Recently I attended ADP’s annual analyst day. This year it was held at their high-tech innovation center located in New York City. There were 22 industry analysts and all of ADP’s senior management team. I must say, the ADP team were laser-focused on their presentation, which was to demonstrate that they have made a significant investment in innovation and they were now ready to show the early fruits of the labor. As CEO Carlos Rodriguez said, he has always been more of a doer and believed in showing their work by executing as opposed to being more vocal about their efforts. Well, this time they rolled out the big announcements and the message was clear; they have increased R&D spending from $538M in 2011 to $859M in 2017 as they look to release transformative technologies and services that will have a large impact on Structure, Process, and People in HR. More importantly, as you can see in the image below, there has been a major shift in their R&D spend with substantially more money invested in innovation.


Don Weinstein, Chief Strategy Officer at ADP, presented their overall corporate strategy, which consisted of a number of different items:

• Grow complete suite of cloud
• Invest to grow and scale HR BPO solutions
• Leverage ADP’s global presence

The focus of Innovation: Centered on 4 areas:

• Mobile and the end user experience
• Big Data
• Their Marketplace growth
• Cloud Innovations

 

Don discussed their HCM cloud footprint, which is one of the largest in the industry with 570,000 clients and over 40,000 net new customers added in the last year. That’s massive compared to anyone else in the industry.

Their BPO business is also extremely large – currently, they have 2.5M people employed, which is up 10% since last year, making them the largest BPO provider in the space.

On a global front, they now have 64,000 International clients and 1,500 Multinational clients, which shows their strong presence in the Enterprise business space.

Last year they had 3 key themes:

• Bigger on big data
• Open HCM
• Focus on Talent

They were pleased to report significant progress in all 3 areas, which shows that they were true to their promises and that is always a good thing to see from a vendor.

Here were their achievements:

• Big Data Results: They have signed up over 4,000 clients to their Big Data Services. They Introduced Pay Equity Explorer earlier this year (which has been very well received) and they introduced Data as a Service Business.
• Open HCM Results: The ADP Marketplace has shown significant growth. It provides ADP clients with add-on capabilities that help them solve issues specific to them with best-of-breed suppliers. Currently, there are 200+ Apps available and they have seen over 6,000 subscriptions.
• Talent Results:  In the last year ADP acquired The Marcus Buckingham Company (TMBC) and together developed and launched Leader Compass (a new coaching and leadership training tool). The important message from this is they have a broad set of talent management functionality, and they can meet clients where they are in their talent journey – whether it’s traditional performance review or next-gen talent via TMBC.

The issues in HR as ADP see them – and how they want to address them

• Evolving Workplace Dynamics: There are now 4 generations in the workforce and this makes ensuring employees get what they want a difficult task.

The ADP Research Institute study looked at this and saw a disconnect between what employees want vs. what companies think is important. There is an evolution of work where priorities are changing and companies need to be focused on what their employees are looking for to avoid potential flight risk:

• The Employee focus is on ME (how is my job, how am I being developed)
• The Employer focus is WE (free food, flex hours, unlimited PTO, bring your dog to work etc.).

• The Rise of the GIG Worker: Companies will increase their use of the flexible worker, which creates a huge disconnect on how we look at the total workforce. The actual talent acquisition goes through different channels (procurement for GIG workers and HR for full-time employees). This presents a problem for understanding headcount, payroll costs, and many more things.
• The Rise of Teams: HCM systems are not designed or reflective of how work gets done today; they are based on rigid hierarchies, which is an outdated way to look at the organizational structure. The investment in technology that looks at work in this fashion is seen as outdated by Millennials as they have no way to connect with all of their teammates (across various teams they participate on every day).
• Obstacles for HR Insight: Did you know that 54% of Employees use the HCM system less than one time per month and only 21% of Business leaders believe HR systems provide valuable insights? It’s no wonder then, that with nobody using the system there is very little data being added to the system to analyze. So even if you were to invest in AI and machine learning, the algorithms will have very little data to run on and will probably come up with bad results.

New Innovations to address these issues:


Paying Your People

NextGen Payroll and Tax: One of ADP’s major innovation investments is in next-generation payroll and tax designed to ensure that as the workforce changes, they are going to be able to help their clients pay different kinds of workers. Two of the major principals of their next generation technology strategy are building global from the ground up and focusing on person-centric payroll so that it can handle all of the variable ways that person makes money. As an example, this will support gig workers who might have a W2 and a 1099 job. This means I can see as a person all of my payroll summaries in one single place – ADP feels that this is a major differentiator and a step in the right direction in helping companies better serve the new workforce in terms of payroll.

Transparency is powered by their new policy engine to provide a new level of clarity on how pay is calculated. They are building the calculation engine globally from the ground up by integrating local policies for each geo. The payroll engine processes payroll in real time so users can see in real time (i.e. departments can see their actual payroll costs in real time and end users can see how much they have earned in real time). If the company allows it, employees can get paid in real time vs. waiting for pay periods.    

