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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

HR Tech Weekly

Episode: 59
Air Date: February 25, 2016

 

This Week

This week John and Stacey discuss:

  • Ceridian Dayforce Analyst Event Link
  • EAP Employee Assistance Program called LifeWorks Link
  • Namely Raises Additional $30 Million in Funding Link
  • New Halogen HRIS Integration with Cloud-based TalentSpace Connect Link
  • Topics: Payroll, Tech company valuations, EAP, Rewards

About HR Tech Weekly

Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

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Transcript

 

Begin Transcript

John Sumser: Good morning and welcome to HRTech Weekly: One Step Closer, with Stacey Harris and John Sumser. Stacey, how are you?

 

Stacey Harris: I’m doing well, I’m doing well. I’m calling in today from beautiful, at least nice weather anyways, Hollywood California. I’m doing quite well. Hopefully the storms will have all passed and I’ll be able to get home this afternoon. I’m flying out today. You’re back home, but you were here this week as well, right?

 

John Sumser: I was there this week as well. I think everybody should know that you are staying in the same hotel as Jennifer Anniston.

 

Stacey Harris: Oh really?

 

John Sumser: You’re running with a … Yeah, yeah. We saw her yesterday.

 

Stacey Harris: I didn’t know she was here.

 

John Sumser: Yeah, well she was looking for you. She said, “I need to talk to Stacey, and I’m staying here until I find her.” She looked just like Jennifer Anniston. It was very interesting.

 

Stacey Harris: Very good.

 

John Sumser: She didn’t look like anybody else.

 

Stacey Harris: My husband will be upset with me. Jennifer Anniston is his girl, so that would have been the one person he would have enjoyed a nice picture of, but that’s okay. We’ll say that I was here, and that was good enough, right?

 

John Sumser: Yeah.

 

Stacey Harris: All the star-gazing that we’re doing.

 

John Sumser: I thought it was astonishing. At the intersection of Hollywood and Vine, the homeless problem is huge. Of course, people go to Hollywood to find their fortune and fame and not everybody does. The streets were sort of, “looks like wants to be a celebrity,” and, “looks like lost their chance to be a celebrity.” It was a very interesting scene, seemed very hard on those streets. I was reminded of New York City when we’re in California.

 

Stacey Harris: Yeah. I would have to say. It’s my first trip to Hollywood. I’ve been to LA a ton of times for events, but I will say this is the first, which is a nice … [inaudible 00:02:12] see some things you haven’t seen before, but you were right. There is definitely a lot of things in this area that make you think twice. We were here for an analyst event for … Ceridian’s doing an analyst event this week [crosstalk 00:02:28]

 

John Sumser: Oh, you were there for the analyst event? I was there to be discovered.

 

Stacey Harris: You were just there to people watch.

 

John Sumser: Remember, I was there to be discovered. I had my script in my hand and I had makeup on and everything, and it didn’t work. I’m so disappointed. I thought this was when I was going to finally be recognized for the extremely special person that I am, but no. No. Just a Ceridian analyst meeting.

 

Stacey Harris: Yes, yes. That’s not a bad place place to have an analyst meeting, though. John, what were the five or six takeaways besides the fact that you didn’t get discovered that you got from three of the analyst events this week? I know I put a couple down on the list, but before we dive into all the other new [inaudible 00:03:18], probably we should give some insight into what we got this week.

 

John Sumser: I think that’s right. Obviously my first insight is that all of the agents in Hollywood are blind and they couldn’t see my potential. I don’t know what to do. I’m sorry for them. The second-

 

Stacey Harris: You’re not going to let me drag this back into work conversations, are you?

 

John Sumser: The second four things on my list include … The team in Ceridian is amazing, amazing. The guy who runs the company, David Ossip, is … We’ll, he’s the kind of guy who if he’s got two extra hours in the day, he rents a bicycle and rides it up the tallest hill you can find, right? I’m not that kind of guy, but he’s that kind of guy. He’s a very competitive, extremely smart fellow who started Dayforce, which is a scheduling and payroll tool many years ago now, and brought it with him as he took over the workings of Ceridian. Ceridian was the first place where HR technology was ever developed. It was the first place you could buy a payroll system.

 

The renewal of Ceridian, which is what David has been working on, is an extraordinary project. He’s taking this brand new technology and transformed the old service business into something astonishing, and it reasserts Ceridian’s legacy. The fact that they’re still moving forward, they have I think .. We were talking before the show … 2,000 customers on their payroll system-

 

Stacey Harris: That was the number Dave gave you.

 

John Sumser: Yeah, 400 in recruiting and 200 in the performance management system, and that makes them a very credible player in the integrated HR suite business. Their high end is Workday’s low end, and in their arena they compete with ADP, but they’re doing an extraordinary job here.

