Beyond payroll HR midmarket Landscape

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Beyond Payroll Services Midmarket Landscape Report , Payroll Software Technology, HR Software, HRMS, HRIS, Small Business Payroll HR Services

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Beyond payroll HR midmarket Landscape

  1. 1. Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 HR Midmarket Landscape   A summary of retainer/subscription HR Tech & Services           HRO Midmarket      Beyond Payroll Solution Providers  Payroll Staffing Services    Administration Service Providers       2012 Ephor Group, LLC  1/30/2013 
  2. 2. 6 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 Payroll Market Landscape Summary The goal of HR software is to automate key elements, coordinate the human aspects, and measure and analyze it all. To satisfy customer demand, payroll service providers must move beyond payroll services to offer HRMS software technology as well as HR services. The market is currently on the cusp of a major shift between legacy client-server technology and cloud SaaS. Along with the technology platform, demand by consumers has shifted. HR is increasingly being asked to not only manage “employee transactions” through “System of Record HRMS solutions” but to also enable the worker through “Systems of Engagement” which utilize social, mobile, and analytics capabilities embedded in the technology software applications. While the payroll market for small businesses with less than 100 employees is highly competitive (“red ocean”) between several different vendor types; there are approximately 50 players with significant, meaningful revenues ($10M - $100M in annual recurring non “pass-through / non- reseller revenues). In addition to local accounting firms and banks, which are increasingly choosing to be referral sources and private-label partners for payroll vendors, the landscape can be grouped into the following primary buckets of competitive players:  The big four “umbrella” brands – ADP and Paychex together control a significant share of the target market and continue to grow based on their sheer brand recognition and referral base. ADP primarily focuses on the mid-market and Paychex targets the lower end. Ceridian focuses up market and Intuit’s focus is with very small businesses. ADP and Paychex are the big targets and are showing vulnerabilities to the up and comers based on technology, service, and price.  Licensees – there are ~300 service bureaus ranging from $1-10M in revenue that are delivering their service based on licensed technology from a handful of small software vendors in the market who in turn receive an average of 3-9% of the service bureaus’ revenue.  Home-grown, legacy providers – there are ~50 smaller payroll providers and a “handful” of larger players who are operating older proprietary systems that do traditional payroll processing but lack a differentiated technology strategy including WFM capabilities.  Software only providers – Intuit and Sage provide software only solutions for the very smallest of businesses (< 50 ees) with simple needs. These do-it-yourself solutions come with tax table updates for an annual fee, but do not guarantee compliance and keep the burden of processing payroll on the small business itself.
  3. 3. 8 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 Payroll Services Landscape  Payroll outsourcing driven by Finance and supported by HR.  Employers demanding more holistic set of services from payroll providers from payroll providers.  Payroll vendors partner for delivery of payroll in additional geographies and for access to systems integration expertise.  Top vendor selection criteria is service provider experience, followed by price........ followed by capabilities to be a strong partner, vendor financial stability and strength of technology. Cost savings is a "switching cost" requirement. Perceived Benefits of Consolidated HR Platform:  Streamlined processes. In many instances, employers are able to eliminate headcount or reallocate duties as manual processes become automated and less error prone.  Multiple service offerings allow for the most competitive pricing structure. A bundled offering includes the benefit of economies of scale. The more revenue that a vendor earns, the more leverage a company has for negotiating volume discounts. This also holds true for guaranteeing higher service-level agreements or contract terms.  Simplified employee experience. Having one point of contact or one system to access for managing multiple requests or transactions creates an efficient employee experience. This heightens employee productivity and increases employee satisfaction.
  4. 4. 7 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 Payroll Software Market Landscape Payroll Software Payroll Service Providers and BPOs  Internal “Do it Yourself Software” such as QuickBooks Payroll from Intuit. Payroll Service Bureaus  300 single location service bureaus.  Big Four Payroll Providers (ADP, Paychex, Ceridian, Intuit).  Payroll software to the payroll service bureaus:  Professional Employer Organizations (PEO’s) such as TriNet, Insperity, AlphaStaff.  PEO Software such as:  HR Outsourcers (HROs and ASOs) as highlighted in the table below.  Accountants, Bookkeepers and FAO 5 Outsourcers.  Banks (Wells Fargo), Insurance (Fidelity), & Staffing (Kelly, Manpower). The middle market of small and medium organizations with 100 to 1,000 employees represents a million USA businesses is wide open as no dominant nationwide leader exists. Regional and industry specific payroll and beyond service providers do exist as highlighted in the table below. 5 Both FAO & F&A is abbreviated for “Finance and Administration” outsourcing solution providers. Scope of services vary widely among these providers.