Getting Proper Insights

Going Bigger on Big Data: Without data, it’s difficult for HR professionals to do their jobs. In a very small office, that can be as simple as noticing a colleague’s repeat absenteeism and addressing it. At most companies, though, there’s the potential to unlock much more powerful insights from people data, which can save a company time and money by smoothing transitions, improving staffing strategies, easing turnover, and much more.
 
Since 2015, ADP DataCloud has helped HR teams with people data by using anonymized data from 95,000 clients and nearly 30 million employees - now ADP announced the next generation of ADP DataCloud.
 
There are three big changes.

1. First, starting immediately, ADP is offering People Insights Professional Services. An August 2017 PwC report showed that over half of companies don’t have dedicated people analytics staff, so ADP decided to help clients apply the insights ADP DataCloud provides. The consulting practice will help organizations apply insights and develop the business processes to support a data-driven culture.  HR and business leaders will also have access to “boot camp” training sessions to learn best practices for applying data to make more effective people decisions.
2. Second is mobile access. Through the ADP Mobile App, ADP DataCloud can now show tailored insights and metrics for different team members: executives, front-line managers—anyone who is given access. I can see mobile access being hugely helpful for traveling executives and employees out in the field, some of whom are rarely on desktops anymore.
3. Finally, starting later this year, ADP DataCloud will increase its use of artificial intelligence. The platform will learn from your past behavior and actively monitor things you have demonstrated an interest in, then proactively push insights. It’ll also proactively highlight any outliers or changing trends it spots for more attention.

I can see the professional services being an enormous help to resource-strapped HR teams, and the mobile access and AI saving ADP DataCloud users a lot of time. Altogether, this feels like a next-generation set of features, and it’ll be exciting to see how they change HR as they’re rolled out in the coming months.
 
Modern HCM Experience

Open HCM: ADP is committed to providing you with a solution that lets you combine both innovations from ADP as well as other solution providers into your HCM technology solution. They do this in a number of ways:

• ADP Marketplace: An online store where you can get solutions that integrate into ADP’s products like Workforce Now and Vantage.
• Global Cloud Connect: This is a really interesting initiative that lets companies who rely on multiple HR systems connect seamlessly. It is not just an integration solution but actually a data management solution. In a client test case, the client had 85 integrations – this solution brought it down to 3 and in the process saved 3 FTE’s by doing this. This is set to go live in January and I expect it will have a major impact.

 

Dynamic Teams: This is currently in beta and built into their new platform, user profiles can be set up to create any kind of team, regardless of direct reporting relationships. As an example, a project team or scrum team can be built to reflect teams where work actually happens. This has an impact throughout the HCM system, as an example, performance management reviews can collect feedback from people on cross-functional teams where an individual work with day to day. This is a completely different way of looking at individual performance - they get proper feedback from all people that they interact the work environment - from their formal manager to various teams they are on to social groups that they participate in.


HCM Your Way: Open HCM Enables “HCM Your Way” from Hire to Retire. ADP is building mini-apps (so far they have 30 and growing) The idea is that you can add functionality to your existing system by new mini apps that can be set up and configured based on the way you want to use them. For example, someone in San Francisco could integrate a mini app and configure it one way to do specifically what they want it to do while someone else in Boston could install the same app and configure it differently to do what they want. This is a very different and easier way to add functionality as opposed to the traditional, very cumbersome process of adding and configuring a complete module with all of its rigid complexities. ADP feels that this is the market differentiator and I would agree; I haven’t seen this concept anywhere else.       

Person Centric System: Their new mobile & consumer-grade user experience (UX) is a major step in the right direction of getting users to interact with the system on a more regular basis. The system creates a “Wizard” that provides feedback using SMS text messaging on a mobile phone. Since everyone knows how to use SMS there is virtually no training required. Also, information gets to people in an easier and faster way. The system even makes suggestions to the user of suggested next steps which help the end user complete the task.


Developing your people

Talent Management: ADP’s acquisition of The Marcus Buckingham Company signals a strong commitment to talent and how to help you develop your people. Their solution is scaleable depending on where you are on your talent management maturity.

They can help you with the following:

• Automation: Talent is about the efficient management of your people.
• Optimization: Talent is about effectively engaging and optimizing your people.
• Activation: Talent is about growing your people and their ability into dynamic agility.

This is a big focus for ADP and as I see it a solid indicator of their commitment to being a partner in the changing HR landscape, by providing you with tools to develop your people.

My Take:
ADP has made a massive investment in innovation and the fruit of their labor is starting to show. I believe their focus on creating an engaging experience for the end user will help feed your system with important data that will help you understand your people business more effectively. Moreover, their DataCloud is an amazing resource not to be overlooked as they have reams of data to help you truly get the answers you need to run your business more effectively. Finally, I like where they are going with their innovation of the platform to recognize teams. This is the way business is working these days and providing a modern experience will be welcome to the workforce in terms of driving satisfaction in work.