HR Technology Column

After 60 Years, ADP Opens Its Doors

ADP finally lets outsiders into its annual user conference. It's part of a long-time, but intensifying effort to reposition itself as more than a payroll company. ADP now sells nearly everything HR buys, but questions remain about how well all those pieces work together.

Monday, April 5, 2010
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Most of you know about, and may have attended, HR technology vendor user conferences.

If you are a client of ADP's National Accounts Division (1,000 and more employees), you know ADP has also had one for more than two decades called "Meeting of the Minds."

But what you probably don't know is that, while other major HRMS vendors -- Oracle, SAP, et al -- have thrown open their conference doors to outsiders for a dozen years or more, ADP has kept its doors shut to everyone but clients, except for some carefully selected prospects.

Until this March, that is, when they hosted four analysts for the first time: Gartner's Jim Holincheck, IDC's Lisa Rowan, Knowledge Infusion's Jason Corsello and me.

This is more significant than it sounds because ADP has always been the most conservative and quiet giant in our world with its nearly $9 billion in gross revenues from an astounding 570,000 company clients. ADP pays one-sixth of all employed Americans.

Probably an appropriate stance for a company trusted to move around more than $1.3 trillion (with a "t") of those clients' money every year for payroll, quarterly taxes, 401(k) contributions and other funds.

ADP famously has so many feet-on-the-street selling (3,500 people, plus another 500 on the phone) that more than one of its CEOs has brushed aside every new marketing proposal with a comment like, "Will we close more business executing that program or by using the money to hire more salespeople?"

As a result, ADP's HRMS products had no print advertising or public relations campaigns until 1993. But maybe justifying their reliance on the sales force to spread the word, ADP is now second in HRMS market share behind PeopleSoft Enterprise. Yes, ahead of Lawson, Oracle's own EBS and SAP. Did you know that?

I didn't until seeing an analyst firm survey a few years ago, and the current Cedar/Crestone HR Systems Survey confirms it. Way behind PeopleSoft and just ahead of Lawson, to be fair, but second nevertheless.

This conservative stance has always been conscious and deliberate, and long-time executives admit it. At a group analyst breakfast with CEO Gary Butler (a 35-year veteran), I recalled my first visit to corporate headquarters in Roseland, N.J., in the early '90s as being like a trip back in time: a sea of men in blue or black suits, all wearing gleaming white shirts with rep ties.

"Yes, we were very IBM then," Butler says, "And no women!"

True. Founded in 1949, ADP didn't appoint its first female vice president until 42 years later: Zena Brand, who recently left the company as an SVP to start her own consultancy.

Well that has changed dramatically. Butler has announced his retirement as CEO in two-and-a-half years and one of the leading candidates for his job is 27-year employee Regina Lee, formerly head of National Accounts and now running the two other divisions (Majors and SBS) that service companies with 999 employees or fewer, the traditional heart of ADP's market.

The quiet stance is changing due to the new markets ADP has entered. GlobalView, its global outsourcing partnership with SAP, currently has 92 customers (68 of them are live in 38 countries) with an average size of 11,000 employees, far above ADP's traditional sweet spot. A small-company version, GlobalView Select, was announced at the user conference.

The challenge now facing ADP is that everyone knows they are the world's largest payroll service bureau. But few, except their other customers, know the company now sells just about everything that HR buys! Increasingly around the world.

I hesitate to offer any exceptions, but I'm pretty confident it doesn't sell executive search, relocation services or inspirational posters.

ADP made a key transformation in January 2009 when National Accounts partnered to resell Cornerstone OnDemand's talent management suite under ADP's name. The suite includes all the usual applications except recruiting, which ADP already had with its earlier acquisition of VirtualEdge.

Suddenly, ADP left its comfort zone of handling transactions and entered the relatively new territory of strategic HR -- and faces again its decades-old challenge of application integration.

Few people outside the company realize that most of the software ADP uses to deliver its services (except the Autopay payroll engine) was acquired by buying other companies or licensing their source code.

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BMS in the UK became a Major Accounts HRMS called HR Perspective. What Majors now sells as HRB (HR and Benefits) is the former Employease. National Accounts' HRMS is still running on the foundation of licensing the PeopleSoft 3.0/4.0 source code years ago.

ADP knows that it's not a software company and has been the better for it. But how good a systems integrator has ADP been making all the disparate pieces work together? There the judgment has been decidedly mixed.

The Cornerstone deal illustrates its latest challenge, one faced by every talent management vendor who has bought the pieces, but complicated by ADP's having an HRMS.

VirtualEdge and Cornerstone both have a person or talent profile. Whose do you use? Not decided yet. Each has a different user interface: Cornerstone probably gets a new VirtualEdge skin. What happens to the more rudimentary talent management applications already in the HRMS? They won't be "sunsetted," but nothing else is definite. Up to 15 customers have licensed Cornerstone from ADP so far.

CIO Mike Capone is well aware of these challenges. "We have repurposed Research and Development to de-emphasize new products in order to erase boundaries between existing products," he says. "Within 12 months, we expect to have a single Web front-end and product integration."

All with the doors still open, I hope.


HR Technology Columnist Bill Kutik is co-chairman of the 13th Annual HR Technology® Conference & Exposition in Chicago, Sept. 29 to Oct. 1, 2010. This year's program will be available online in May. You can comment on his column at the Conference LinkedIn Group , which does not require prior attendance to join. He is also host of The Bill Kutik Radio Show ®. He can be reached at .  

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