 

Stacey Harris: Yeah.

 

John Sumser: The first thing is the momentum continues, and that’s pretty amazing. Then they’ve taken this personality assessment tool and embedded it in everything they do. It’s called TeamRelate, and when you use TeamRelate, it offers you insight about how to communicate more effectively with the people around you. I have mixed feelings about it, but they seem to have really emphasized making it the heart of the business so you get payroll scheduling, recruiting, performance, and as a leader or as a participant on the team, you get the ability to see what other people are doing and communicate with them effectively. Very interesting idea. Those are my big pieces. What did you see?

 

Stacey Harris: Well, I think the piece that I took away from today from the [inaudible 00:06:38] definitely the momentum he can use, and I think that … I look at organizations like Ceridian. They all sort of fall in that same category as far as the type [inaudible 00:06:46] ultimate, right? Tellme they’re continuing to just slowly but surely invest in the right areas of their technology, right? The compliance, the hard stuff, the things that people often times gloss over as being important, but are the challenges like HCA Reporting, workforce management, scheduling, right? Those types of things.

 

I think Ceridian’s done a very nice job of balancing the need to add the recruitings and the performance managements and some of the talent management stuff with … It’s some of the deepest compliance-based elements. Part of the reason they can be so good at compliance is not how they’ve built up a group of services that go around the compliance, but that they also hold the three most important compliance technologies in your system: core HR management, workforce management, and benefits, all in a single platform, and they are all extensive systems within that platform.

 

I think I was quite pleased to see that Ceridian’s can change it, steadily make inroads, and do it at a pace in which they can scale [inaudible 00:07:58], right? The thing that was interesting and you could probably say this a little better because you know the better the history of Ceridian, is that one of the big announcements the first day that we were here and the last couple days was that David Ossip is breaking away the EAP Employee Assistance Program called LifeWorks into a new company called LifeWorks. I think that it’s going to be called LifeWorks Company, right, that is associated with Ceridian but is separate. Within that, he’s going to include WorkAngel, which was a online awards recognition communication platform that they had connected with. It was another sort of organization they were putting the LifeWorks, which is the EAP, stuck with this WorkAngel platform. To me, that was interesting in the fact that they’re breaking off of the separate technology, which means that their goal is this, they call it an engagement platform, could basically work with any other vendors. It got them out of the issue of it’s only a Ceridian product, right?

 

The goal very clearly stated by David is that this is the primary system that they see employees wanting to engage with because of the tool that … Not only is it mobile, which their platform is mobile, but this system is mobile-driven. It has within it the awards, the recognition, the couponing, the benefits … Somewhat benefits right now. They’re still working on benefit pieces, as well as all the EAP stuff, the Employee Assistance Program stuff and content that Ceridian’s been working on for ages.

 

That to me is probably some of the most interesting stuff that they shared this week, outside of some of the other things that you had mentioned. Can you tell us a little about listing as separate companies, John? Do you think that’s the right move? Did they need to streamline who Ceridian is versus some of these other things that they’re working on?

 

John Sumser: It’s a complicated question. I want to ask you something, and then we’ll get on to the “will it work.” EAP. Everybody knows that the EAP is. You get divorced, you go to the EAP. You come to work drunk too many times, you go to EAP. You have a heroin problem, you go to the EAP. Maybe your kid’s a little rebellious and is burning down the house, you go to the EAP. I don’t exactly get how you put EAP, Employee Assistance Program, getting people through tough parts in their life, with perks and benefits and discounts on Apple products. This doesn’t seem exactly like a perfect fit for me.

 

Stacey Harris: Well, I kind of disagree with you on that one, because I actually do think it’s … I think they have to be careful about how they do it, and they have to be very cognizant of the existing perception about EAP programs, right? But EAPs are also there if you have a sick family member [inaudible 00:11:24], going through some stuff for my own [inaudible 00:11:23], and to support that, and also the’yre to help if you got some financial changes you’re trying to make. Some of them are positive things you’re doing in your life as well, and I think a lot of times what people forget just the [inaudible 00:11:40] that they have available. These things are given as, oh, this is something we have that no one ever really uses until they hit rock bottom of whatever they’re dealing with.

 

I think what … In the conversations with Jamie, who’s going to run this group, is that they’ve seen this as a way to elevate the EAP program from less of what you were just talking about, which is the bad feeling place, to more of a resource that really does help people, that you’re using it when you’re starting to deal with some of the stuff, not after you’ve hit rock bottom.

 

The other thing I think is that right now, that tool doesn’t have benefits in it that deeply like some of the other online tool that we know, like [inaudible 00:12:25] and some of them. I think that if you connect benefits, the awards, recognition, and couponing tool, I do think they you have a nicer seamless connection between here’s where I go to get all the fun benefits, here’s where I go to get my health benefits, and here’s where I go to get my deep shit’s happening benefits. I kind of see it connected. I think it has to be managed carefully, and the data privacy issue has to really be tackled appropriately, but I think that it could be of value to really see a lot of that stuff as a separate thing from any HR system that they’re using.