  5. 5. 5 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 HR Payroll Services & Beyond *There are numerous other regional providers and point specific solutions. Email us at ephor[at]ephorgroup.com for a complete list. Payroll Mid-Market Illustrative Landscape 3 : Payroll + Benefits + HR Payroll + HR National Payroll Providers4 : HR ASO ~$100M Millennium + other platforms for payroll + benefits. <$10M Millennium + HRMS. InfiniSource-Qqest ~95M Millennium + HRMS / HCM. ~10M. Millennium + HRMS. PayPro Corporation $8M avg client 100 ee Millennium + HR SS. ~$50M Millennium + HRMS + TM. ~$50M Millennium + HR SS. ~$15M. Millennium ~$20M Isystems Evolution + HR Services. ~$10M ISystems Evolution Payroll + HRMS. ~$50M iSystems Evolution + HRMS. ~$20M Proprietary HR, Payroll, Benefits Platform. ~$100M Platform Proprietary with Payroll + Staffing + PEO. ~$10M Proprietary Payroll + HRMS. PrimePay ~$20M Proprietary payroll + HR Services. CTR Systems ~$25M Proprietary payroll + parking and facilities management. Icon ~$20M Contingent Workforce Management. ~25M Payroll + FAO for restaurants. EmployerFlexible ~10M. Darwin platform. Co-Advantage ~$55M Proprietary. Valiant Solutions ~$10M Proprietary. CheckPointHR NJ ~$25M CheckPoint Florida ~$15M TritonHR ~$5M Discovery Outsourcing ~$40M 3 Payroll Landscape does not include PEOs such as: TriNet, Insperity, EmpowerHR, AMCheck, Alpastaff, see NAPEO for a complete list. Sources: Inc 5000, American Payroll Association, IPPA, Ephor Payroll Software Providers3 database, LinkedIn. 4 Major global providers include Celergo and Patterons, Talent2, NorthgateARinso euHReka 11, http://www.fullymanagedpayroll.com/, Canada payroll CGI, GlobalPay
  6. 6. 10 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 Staffing Payroll Services The marketplace for workforce management staffing and related BPO including content, software, services, and outsourcing solutions consists of thousands of firms worldwide. However, by function and by industry leaders do exist. The mid-market and global enterprises listed below highlight the diversity of the sector in 2012. Payroll Staffing6 Staffing + ASO >$1B Staffing Portfolio Rapid Global Business Solutions Human Capital Management Solutions ~$55M LinkedIn Followers = 956 Klout score = NA HowSociable score = 1 MozRank = 0 External Traffic Links = 28 SheakleyHR Solutions Reduce Liability and Increase Profitability Through Outsourcing ~$140M LinkedIn Followers = 395 Klout score = 19 HowSociable score = 1.3 MozRank = 5 External Traffic Links = 73 Act1Group Portfolio of workforce companies: AppleOne. LinkedIn Followers =7783 Klout score =56 HowSociable score = 3.5 MozRank = 2 External Traffic Links = 46 WorkMarket Online Staffing for Onsite Workers, Labor Resource Platform ~$55M LinkedIn Followers = 319 Klout score = 45 HowSociable score = 1.3 MozRank = 6 External Traffic Links = 85 Discovery Outsourcing, LLC PEO, Staffing, HRO, Payroll ~$40M LinkedIn Followers = 94 Klout score = NA HowSociable score = 1.1 MozRank = 5 External Traffic Links = 11 RecruitCo LTD Portfolio of workforce companies including Staffmark Holdings Inc, VenturiStaffingPartners, CBS Personnel Holdings. LinkedIn Followers =NA Klout score =NA HowSociable score =1.1 MozRank = NA External Traffic Links = NA Frontline Source Group Inc. Temporary Staffing Agency And Direct Hire Employment Career Firm ~$10M LinkedIn Followers = 515 Klout score = 35 HowSociable score = 2.2 MozRank = 3 External Traffic Links = 802 Doherty Employment Group, Staffing, HRO ~$10M LinkedIn Followers = 1468 Klout score = 30 HowSociable score = 4.8 MozRank = 5 External Traffic Links = 107 Impellam Group, plc LON:IPEL subsidiaries include Guidant Group Inc. CoreStaff LinkedIn Followers =644 Klout score = NA HowSociable score =1.3 MozRank =NA External Traffic Links = <10 Global Employment Solutions ~$185 LinkedIn Followers = 1153 Klout score =0 HowSociable score =2.1 MozRank = 5 External Traffic Links = 61 Landrum Human Resource Companies ~$10M LinkedIn Followers = 206 Klout score = NA HowSociable score =3.2 MozRank = 2 External Traffic Links = 25 KForce LinkedIn Followers =15646 Klout score = 52 HowSociable score =4.1 MozRank = 4 External Traffic Links =1106 6 Sources: http://www.generationequityadvisors.com/files/GEA_IT_Services_MnA_Update_Q4_2011_.pdf http://www.capstonellc.com/research/industryreports/Capstone%20Staffing%20Report%20Q1%202012.pdf http://www.staffingindustry.com/Research-Publications/Blogs/Subadhra-Sriram-s-Blog/Eight-CW-Changes-to-Look-Out-For-in-2013%20
  7. 7. 11 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 Tempworks, Inc. Back-office including staffing, logistical services, payroll, and more ~$15M LinkedIn Followers = 199 Klout score = 31 HowSociable score = 1.4 MozRank =4 External Traffic Links = 285 HR Knowledge, Inc. ~$10M LinkedIn Followers = 28 Klout score = NA HowSociable score = 1.4 MozRank = 6 External Traffic Links = 22 RobertHalf LinkedIn Followers =>20k Klout score =57 HowSociable score =2.1 MozRank = 4 External Traffic Links =842 The Fountain Group Our precision workforce is your contingent labor solution ~$55M LinkedIn Followers = 802 Klout score = NA HowSociable score = 2.8 MozRank = 4 External Traffic Links = 21 Access Point, LLC ~$61M LinkedIn Followers =NA Klout score = 0 HowSociable score =2.1 MozRank = 2 External Traffic Links = 11 Adecco LinkedIn Followers =>20k Klout score = 45 HowSociable score =5.6 MozRank = 7 External Traffic Links = 1816 Exact Staff Inc. Precision in personnel, Jobs and Staffing Services ~$40M LinkedIn Followers = 90 Klout score = 18 HowSociable score = 1.3 MozRank = 4 External Traffic Links = 32 Co-Advantage ~$55M LinkedIn Followers = 492 Klout score = 0 HowSociable score =1 MozRank =5 External Traffic Links =54 Manpower LinkedIn Followers =>20k Klout score = 50 HowSociable score = 5.3 MozRank = 5 External Traffic Links =3817 Corporate Brokers, LLC Strategic Staffing Services ~$25M LinkedIn Followers = 355 Klout score = 27 HowSociable score = 1.5 MozRank =3 External Traffic Links = 27 Orion Associates Dedicated to providing management services of the highest quality ~$50M LinkedIn Followers =NA Klout score = 0 HowSociable score =1 MozRank = 4 External Traffic Links = 14 Kelly Services LinkedIn Followers =~10k Klout score = 49 HowSociable score = 4.3 MozRank = 5 External Traffic Links = 314 Populus Group, LLC ~500M The firms selected above are intended to be an illustrative introduction to the mid-market leaders. The list is neither exhaustive nor complete. Firms highlighted are market or niche leaders. For more information please email us at ephor[at]ephorgroup.com. Read more online here: American Staffing Association StaffingToday.net, HRO today Resource Guide, Inc 5000 2012. Klout measures more than 35 different variables grouped into three basic areas: True Reach, the size of the engaged audience; Amplification, the likelihood content will be acted upon by others; and Network, the influence level of the engaged audience. Your company's True Reach, Amplication, and Network combine to create the overall Klout score, which is a number 1 to 100. The Online Brand Rankings are taken from LinkedIn, Klout, HowSociable, and HubSpot.
