media features.

Nothing Succeeds Like Success

Imagine the excitement when your new system far exceeds expectations, wins awards, and delights customers. No wonder a good time was had at Ceridian’s annual sales conference!

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

The CedarCrestone HR Systems Survey and HRO: Part 1

Linda Merritt, HRO Research Analyst, NelsonHall

Lexy Martin, CedarCrestone’s research and analytics vice president, debuted the 2012-2013 HR Systems Survey at the HR Technology Conference. I always enjoy pouring over this research, particularly now as it is in its 15^th year and is full of trends and insights into what is happening with HR technology. The findings are especially interesting this year as we see the emergence of newer technologies come into usage and high expectations for the future growth of HR SaaS HRMS, analytics, social, and mobile technologies.There is a lot of good news for HRO service providers and HR technology vendors. As we know, technology investments have seen some lean years recently. This year, the survey of 1,246 respondents from HR, IT, finance, operations, and executives indicates that 50% of large and medium-sized organizations will be increasing HR technology spend for 2013. Interestingly, the largest increase will be from organizations outside of the U.S. and Europe (59% to 44%).

The top HR technology initiatives for 2012-2013 include:

• Business process improvements and innovations
• Talent management processes and automation
• Service delivery improvements
• Business intelligence/workforce metrics.

While the greatest growth over the next three years is expected for workforce analytics/planning (142%), social media tools (81%), and service delivery (57%), it is important to remember that adoption of the more common technologies is not at 100%. HR administration is highest at 95%, but service delivery applications, which include employee and manager self-service is only at 49%. Check the full report for results by size and industry. For example, large enterprises have higher adoption rates, and industry varies with early adopters seen in high tech, financial services, and retail and late adopters seen in higher education and public administration.

Key Observations

• A shared services delivery model that includes an HR help desk application and self-service delivers the highest level of efficiency to enterprises and saves at least 15% in administration costs
• Basic workforce management technologies including time management self-service, absence management, labor scheduling, and labor budgeting can grow operating income faster
• An integrated HRMS and talent management solution can yield up to 33% higher revenue per employee.

The survey is not about HR outsourcing, but it sure applies. Between the HR technology initiatives, state of adoption of HR technologies, and evidence of results who better to help a client out than your friendly HR service provider!

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

Bridging Talent Management and Workforce Management with HRO

Linda Merritt, HRO Research Analyst, NelsonHall

One of the hottest topics in HR and HRO has been talent management (TM), including everything from recruiting and RPO to performance management and employee engagement. Major ERP vendors have snapped up TM software leaders to strengthen HR product lines, e.g., SAP and SuccessFactors; Oracle and Taleo. Very good moves and very on trend, but let’s not forget about the less flashy powerhouse: workforce management (WM).

TM and WM are both critical components of human capital management (HCM) and depending on definitions and models, there can be a lot of overlap. For my purpose here, TM is about the individual and the capabilities for a specific job position and WM is about groups of workers and managing multiple positions.

TM involves attracting, retaining, and developing people with the required capabilities according to requested volumes and performance management. WM involves workforce planning and forecasting the capabilities and volumes needed and day-to-day scheduling and time and attendance. It takes both processes to have the right number of people, with the right skills, in the right places, at the right time.

Let’s consider two more elements, HR analytics and ROI, that will also benefit from seamless HR systems and processes, which our dear HRO community can enable and deliver. Timely and accurate workforce data is a foundation block upon which HR is built. At least part of the drive for multi-country payroll has been to get better employee data, and there is an important feeder into payroll: time reporting. Today’s leading time and attendance systems offer great flexibility in capturing the detailed data needed for payroll plus analyses of productivity, labor costing, pricing, project billing, workforce planning, etc.

Everybody wants to tie HR and HRO to ROI. Lowering the cost of HR operations alone is not enough. We must show real impact in measurable business results. Simplifying a bit, TM supports improved business results through customer satisfaction and revenues generated; WM supports improved business results through optimizing SG&A via operations and reducing losses.

Many HRO offerings come in basic and advanced levels. HRO providers– ensure you offer both levels of time and attendance, scheduling, and attendance management services. Buyers – take the time to determine whether advanced workforce management services will not only provide better data, but will pay for itself through reductions in overtime and the impact of absences. Also, for many positions and industries, ensuring all customer-facing seats are filled at the right capacity, capability, and time has a direct link to productivity and revenues. Finally, don’t forget about compliance with wage, hour, and labor regulations where accurate records and proactive scheduling are a great defense against fines and losses.

