Payroll Service Bureaus Prepare for Tomorrow

Transcription

1 A Kronos Company White Paper Payroll Service Bureaus Prepare for Tomorrow Payroll service bureaus are leveraging technology to enhance product offerings, improve efficiencies, and find fresh sources of competitive advantage By Alexandra Arbelaez, Business Development Manager, SaaShr

2 Executive summary Driven by the increasing global business emphasis on creating maximum customer value with a minimum of resources and waste, payroll service bureaus are playing a larger role in American business. This is especially true in startup and emerging organizations across the United States. This growing opportunity has attracted a range of powerful new competitors to a category traditionally served by smaller local or vertically specialized service providers. Increasingly, larger firms are using their scale and technology to place greater competitive and margin pressure on payroll service bureaus by offering a wider range of HR-related services, often at prices other providers cannot match. Faced with these new pressures, well-established but smaller payroll service bureaus competing against these larger firms are being forced to re-evaluate the technology platforms their service offerings are based on. This white paper describes how payroll service bureaus are using softwareas-a-service (SaaS)-based workforce management solutions to address these challenges, enabling these organizations to leverage operational efficiency and external marketing support to gain competitive advantage and grow revenue and margins. By outsourcing payroll, time and labor tracking, and human resource functions to payroll service bureaus, SMBs gain access to the economies of scale and richness of service enjoyed by larger corporations. Payroll service bureaus a dynamic opportunity for SMBs With the increasing complexity of workforce management, more small to midsize businesses (SMBs) are looking to outsource their payroll, time and labor tracking, and human resource functions to third-party organizations. Outsourcing to forward-thinking payroll service bureaus gives SMBs access to the economies of scale and richness of service enjoyed by larger corporations. They can take advantage of premium benefit packages and retirement plans typically provided by their larger competitors while maintaining smaller in-house workforce management infrastructure (or none at all) by relying on the outsourced expertise. SMBs can also reduce hiring overhead as well as the costs related to monitoring and complying with employment laws, governance and tax laws, union rules, and other regulated aspects of employees time and attendance. This helps protect them against the hefty penalties that can come with compliance failure. Businesses that turn to payroll service bureaus generally get turnkey employment services, such as time and labor tracking, paycheck processing, calculating and addressing employee tax issues (including state-to-state variations), withholding and tax filing, and year-end tax documents such as W-2 forms. And their employees benefit by getting paid accurately and on time. 2

3 Perhaps most important, by offloading to third-party providers the routine and repetitive burdens of payroll administration, personnel management, time and labor tracking, and the like, SMBs can realize significant time savings, enabling them to focus on the organization s core competency and grow the bottom line. Nucleus Research reports that the average organization realizes a return of $7.88 for every dollar invested in workforce management applications. 1 The long list of benefits to SMBs has led to huge growth in the human resources outsourcing (HRO) sector. IDC estimates 16 percent annual compounded growth for the next five years in the U.S., and Gartner Inc. estimates an 8 percent worldwide growth rate over the next year. 2 Nucleus Research reports that the average organization realizes a return of $7.88 for every dollar invested in workforce management applications. Greater demand leads to greater pressures on outsourcing providers The bad news for organizations currently providing outsourced payroll services is that all of this growth is increasing the competitive and operational pressure on payroll service bureaus. The breadth of outsourcing services is expanding. Customers are looking to payroll service bureaus to move beyond basic HR and payroll services and provide complete human capital organizations (HCO) solutions. There are a few trends that bear watching for HR services suppliers. Among these are the continuing consolidation in the HR application supplier market, a drive toward global HR visibility, and the big swing toward SaaS-based HR solutions, says Lisa Rowan, program director, HR, Talent, and Learning Strategies for IDC. 3 New competitors are entering the marketplace. Drawn by the category growth and efficiencies of scale, national service bureaus and HR technology competitors are joining benefit brokers, value added resellers (VARs), and CPA or accounting firms in targeting SMB customers that have traditionally been serviced by smaller and/or more vertically and geographically focused service providers. Users expectations are rising. Today s generation of end-users demand intuitive, portable, and adaptable applications that are easy to learn and easy to use. They expect business applications to look and act like what they ve come to expect from today s leading consumer-based products. Consequently, HR technology providers are forced to make significant investments in design and technology to satisfy those demands. Margin pressures are increasing. As competitors scale, they are able to offer a greater range of services at a lower cost. Some services are even offered free as value-added or loss leaders to increase market share. 1 Workforce Management Applications Return $7.88 for Every Dollar Invested, Nucleus Research Finds, Nucleus Research, December 2011, 2 Dr. Manisha Seth and Dr. Deepa Sethi, Human Resource Outsourcing: Analysis Based On Literature Review, International Journal of Innovation, Management and Technology 2, no. 2, (2011): Lisa Rowan, Worldwide and U.S. HR Management Services Forecast, IDC, May 2012, idc.com/getdoc.jsp?containerid=

