Event Report - ADP’s Meeting of the Minds

Like all vendors being in the market for mover than 10-15 years, ADP has established and well adopted products that are well used and operated by ADP customers and ADP itself day in and day out. Similar like other established vendors, ADP has also created a SMB portfolio. And lastly ADP also plays in the global HCM market with its GlobalView product. All in all this leads to a plethora of products to maintain, invest in and keep the innovation flame cooking on. A difficult situation not only for the return of R&D dollars, but likewise for customers to navigate, partners to understand and sales people to articulate.

The go-forward strategy

To leverage investment into product better and to focus innovation ADP has embarked into a front end innovation strategy (we chose this description as best to describe what ADP is doing). And with that we mean that ADP plans to conserve its backend systems, but is in the process to create a common front end to all these backend processes, based on a modern application platform, supplemented by additional horizontal capabilities. 

The first deliverables of this strategy are coming to maturation now and the MOTM attendees saw a nicely build, very usable new user interface, that combines various backend systems. Not surprisingly that user interface is HTML5 based, and features responsive design, meaning that it optimizes automatically to the screen resolutions of smartphones, tablets and desktops. To ADP’s credit, the new UI lacks some of the traditional fluffiness we have seen from other vendors moving to HTML5. ADP is still working on figuring out details on the application server side, which needs to connect to the various backend systems and collect the relevant data and processes so they can be served to the front end. Not a trivial task, but the route ADP decided to take is showing first results and is overall promising. 

The first deliverables of this strategy are coming to maturation now and the MOTM attendees saw a nicely build, very usable new user interface, that combines various backend systems. Not surprisingly that user interface is HTML5 based, and features responsive design, meaning that it optimizes automatically to the screen resolutions of smartphones, tablets and desktops. To ADP’s credit, the new UI lacks some of the traditional fluffiness we have seen from other vendors moving to HTML5. ADP is still working on figuring out details on the application server side, which needs to connect to the various backend systems and collect the relevant data and processes so they can be served to the front end. Not a trivial task, but the route ADP decided to take is showing first results and is overall promising. 

ADP seems to be following a similar strategy like IBM here, which calls it the API economy – in the IBM case BlueMix being the tool to create the new modern front ends. But ADP does not want to be in the implementation service business like IBM – so it will have to make assumptions in the front end to backend integrations, which should not be too hard as it’s an ADP front end speaking to an ADP backend.

The most innovative part of the strategy is the front end technology and application server, which leverages HTML5, No-SQL and graph databases, predictive analytics and open source best of breed components. A radical departure from older ADP architecture – not even going back many years, if e.g. compared to the much more recent VantageHCM architecture.

The bellwether of architecture – agile applications

Of course vendors do not build architectures for architecture’s sake – but to enable agile and 21st century applications. ADP demoed the onboarding of a new employee and made a very good showcase out of it: Not only the traditional onboarding was covered, but also the addition of social network and media information, the discovery of co-workers, the benefits eligibility process (with an eye on take home pay available) – overall a great demo of the new capabilities.

Now ADP needs to show more of these processes with an ESS / MSS and Talent Management backdrop and if these will be implemented equally engaging and well done, the conceptual and practical side of the new architecture will have proven itself.

Reality Check

Let’s look at the present situation for ADP customers, taking a look at the four major product offerings:

• ADP Enterprise – These are the 1000+ ADP customers that are using this relatively oldest platform of ADP (a purchased PeopleSoft license, as only senior industry observers will remember) – that has moved of considerably from its legacy with continued ADP investment. But this customer base is asking for more innovation and ADP has rightfully moved its investment priorities towards this customer group. New innovations like the HCM centric document management are coming to this customer group early. It will be interesting to see how much ADP can upsell and move into this client base in the next quarters to com.

• ADP Workforce Now – The ADP product targeting North America centric enterprises is historically in better shape architecture wise. Customers seem to be generally happy and not too concerned. ADP needs to master the simplification of a more complex backend system and a unified talent management systems (from Vantage HCM) – not an easy task, it will be interesting to see how ADP will address that.

• ADP Vantage HCM – The 2nd youngest child of the ADP product family, Vantage HCM is coming of age (or in pre-school age) and what a difference 3-4 years can make. What started as an appealing UI back then looks rather pedestrian today – so the new architecture will benefit existing and future Vantage HCM customers greatly. The talent management functionality in Vantage HCM is beyond good enough, so a compelling option for ADP customers. And ADP has seen very good adoption doubling the customer base – but now needs to maintain that momentum.