HR and HRO in partnership can be the bridge to strengthen TM and WM across the entire human capital value chain.

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

WorkForce Software Fits with HRO

Linda Merritt, HRO Research Analyst, NelsonHall

“Let’s elevate the discussion on workforce management.” That’s how Kevin Choksi, CEO of WorkForce Software, kicked off the company’s first analyst day. Workforce management, with time, attendance, and scheduling at its heart, is not the most exciting topic, even when it is designed on open systems, is fully configurable, addresses all employee types, and can be deployed globally. But when you have passion for your products, the heart can beat with the energy and excitement that keeps the three founders on board after 13 years and attracts top talent to take the company to the next level of growth.

The inflection point for the company was late 2010 when the SaaS version of the core product, EmpCenter, was introduced. New clients selecting the SaaS option quickly grew to 80% compared to the licensed on-premise or hosted system options. Revenue growth has also accelerated dramatically and Workforce Software has increased the average size of its clients, total users, and services in 30 countries.

The live demo showed how clients can use the flexible rules engine to self-define and update calculations for workforce policies, labor/union requirements, etc. The flexible Advanced Scheduler can create schedules based on a wide range of customer defined requirements and can even directly contact employees to fill in empty shift positions according to availability, skills, seniority rules, etc.  

Two additional modules, Absence Compliance Tracker and Fatigue Management, are available as standalone services or can be integrated with EmpCenter, adding to the differentiation of the workforce management up-and-comer that is in a market currently dominated by the much larger Kronos.

Absence Compliance Tracker supports leave intake, leave determination, and case management. The system provides a recommended leave determination and supporting rationale based on the employee’s eligibility; company policies; and for the U.S., the more than 300 state and federal leave laws and regulations, improving consistency of policy application and providing evidence of compliance.

Fatigue Management helps prevent scheduling fatigued employees, something that is already a requirement in industries such as nuclear power, transportation, oil and gas, pipelines, etc. It will also accommodate industry, labor/union, or company best practices, all of which can address compliance and safety needs.

Making money does cost money. The good news is that WorkForce Software has secured its first infusion of external capital to ensure it can keep up with growth and its development roadmap. Look for it to add staff, geographies, and service locations over the next couple of years as well as adding more BYOD (bring your own device) mobile access and enhanced services.

Expanding is always easier when you have friends, so the company is working to enlarge its partner network. Recent additions include SuccessFactors, Oracle Fusion, and Patersons. WorkForce Software would do well to increase its connections to the HRO vendor community too, as even major HRO vendors sometimes integrate or refer clients to best-of-breed preferred partners.

It was refreshing to spend time with a company not only succeeding, but accelerating in this economic environment. It made even my HRO analyst heart beat just a bit faster.

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

Playing the Hidden Object Game with HRO News

As one of NelsonHall’s research analysts, I follow what is happening in the various HRO markets. The simplest method is reading press releases, to which we add our commentary in our tracking service.  As a reader, you see a portion of this analysis in our HRO Insight Blog and HRO Insight Newsletter.

On my own time, I like to play basic computer and online games. One of my favorite types is hidden object games where you follow clues to solve puzzles. Occasionally, tracking press releases is a bit like a virtual scavenger hunt for the larger objective.

Let’s take a look at an example with Ceridian’s recent announcement of its acquisition of Versult Group, Inc. Versult Group is a workforce management consulting firm acquired to enhance Ceridian’s implementation, training, and support services for its InView Workforce Management (WFM) solution.  It is a straightforward article, easy to cover as is, and then I followed one clue to another and ended up with a richer story. HRO analyst fun!

Back in February 2011, Ceridian announced its partnership with Dayforce to launch InView.  The two partners began working together a year earlier to integrate Dayforce’s WFM software suite into Ceridian’s payroll and HR administration services and ready both teams for launch. Ceridian also made an equity investment in Dayforce, which had already raised $20m, including $10m from Bridgescale Partners in July 2010.

Versult was one of seven Dayforce implementation partners and Versult had already performed implementations with Ceridian. As a bonus to Versult’s experience with WFM system implementation, it brings its own mobile access application, Versobile, to Ceridian.

Ceridian intends to further develop this platform for its clients seeking SaaS-based HR services by integrating beyond the current HR administration and payroll services to create an end-to-end offering including: H&W, tax, pay cards, COBRA, recruiting, EAP, tuition reimbursement, performance management, and training.