4 The importance of keeping pace with advancing technology As these competitive pressures have mounted, payroll service bureaus have become more reliant on automation to address the complex, 24/7 service requirements their customers expect and demand. Automation increases the convenience and lowers the costs of payroll and HRO services. While this situation is not unique to payroll and HR outsourcing organizations, it is true that the nature of their business forces them to address these challenges faster, more economically, and on a larger scale than other organizations of similar size. Unfortunately, most of these service providers find themselves building systems on technologies, products, and platforms that are often underpowered or outdated. At the very least, these aging systems fail to incorporate the latest advancements in workforce management software and hardware, and lack connectivity to the broad list of ancillary third-party products and services used often by SMB customers. All of which leaves payroll service bureaus trying to handle ever-more demanding customers, in an increasingly competitive environment, with tools that are falling farther behind every day. So whether third-party service providers are trying to grow, or just trying to survive, it s quite likely time to consider a change in technology. In fact, it s unavoidable. The intrinsic advantages of SaaS mean SMBs can get enterprise-level capabilities but only pay for the functionality they need without the additional IT investment, or even involvement, usually required by deploying information technology enhancements. Why payroll service bureaus resist adopting new core technology The changes involved in selecting a new core technology solution can be daunting, both financially and operationally. That s because, in most cases, the incumbent workforce management systems have made up the core of the company s product and service offerings for a significant amount of time. As decision makers consider making a technology change, they face a difficult set of issues: The uncertainty of migrating technologies could put their business at risk The time and investment required to make the shift, both from a customer conversion and training standpoint Worries about changing a platform again shortly after simply to keep pace with advancing technology Whether their technology supplier has sufficient resources to make ongoing investments in its own products And staffer members have their own operational concerns to deal with: What will be involved in writing specifications for, installing, and maintaining the technical infrastructure to run the new systems? What operational challenges will we encounter in transferring data, rules, and procedures to the new system(s)? 4

5 Will we be able to ensure ironclad accuracy and reliability to internal customers during the transition? How much training will be needed? These are legitimate questions that payroll service bureaus need to contemplate as they consider which type of technology to migrate to, as well as whom they choose as their technology partner. The promise of cloud computing for HR outsourcing technology Since the term was coined just a few years ago, cloud computing has grown from an IT buzzword to a global business metatrend. From SaaS to IaaS to PaaS, public to private to hybrid, cloud computing in all its various permutations is causing organizations to re-evaluate, if not completely retool, their approaches to their computing needs. SaaS, in particular, has emerged as an effective, low-risk, cost-sensitive delivery model for automating standardized business processes. The intrinsic advantages of SaaS mean SMBs can get enterprise-level capabilities but only pay for the functionality they need without the additional IT investment, or even involvement, usually required to deploy information technology enhancements. The SaaS model offers significant operational advantages for payroll service bureaus, including minimal deployment time and cost, automatic upgrades and enhancements, anytime/anywhere access for users, and the ability to adopt per-user pricing models. The answer: SaaShr the leading solution for payroll service bureaus and their customers SaaShr addresses the complex issues payroll service bureaus have with a unique blend of leading SaaS-based technology, a cultural commitment to service and second-tier support, plus significant domain expertise and marketing support through its recent acquisition by Kronos Incorporated. While there are other cloud-based workforce management solutions, SaaShr delivers a suite of the most critical HR applications all truly integrated through a single database. The SaaShr suite is designed to be deployed and run modularly. Providers and the customers they serve whose operational issues or business models don t require the capabilities of the entire spectrum of the SaaShr offering can selectively deploy individual apps or combinations thereof. They can then expand into other applications as their customers needs dictate. Only one cloudbased workforce management solution SaaShr delivers a truly integrated suite of the most critical HR applications on a single database. This step-by-step approach is especially attractive to customers who want to be able to test and optimize a smaller subset of capabilities. Wary operational or functional managers are often surprised to learn that this unique combination of integration and modularity comes with no loss of functionality. 5

