Further info and resources from my website

Thursday, July 8, 2010

Great Expectations: ADP acquires Workscape to contend more seriously in the Talent Management space

It is one of the worst-kept secrets in the HR tech/services industry that ADP, the Grand Old Lady of our business, has been on the prowl for a Talent Management (TM) product to add to its already impressive portfolio. After plugging the recruiting hole in its offering with the acquisition of Virtual Edge (and Employease) in 2006, it was soon obvious that the Grand Old Lady of Roseland, NJ, was leaving more than small change on the table as many of its customers were buying from other TM vendors what they couldn't get from her. Hence, its  partnership with CornerStone OnDemand last year. Now, these partnerships have been around from Day 1 of our business and they mean only two things: (a) we don't have a viable solution, (b) we have a viable solution. Because of the ambiguous nature of these partnerships, they last only long enough for the weaker party (here it is undoubtedly ADP, not CSoD) to develop its own offering. PeopleSoft did it with ADP in the late '90s when it (PeopleSoft) was staggering in the dark towards a global payroll strategy. Workday has recently done it with Mr Ted while it builds (if ever!) its own recruiting solution, and ADP has been doing it on the TM front with CSoD until now.

What is Workscape bringing to the table? If ADP's goal was to enhance its compensation offering it sure got the prettiest bride around: Workscape is widely considered as having the best compensation tool in the industry. If it was more the performance management space that was the aim, this is still WIP since the Performance Management module is new (launched in 2008) with new modules around assessment expected by beginning of next year. However, there is no recruiting or learning capability - nor is there any talk of adding it to the roadmap. Another acquisition in the offing to plug this hole? Well, crater is a better word since these are two key features that no self-respecting HCM offering would be caught dead without.

Will Workscape help ADP grow internationally as some observers are claiming? I strongly doubt it in its present form. If ADP tries that, it would be a case of the blind leading the blind as Workscape is as parochial in its business (give or take the odd customer in Europe) as ADP. Sure, ADP has good name recognition in France (through the acquisition of GSI decades ago - still branded here as ADP/GSI) and Germany, but International still makes up for less than 15% of ADP's business.  So it will take more than this to make ADP the strong global player that it could become, but has so far shied seriously from.

Three major challenges await ADP as it embarks on this new adventure: integration, image and product rationalization. First, even if the jury's still out on the Virtual Edge integration, so far no major disaster in the form of product failures, strategy inconsistency or customer stampede towards the exit has been noted, so the omen are not too bad. Second, ADP has the dusty image of a vendor whose main business, payroll, is a bit passé. I've always looked at ADP as an old lady, who once upon a time was quite pretty but whose better years are now behind her. No amount of rouge, mascara and lipstick can hide the lines on the face. What she needs is a full facelift to enter the brave new world of 21st-century HR. Third, and to help overcome the second challenge, some product rationalization is in order. ADP is rather unique in the market (except for Sage) in that it is a collection of disparate payroll and HR products serving different market segments and geographies. While this has undeniably been responsible for ADP's success, especially in the US, it has reached a point where it becomes too complex to manage. Some streamlining and product retiring are inevitable. A product like Workscape that can be aimed at different market segments (although not the lower end of the market) and geographies (provided localization is available beyond the UK) could help ADP on that front.

In summary, it seems that our Grand Old Lady has emerged from her nap and, surprise, surprise, she's still kicking. Whether she relapses into her torpor or is reinvigorated will depend on execution on this acquisition  and the next moves she embarks on.

No comments:

Post a Comment