The payoff so far is that Ceridian’s investments are seeing rapid initial client acceptance. The platform has already grown to 90 Ceridian customers, rapidly escalating from 20 in February 2011.

This is a good, well-thought-out strategic move for Ceridian. It gets to cost effectively expand its SaaS service portfolio, leverage the strengths of its current offerings, increase scope with its client base, and add an experienced implementation team. It also has an equity stake in WFM, an increasingly important service line given employer concerns with cost control and the capability for rapid and effective workforce scaling.

Let’s leave this chapter of the story with a puzzle. How long will Ceridian be satisfied with a partnership with Dayforce, the WFM software source, when it felt the need to acquire Versult, the implementer?

Now for HRO vendors large and small, how are you solving your piece of the HRO SaaS puzzle?

Linda Merritt, Research Director, HRO, NelsonHall

HRO Staffing – A Balancing Act

Fast and flexible scaling is one of the major benefits of HRO. Scaling up is a lot more fun than scaling down, but both are important, take time, and consume resources. One of the toughest challenges in HRO is maintaining staffing and margins at the same time through the ups and downs of client demand and the overall economy.

Recent times required painful and expensive downscaling as HRO client demand and employment levels dropped, reducing volumes and overall spend. Significant expenses were allocated for staff severance and consolidation of real estate. Even in periods of growth, merger and acquisition “savings” targets are based largely on staff downsizing to reduce overlap, followed by real estate consolidation. Whether a service provider is growing organically or via acquisition, or responding to reduced demand, maintaining appropriate staffing capability, capacity, and expense is critical.

HRO is slowly recovering with RPO leading the way while some areas are still waiting for their upturn including learning and MPHRO. New deals are occurring, renewals are going well, and existing clients are once again increasing scale and scope, at least at a modest level. All good and welcome news!

HRO service providers are confident enough to prepare for a return to growth and make select expansions. At the same time, they know they need to add client load with a minimum of new hiring as pricing pressure is still intense. And this is not even mentioning the need for maintaining an experienced and qualified staff to satisfy client employees and other end-users in the ever changing world of HR.

On the upside, clients are growing in sophistication and understanding of HR outsourcing options. While onshore delivery still leads, especially for voice, acceptance of offshoring has reached the expectation that HRO vendors should offer multi-shore delivery options. Nearshore options and the use of non-voice channels like chat allow leveraging more work to selected centers, increasing the need for and the value of a truly global service delivery network.

Recent HRO service provider expansions include:

• TriNet – Added three new U.S. offices
• CPH – Opened a new office in Sydney
• Futurestep – Added a global recruitment operations center in Houston
• NorthgateArinso – Invested in a new global HR delivery center in Hyderabad, India; opened offices in Russia, the Czech Republic, and Istanbul; partnering with ICAP Group in Greece
• Edvantage Group – New e-learning production center in Denmark.

Expanding the coverage of service locations helps avoid the war for talent and damaging attrition rates in the hottest spots as well as providing increased options for clients.

Buyers, do more than look for an SLA on turnover. Ask about the vendor’s current and future plans for managing staffing and service flexible coverage. Does your service provider show that they are at least as, or more, sophisticated as you are in workforce planning and management? They should be.

Linda Merritt, Research Director, HRO, NelsonHall

Make Merry Across the Land of HRO

It is a time of major holidays for many of us around the world, and we in the HR outsourcing community should take time to make merry together in celebration, even as we prepare for a brighter New Year.

Yes, the recovery has been slow, but it is happening, and improved results are spreading good cheer across the land of HRO. Look at Accenture’s results for 1Q 2011 to see what is possible and happening right now for even the big players. Revenues for the quarter were up by 12 percent to $6.6 billion, with $2.5 billion coming from outsourcing, which was up 10 percent. And for the last quarter reported, both ADP and Mercer were up a healthy six percent in revenues. Each is showing it can add more volume without losing the effect of cost reduction initiatives made during the downturn.

The upturn in RPO has been dramatic, and there is plenty to stimulate the continued need to manage hiring in new and improved ways –and not just for managing turnover, but also for growth. A well integrated RPO platform of services with the people skills of real recruiters, sophisticated technology and robust back-office processing is a great way for buyers to access today’s needed staffing capabilities without bearing the full cost of investment, and still keeping costs variable with volumes. Wrap up a nice RPO present and put a bow on it!