  8. 8. 20 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 Mid-Market HRO Outsourcing Service Providers & Software Implementation VARs FAO USA Market Landscape Non-Healthcare regional providers: The Future of 21st Century Online Accounting. Payroll, HRO, Accounting, FAO, Global. The Leader in Back Office Services. AR, AP, GL, Payroll, HRO Cloud Finance and Accounting Solutions FAO, Global Information is Power. Payroll + GL Your Total Financial Solution. AP, AR, Payroll, GL, VBO, Project THE PREMIER U.S. BASED FINANCE AND ACCOUNTING OUTSOURCING FIRM™ FAO, Technology, Compliance Accounting Outsourcing Solutions. Certified Public Accountants & Advisors Payroll, Consulting, AP, AR, FL, FAO Outsourced F&A Accounting advisory plus outsourced bookkeeping *There are numerous other regional providers and point specific solutions. Email us at ephor[at]ephorgroup.com for a complete list. FAOToday Guide
  9. 9. 3 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 HR Technology Software Platform Midmarket Star Performers The market leaders for small and lower midmarket technology solution are as follows:  ADP – missing some performance and recruiting features, but strong core HRIS and strong mobile.  Ultimate Software, UltiPro – their newest version is very cool. Integrates social features. The midmarket tier for HRMS technology:  Ceridian’s Dayforce  SaasHR from Kronos  Sentric (Epicor platform)  Mangrove (proprietary platform) SaaS HR Software USA Mid-Market Leaders Greater than $10M annual recurring revenues FOCUS Leaders ERP Platform: Oracle-PeopleSoft/Taleo, SAP-SuccessFactors Workday, NetSuite, Infor, Intaact, Sage, Zoho (SMB focused), Epicor, Microsoft SaaS HRMS Platform ADP, UltimateSoftware, Kronos-SaaSHR, Sentric, SyncHR, PeopleStrategy, NorthgateArinso, Patersons, Celergo, TalentSoft, HRAccess, Meta4, SumTotal (Accerro + Cyborg + Softscape), Paychex, Ceridian (DayForce), Peoplefluent, Lumesse National Service Providers Payroll: ADP, Ceridian, Intuit, Paychex, CompuPay, ExecuPay, TriCore, PayDay, PayChoice, Qquest, Paycom, Paylocity, Paycor, Ovation, APS, InfoSync, PrimePay, CTR Systems, Icon, EmployeeMax, InfiniSource, PayPro PEO: TriNet, Insperity, AccordHR, EmpowerHR, Emplicity, OdysseyOne, Sheakley, Discovery, Landrum, SCICompanies, SOIHoldings, Barrett, AlphaStaff, Oasis. Ambrose, Co-Advantage, EmpowerHR, CheckPoint HR (2 divisions) ASO: Co-Advantage, Advantec, HRAmerica, VSManagement, Basic, Ascentis, CheckPoint, Doherty, HRKnowedge, AccessPoint, Orion HR staffing firms: Addecco, Kelly, Manpower, HRQ, AlphaStaff Recruitment Process Outsourcing: YOH, iRPO, AMN Healthcare, RPOworldwide, SelectIntl, The RightThing, HudsonRPO, Kenexa Background: Kroll, Hireright, Talentwise, ISP, Verifications Assessments: PSI,P&I Worldwide, Profiles International, Kenexa, RCI, Bigby Havis, Hogan, Skillsoft, SHL, DDI HRO: CorbanOneSource, ZeroChaos, Infosynch, Tag, AccessPointHR, Sheakley, Qqest, IES, UnicornHRO, CPEhr Software Providers to HRO Service Providers: For Payroll: Isystems Evolution, Millenium, ExecuPay For PEOs: Darwin, Evolution, Pyramid, ExecuPay, ISymmetry For Time: NetTime Legiant, Cybershift, InfoTronics, WorkforceSoftware, AttendanceonDemand, NovaTime For HRMS: UltimateSoftware (UltiPro), SaaSHR, Sentric, 2Interact Recruiting: Taleo, iCIMS, HodesIQ, Jobvite, NuView, BondTalent Social Performance: Work.com, Yammer, Bullseye, PeopleFluent, SuccessFactors, Halogen. Jobs: LinkedIn, Monster, CareerBuilder. Training: TRGI, BizLibrary, Covey, HRSG. Benefits: Benetrac, Bswft, BenefitFocus, BenefitsXpress Integration Firms: VARs: BlytheCo, TriBridge, Tectura, Professional Advantage, Crowe Horwath, Fullscope (Edgewater), ArmaninoMcKenna, ClientsFirst, WesternComputer, Net@Work, Wiplifi For HR technology: OnesourceHR, Jeitosa Group Intl, Sability, HumanConcepts, CollectiveHRSolutions, RCM Technologies, Wise Consulting, Sibson, Towers, Talent2, PWC, Hackett, Pilat HR Solutions, IBM-Kenexa, Analysts: Avero-KnowledgeInfusion, Bloom & Wallace, Deloitte-Bersin, Oracle-Cedar Crestone, HRchitect