6 This technological advantage extends through the back-office tools as well. For example, SaaShr s advanced setup wizards and conversion tools streamline data conversion and minimize customer implementation time. This means better margins for partners and faster ROI for customers. Because SaaShr is owned by Kronos the global leader in dedicated workforce management solutions the SaaShr technology Application-by-application, advantage is supported by extensive resources and domain expertise. This will continue to accelerate the pace of innovation at SaaShr show that SaaShr s solutions are feature-by-feature comparisons and allow SaaShr partners to more effectively service customers while competing with larger, more well-established national competitors in the most technologically advanced the fiercely competitive HR service outsourcing sector. and feature-rich solutions in the SMB marketplace. A growing commitment to service and support Unlike traditional software companies that come to the HR outsourcing space looking for opportunities for their technologies, SaaShr originated in the workforce management space with a partner-driven model. This of Product Management Robert DelPonte, Senior Director unique philosophy of reliance on a channel of accredited service providers Kronos Incorporated means that SaaShr has an incentive to approach the development and deployment of its products differently from the competition. The model results in a culture of service that drives the company to actively collaborate with its partner channel to address the ever-changing day-to-day needs of providers and their clients and incorporate these needs into the product development process. According to Josh Robinson of SaaShr partner Checkmate Payroll Services, SaaShr has some of the most high-quality, interactive staff I have ever come across. They continue to offer great assistance to both my employees and my clients employees throughout the implementation process. Marketing tools help accelerate the growth of partnered payroll service bureaus As the payroll and HR outsourcing marketplace grows in both size and complexity, it is becoming more attractive to larger providers that can leverage their ability to scale as a competitive advantage. Providers focused on SMB customers have responded with some success by providing higher levels of service and vertical market expertise. This strategy can only last so long, however, as technology advances and competitive pressures increase. SaaShr partners gain an inherent advantage here because they can tap into SaaShr s Kronos-backed marketing support, while individual providers are forced to go it alone. As one of the key advantages of the acquisition of SaaShr by Kronos, SaaShr partners have access to a steady stream of sales leads that are generally smaller or more specialized than those customers typically serviced by the Kronos direct sales channel. These leads are automatically funneled to the SaaShr marketing team, where they are directed to SaaShr 6

7 partners based on geography or vertical expertise. This lead flow is a tremendous asset to partners who are focused primarily on day-to-day operational issues or who only have limited marketing resources themselves. The SaaShr platform also streamlines the sales process by allowing partners to create a virtually unlimited number of demo environments. Salespeople can easily create demos that mimic the look and feel of a prospect and can specify feature sets that align to the prospect s industry, business model, and anticipated usage. SaaShr partners also benefit from access to the Kronos workforce management competitive-intelligence resource. By leveraging this industry-specific analysis and trend forecasting, SaaShr partners are equipped to go toe-to-toe with even the largest category competitors. The SaaShr technology advantage is supported by the extensive resources and domain expertise of Kronos Incorporated. Payroll service bureau product offerings built with SaaShr are easier to differentiate and easier to sell. Payroll service bureau products built with SaaShr are easier to differentiate and sell At their core, HR and payroll outsourcing are service industries, and the organization that provides the best, most reliable, and most flexible service will ultimately prevail. That s why SaaShr partners have an advantage. SaaShr s hub-and-spoke -style architecture offers customers the simplicity of having just one database, one interface, and one user experience across all applications. This true single database approach is extremely attractive to customers frustrated by piecemeal systems cobbled together by other outsourcing organizations. 7

8 Another competitive edge is SaaShr s intuitive report tools, which let managers custom-configure reports rather than spend time combing through the canned reports of other systems. End-user customers looking for dynamic decision support are attracted to the real-time intelligence provided by the SaaShr architecture. This anytime, anywhere, any-screen data access appeals to users struggling with the inherent information lag of batch process systems. SaaShr s Ancillary Product and Service Marketplace offers tightly integrated complementary products and services from accredited third-party vendors as well as internally developed add-ons in a broad range of functional categories. Consumer electronics have created expectations that users should have direct and easy access to apps and other tools in order to address specific needs outside the product s core functionality. The marketplace allows even small partners to efficiently and effectively provide one-stop-shop service to address the diverse and dynamic day-to-day needs of their customers. Conclusion The SMB workforce management technology market includes engineeringdriven organizations and service-oriented organizations. Since its inception in 2002, SaaShr has delivered the best of both worlds by combining the industry s leading workforce management technology with an open approach to development and a culture of service. This unique blend, recently energized and extended by the innovation and marketing resources of Kronos, means that SaaShr is solely focused on addressing the technology and operational needs of both payroll service bureaus and their end-user customers. We deliver HR and payroll systems that allow SMBs to run their businesses according to their parameters, not those of their systems. Dmitry Korsunsky, Senior Software Engineer SaaShr About the Author Alexandra Arbelaez is a business development manager with SaaShr. In this role she nurtures existing partner relationships and prospects for new channel opportunities through market research, contact management, and / phone communications. Her responsibilities also include demonstrating business model and core system functionality using remote Web conferencing tools as well as analyzing partner and end-user needs to further develop software features required to gain market share and maintain a competitive edge. Previously, Arbelaez was in Account Relations with Canon USA. She holds a degree from Rutgers. A Kronos Company 3040 Route 22 West, Suite 200 Branchburg, NJ , Kronos Incorporated. Kronos and the Kronos logo are registered trademarks and SaaShr is a trademark of Kronos Incorporated or a related company. All other product, company names, or marks mentioned, if any, are used for identification purposes only and may be the trademarks of their respective owners. All specifications are subject to change. All rights reserved. CV0174-USv1