The new business mix is changing, and Accenture is starting to see both consulting and service deals aimed at growth and new market entry. The merry point for savvy and prepared HRO vendors? This should be a lead-in to more demand for HRO beyond and in addition to cost control and operational efficiency. Bust out more than single point solutions – shine up and get ready those bundles of service for expansions in talent and workforce management.

Holidays are a time of gathering, and I have been impressed with the progress that HRO service providers have made in listening to their clients. ACS, a Xerox company, and IBM have been pioneers in gathering together customers, listening to them and letting them talk to one another, both physically and virtually. Aon Hewitt makes more the merrier, having just spent a full day with its HR BPO Client Council; and it also has councils for benefits and human capital leadership for CHROs from around the world.

My hope for the New Year is that HRO clients and service providers put the proof in the pudding to show that a strong HRO partnership is a viable and valuable path to strategic HR that improves business results for the enterprise, and in turn builds career opportunities and better lives for people around the world.

My colleague Gary and I are planning to take next week off from blogging (although we may sneak one in.) So I’d now like to thank our clients and our blog readers, and wish all merry holidays and a Happy and prosperous New Year.

Linda Merritt, Research Director, HRO, NelsonHall

HR Business Intelligence – How does it tie into HRO?

HR organizations are largely on the path to improve the use of technology in managing administration, and service delivery and even workforce and talent management are coming along, according to the CedarCrestone 2010-2011 HR Systems Survey. The highest penetration rate is for administration technologies like core HR recordkeeping, payroll and benefits administration, at 90 percent. These are also top areas for HRO. Service delivery (47 percent), workforce management (45 percent) and talent management (43 percent) are not yet quite at the half-way point.

Business intelligence tools like data warehouse and reporting and presentation applications have reached 37 percent. Workforce optimization is lagging at 17 percent for tools that enhance and enable the use of talent analytics, and dynamic workforce planning that helps prepare for and align a workforce with changing business needs and strategies.

Workforce management addresses the here and now, and how many people, where and at what expense has been a big focus throughout the economic downturn. Sadly, the information was largely used (and needed) to determine where to cut costs and ensure the reductions were achieved. But in  normal times, workforce data is needed to meet and maintain current and near-term staffing levels.

With workforce management tools and data improving, some organizations are not sure where to go next with the tools or how to fully leverage them. With a vague plan, even at 37 percent penetration rate, business intelligence packages can end up being a pretty, expensive, underutilized investment.

As I wrote about in last week’s blog on building an integrated HR ecosystem, it is the connectivity of a comprehensive set of tools and technologies that can unleash the true strategic power of HR in enabling business growth. The ability to use the system to understand, discover and advise is also needed.

As HR uses greater levels of technology for administration and self-service, HR’s workforce needs are generally reduced. In the case of workforce optimization, leading practice indicates that specialized staffing for workforce reporting and workforce planning increases slightly. Large organizations in the study averaged 5.8 people in workforce planning and 4.8 in reporting, while leading users for workforce optimization tools averaged 7.8 and 5.3, respectively.  Oh, and in the leading practice companies HR was viewed as strategic (66 percent), more than in other large organizations (41 percent)!

This is such an important area for HR to truly achieve transformation. It is also important for HRO service providers to be able to move up the value chain and not be relegated to only being useful in building and running the back office administrative systems at lower operating cost – although that will always be a cornerstone of HRO.

Buyers, be sure the vendor you select can not only meet today’s needs but can continue to be your partner as you build out an integrated HR ecosystem. Providers, be ready to demonstrate that you are the partner that can help clients bridge the gap in building and using workforce optimization tools to create business results, including by making them easier to use and understand, and simplifying reporting and providing basic analytical services.

Linda Merritt, Research Director, HRO, NelsonHall

The HRO Phrase of the Day – Integrated Ecosystem

Can extensive multi-process HRO (MPHRO) beat a well-managed internal HRIT and shared services organization? I believe it is possible, especially if the MPHRO provider is a leader in achieving integrated services.

I am a strong proponent of strategic HR that includes a strategic plan for HR technology, processes and services. Without that foundation and the business intelligence it can provide, “strategic” HR consulting is operating with one arm tied behind its back. Why limit your ability to drive business results and be viewed as a strategic asset when technology enablement and automation can help you get there?