• ADP GlobalView – Based on SAP technology, ADP recently decided to go with SuccessFactors products for Talent Management functionality (instead of VantageHCM). Surprising at first, but ultimately a consequence of building on SAP, like it or not, then you have to follow the system strategy of SAP. But ADP executives made very clear that his may change in the future. The question remains when. In the meantime GlobalView is one of the few attractive offerings for a global HCM and payroll implementation. Its relationship with the Streamline payroll product moves the GlobalView reach beyond the SAP payroll reach, which turns out to be a helpful differentiator in payroll deals. .

Implications, Implications

Implications for ADP customers

The new ADP is good news and innovation is always good for customers, as long as served in a measured and high quality fashion. Customers need to make sure they understand ADP’s strategy and look for value scenarios as they chart their way forward in their HCM automation plans. The ADP front end innovation strategy gives a good mix of innovation and conservation of proven systems, so adoption of the new front end should be not too much of a concern even for the more conservative and risk aware customers. Customers should ask ADP for roadmaps to understand what is coming when and how the future products matches to their enterprises plans and pain points. Up to a certain point understanding and aligning internal HCM rollout plans with the ones of ADP is a worthy strategy to pursue. Nervous Enterprise customers should await ADP’s more detailed plans first, before rushing to any premature HCM system selection and re-consider in 6 months when the first wave of innovations will be available.

Implications for BPO customers and prospects

The front end innovation strategy is of significant value to BPO customers and prospects, especially when operating on a global scale. Traditionally the back end systems of established vendors have lacked in usability and talent management capability – making their systems a point of contention in many large companies. With the front end flexibility ADP plans to introduce and the functionality in Vantage HCM, ADP can address this successfully, making it both more attractive as a BPO provider and potentially even as a BPO platform provider.

Implications for ADP competitors

ADP is moving, and for a vendor the size of ADP, moving with speed. While Oracle has committed and is finishing a complete rebuild with Fusion’s Cloud HCM, SAP is re-building on the HANA platform, mainly in core HR or the moment and Workday keeps extending functionality on its proprietary architecture – only Infor has done a similar architecture approach as ADP with its Ion platform. But the Infor pieces had less functional overlap, a complexity ADP needs to address. The vendor probably most close to ADP from a DNA and customer base, Ceridian, has committed to a complete re—build with DayForce. So we expect vendors to align their marketing and overall value propositions more around the uniqueness of how they build their respective systems. Interesting times ahead.

Implications for ADP

ADP has embarked in a multi year journey on how to unify and rationalize its offerings. The company deserves kudos for this strategic move, very few payroll players can make and eventually do make this move. ADP needs now to balance the needs of its customers on the existing and older platforms, with the investment in Talent Management and the new front end. .At the same time ADP needs to keep a pulse on true innovation in the HCM space, not to risk to end up putting last century business processes in new clothes. Not easy, but ADP has the deep pockets to get that done. Keeping customers on board in the process is a similar challenge, but so far so good.

MyPOV

Changing an established enterprise culture and focus – something ADP is undertaking - is never an easy endeavor. But the company is off to a good start on the product innovation side, it now needs to pick up speed and communicate its plan and progress. Extending roadmaps and establishing value propositions and value maps for each of its customer groups will be a useful instrument to choose, implement and live by.

It is key to hear ADP executives talk about being a service AND a software player. But ADP needs to learn that it is a victim of its own success as there are no ADP like competitors out there (anymore). This makes it hard for existing and prospective customers in shortlist situations as purchasing best practices requires multiple vendors being part of the selection process and the ADP competitors are almost exclusively software companies. So ADP needs to emphasize thought leadership, best practices and other key software vendor virtues to be part of the shortlists. And then show a differentiated value proposition by its services being engineered in the core offering of its products. ADP’s capabilities in payroll and compliance then become strong differentiators and will no longer serve as potential exit qualification criteria.

In the long, long run (2020+) ADP must also address its backend systems and unify them, re-design them, re-architect them to be in line with 21st century best practices, get more out of the R&D dollars it spends and create an enterprise HCM system that is not only attractive and appealing to use, but also agile on the backend side. The good news is, that ADP knows this and has some time to plan and address this topic. Sooner is always better.

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You can find a Storify collection of Keynote tweets here.

More on ADP

• First take - 3 Key Takeaways from ADP's Meeting of the Minds Conference Day 1 Keynote - read here

• ADP innovates with with verve and good timing – read here

And  more on the importance of the paycheck for HCM:

• Could the paycheck re-invent HCM – yes it can – read here.

• And suddenly, payroll matters again! Read here.