We had the opportunity to attend Ultimate Software's yearly analyst summit, held November 13th and 14th 2018 at the vendor's headquarters in Weston, Florida. Good attendance from the key influencers and a great evening program with a cooking demonstration.
Here is the 1 slide condensation (if the slide doesn't show up, check here):
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Ultimate keeps executing on growth – Practically most HCM vendors are doing well these days, fueled by the move of HCM to the cloud and the need to replace aging technology that is no longer in synch with the best practices that people expect in 2018. Ultimate is not only growing on the revenue front, but also on the product side, innovating with AI (Xander) and pushing forward the overall functionality of the UltiPro Suite.
HR Services is next – For a long time I have been asking Ultimate CEO Scherr on how the vendor wants to keep growing on a longer-term perspective. Until now he has always been confident that the focus on North America and HCM SaaS is enough to fuel Ultimate Software growth. And performance has proven Scherr right. Internationalization was more lukewarm effort so far, but it has not hurt the vendor. It all changed with the acquisition of PeopleDoc, unveiled July 18th, 2018. With PeopleDoc Ultimate becomes a player in HR Services (Delivery, or Integrated HR Service Delivery as Ultimate likes to call it - I refer to it simply as "HR Services) and gets a lot of exposure in Europe, particularly France ang Germany. Now it will be key to see if Ultimate can leverage PeopleDoc assets and expertise beyond the upsell in North America, making it the growth engine beyond North America. End users care for growth of their software suppliers, as it reduces the cost of R&D across them and allows the vendors to deliver more functionality.
Momentum in AI / Xander remains strong – The acquisition of Kanjoya by Ultimate Software a little more than two years ago, on September 3oth, was Ultimate's entry into AI / Machine Learning… specifically leveraging the NLP assets of Kanjoya. The acquisition has been a success, with assets and people talent having made a substantial difference for Ultimate. What is impressive is the wide adoption of AI services / Xander in the Ultimate install base and how Ultimate is moving innovation into the core of its install base. In contrast to that, many competitors see delays and hesitation in using AI technologies on a wider scale.
People first culture. Ultimate prides itself in people centricity and live these values. The core tenet of the philosophy is to treat your people right and good things will follow, most importantly, they will treat customers right. Examples for the people centricity is the inclusion of the families of employees are the fully funded healthcare. Many HCM vendors do much in this area – but none I am aware takes it to this point. The question for customers is of course, how much that matters, but most of them admire the philosophy and culture, and though not reachable for them, see it at least as an example and inspiration.
MyPOVOverall it is impressive progress that Ultimate is showing on all fronts, from business overall people to technology. What matters most for customers is product and technology progress and Ultimate is innovating across the suite, with a strong push on AI / Machine Learning with Xander. The PeopleDoc acquisition is opening new potential, but also a new category software wise, as Ultimate is on the BPaaS game now and needs not only to make its customers employees, managers and HR professionals more productive, but is adding the call center reps to the equation.
On the concern side, Ultimate has added more moving pieces to an already big puzzle of moving pieces. It needs to reach the critical escape velocity in its development processes to finish the application work on an ever-evolving technology stack, without adding more technology pieces to the puzzle, that can quickly become the great idea from yesteryear. A challenge for all established and successful vendors, and it's time for Ultimate to master it.
But overall very good progress by Ultimate, the next 12 months will be key to watch. Stay tuned.