While specific HRO provider case studies that prove the point are still needed, at the broader level it is possible to show that the investment in and use of an integrated set of HR technologies can make a measurable difference in business results. Set aside a few minutes to study the CedarCrestone 2010-2011 HR Systems Survey.

The CedarCrestone survey is not about HRO, but its messages apply just as much, if not more so, to MPHRO vendors. MPHRO providers need to show: 1) they are farther along the path; 2) offer the best balance of cost, time, effort and return to achieve the HR systems and services that deliver operational excellence at competitive operating expense; and 3) provide the HR platform for strategic talent management, workforce management and workforce optimization that increases the rate of sales growth and revenue per employee.

The HRO community has a moment in time opportunity before it. Some activities taken up as part of addressing the economic crisis need to be reinforced if they are to become part of the new normal in HR and business operations. We saw increased demand for workforce information; who, how many, at what cost and where? As a focus on the future returns, investments will still be lean and need to be targeted to achieve the largest impact – providing an excellent opportunity for strategic HR counsel supported by fact-based data and analytical projections.

The demand is already here, and HR consulting revenues are on the rise. This is an opportunity for MPHRO as well. Organizations that slapped together a set of individual technologies and providers may have limited ability to connect the dots across important HR and business data pools. To attain maximum results, everything needs to work together and connect to all the needed data sources and repositories.

I used the term integrated ecosystem in my blog title because it takes a variety of products and providers to assemble the needed systems and services. What is “behind the curtain” matters less if you have the right MPHRO vendor managing the integrations into a seamless user experience for your business. Building and managing the comprehensive systems outlined in the CedarCrestone study has a business impact for those few companies that are just about there, but few are at the stage of full optimization. Who better than an MPHRO partner to help you get there!

Linda Merritt, Research Director, HRO, NelsonHall

How to Get There From Here – A Roadmap for HR Analytics

HR service providers have reporting and analytics capabilities including software, consulting and outsourcing. But getting beyond providing support for basic reporting capabilities has been a slow and rocky road. To move further down the path, we need a roadmap for HR analytics.

NelsonHall’s 2009 report, “HRO Analytics: Utilizing Analytics to Improve Outsourcing Experiences”, found that 85 percent of vendors have an advanced analytics offering, but only 22 percent of clients have implemented such services. Gaining agreement that workforce data is important is easy, but finding funding to build or buy the capability is considerably harder. One of the reasons for the slow adoption rate in HR analytics is how hard it can be to demonstrate ROI. 

I see signs of current buyer interest that can be leveraged, although the signs may not look like a direct request for HR analytics:

•  Behind the drive for multi-country payroll during a recession was not a bizarre interest in payroll systems, but rather a senior leadership demand for better workforce and financial data in order to understand what is happening in every operating geography.

•  Growth in leave of absence, absence management and dependent audits all support tighter workforce management in lean times.

•  Can anything sound more non-urgent than consolidating time reporting systems? But how about when they are linked to razor-thin staffing levels and controlling the use of overtime while still meeting sales and customer service objectives?

•  With an expected modest rise in recruiting, improved workforce planning and forecasting is vital to ensuring the most critical areas are targeted.

Each of these opportunities require timely and accurate data from across the enterprise, and each impacts the total cost of labor – in other words, an ROI signpost and a roadway to direct bottom line impact.

Sometimes HR wants to start at the end – the fun and strategic stuff. But to get credible workforce data that drives decisions and impacts business results, the data infrastructure must be in place first. Perhaps boring to some, but data definitions, data warehousing, establishing a system of record, reporting applications, data security, etc., are all important, as is having a framework for what data needs to be pulled into the system: employee, workforce, individual and business performance and financial data.

If you’re a buyer, do you have a roadmap to get there from here? Are current HR systems adequate, or can you get there with add-ons at the edge or in the cloud? If you go for separate point solutions for each issue, will you be able to pull in all the data from the various vendors? Where will you connect to the enterprise business performance and financial systems? How many interfaces are manageable, and who will manage them? Which analytical capabilities should you build in-house, and should some be outsourced?

A word to vendors – R analytic sales opportunities may be disguised, but they are there.  The time is right for you to drive your shiny offerings down prospect road.

And advice to buyers – call your friendly HR portfolio manager to ensure you build an integrated set of systems and capabilities at the lowest operational cost level while raising the bar on HR’s ability to increase business results.

Linda Merritt, Research Director, HRO, NelsonHall