  10. 10. 12 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 HRMS Landscape for the Mid-Market 7 HRMS 8 Landscape Mid-Market 9 Landscape 10 Exhibit 11 : ~$15M LinkedIn Followers = 56 Klout score = 29 HowSociable score = 1.8 MozRank = 5 External Traffic Links = 83 SilkRoad 12 7 Upmarket Key Players include: Oracle/Taleo, SAP/SuccessFactors, SumTotal/Softscare, Cornerstone, VistaEquity,Saba (Public) IBM-KeneXa (Kenexa is the #2 provider of employee assessments in the market (After SHL, which was just acquired by Corporate Executive Board). the assessment market is over $1.1 billion today and it’s one of the highest margin businesses in HR. 8 Driving HR SaaS Work Management is the demand for bundled (multi-process, multi-function) outsourced solutions such as Workforce Management (WFM) and Human Capital Management (HCM). These outsourcing solutions represent a large market due to limited overall penetration in the small & medium sized businesses (~50% of all business). In secondary and tertiary markets, enterprise providers with their “bundled” outsource service offerings are not present. With this unsatisfied demand, there is an opportunity for accelerated organic revenue growth (18%-22% per year). 10 The market potential for SaaS HR solutions including human capital management and talent management is estimated to be $10B and growing at 18% CAGR10 worldwide10 . The demand for SaaS HR solutions, may actually be greater as the use of mobile devices and tablets is accelerating the market appetite for adoption of SaaS applications and SaaS HR solutions are also being integrated with ERP and other work management applications. 11 HRMS Landscape Top Ten is focused on SaaS. Does not include upmarket products such as Oracle, SAP, Workday, or Lawson/Infor. HRMS does not include ERP vendors. HRMS vendors not including payroll directly with excluded. 12 Silroad source = http://www.hreonline.com/HRE/story.jsp?storyId=533350246. unified SaaS HRMS and talent-management product largely for SMBs (500 to 5,000 employees but with some much larger clients, as always) that hews to that tradition -- while constantly questioning the marketing wisdom of it internally. With 1,500 customers in 2011 (adding 130 new ones every quarter, according to Flip), SilkRoad says that 150 of them have bought four products and 500 more than one. Very well done for HR. still forms driven, global enterprise focus is nicely targeted at SME and mid-market.
  11. 11. 26 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046 HR Software M&A Transactions 2012 YTD Recap The marketplace for workforce management software and related HCM (human capital management) including content, software, services, and outsourcing solutions consists of thousands of firms worldwide. However, by function and by industry leaders exist. Technology giants are paying hefty premiums to rapidly expand their geographic social footprint. Notable M&A transactions YTD 2012 include: HR Software Technology Landscape HR technology solutions have evolved beyond simple automation of HR and employee transactions. The combination of cloud solutions and consumer friendly application interfaces coupled with enterprise strength analytical capabilities is enabling widespread adoption. HR Software Technology Mergers & Acquisitions M&A activity over the last 9 months has been very robust. Greater than $9 billion in disclosed transaction value.

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