 

John Sumser: Yeah, I just worry about the messaging. Here you go. I go to this platform and I’m having a really hard time so I’m trying to pick something, and right next to the really hard time and I’m trying to fix something stuff, are more opportunities to shop.

 

Stacey Harris: Okay.

 

John Sumser: Right? Here I go. I think I was trying to explain this to somebody yesterday. I think a lot of what happens in EAP is that people deal with things that they’re scared about and ashamed of.

 

Stacey Harris: Yeah.

 

John Sumser: That’s a lot of the terrain in EAP. I’m scared and ashamed. Let’s go shopping. I get it. I get it, but it seems like it’s a little unlikely to me. Then the EAP stuff really, really requires deep privacy, and the, “Here are a thousand discounts and perks for you” stuff requires deep personalization. You have in the same place something that wants to know a lot about you to make choices, and topics where you don’t want people to know a lot about you. I think it’s just very difficult to get that right.

 

Stacey Harris: I agree, although I do think with the EAP world these days, I think part of the reason it hasn’t really ever been used at a great length. Maybe it shouldn’t ever be used to great lengths, because maybe it should only be used for those extreme cases. I think part of the reason that it’s never been used to great lengths is because it wasn’t personalized very much at any level. The anonymity … Yeah, see if you can say that twice early in the morning. It made it so generic that it wasn’t really valuable. I think there is some room to make EAP a bit more personalized in a safe way. I think there is some opportunity, but you’re right. There is a big challenge with the privacy, and where does that data go, and how do you aggregate that, and at what point who has access to it.

 

John Sumser: I think you’re on to something. I think you and I should walk out to the world. Maybe somebody listening will just call up and say, “Oh, go ahead and do that.” We should have a white paper called, “Making EAP Sexy.”

 

Stacey Harris: Okay. I’ll let you handle that one, and in the meantime, there was a couple of things at Ceridian, not just the LifeWorks, that I do think is worth mentioning. They are rolling out some new stuff that does payroll which they’re calling Payroll 2.0. I think we were all wondering, “Is that like Web 2.0?” But it was more of an aggregate of you, which I think added a level of interesting … It had nothing really to do with the [casability 00:15:55], though there was some what they call multi-threading technology that they had included which allowed some processes to run faster. More importantly, they aggregated all of the different payroll runs into a single view which I think has been done by other organizations previously in different ways, but it was nice to see it through Ceridian.

 

The other thing that they mentioned, quite expansively, was their managed services offering. They’ve divested a lot of their other what I would call service bureau type of activities like [inaudible 00:16:25] and things like that, and yet they’re building up this very specific staff-based managed services business, which is all about supporting payroll benefits and other workforce management stuff that is very specific to what you would need if you had a staff product.

 

We’ve been talking quite a bit about the changes taking place and the valuations of tech companies. Do you think that this is going to allow Ceridian to have the type of numbers they need to run a managed services organization the way you’ve been talking about?

 

John Sumser: Well, I think we are about to see an extraordinary change. The software business since the early ’90s has been an amazing place to make billions of dollars. I think if you look at the number of people who’ve become billionaires in the United States in the last 30 years, some significant majority of them did it as tech CEOs because people printed money when they were in charge of tech companies. The value of a tech company was very different from the value of some other company in that the revenue times 10 was the gold standard for the value of a tech company, and a normal company it’s revenue times somewhere between 50% and 300%, or .5 and 3x.

 

What’s happened in the last couple of months is that tech stock valuations have come from 10 times revenue down to 3 to 5 times revenue. When you have a change like that, it means people are going to reexamine everything about how you do the business. There are decisions that you can make when the net result is 10 times revenue. There are things that you can do to generate revenue that you wouldn’t do if the results if 3 to 5 times revenue. We’re going to see a correction in both the value of the stock and the way the technology gets developed.

 

One of the big things was managed services is something that many of the big players are pushing off out into the ecosystem rather than doing it in house, and with the new valuation models it makes all the sense in the world to keep that business in house. I think Ceridian was exactly on time with their thinking about that.

 

Stacey Harris: Well, and I think what’s going to be interesting is that through their managed services process and their implementation that they’ve pretty much held closely in house for many years, they’ve also created some new tools which I only see generally in big system integrators. Like they had this great little tool that’s allowing all companies of 1,000 and below to do a walk-through Turbo Tax-type sort of configuration of their technology, which is, “Answer this question. Answer this question. Here’s your configuration.” Right? I think keeping some of that in house does give them a lot of ability to understand some of the bigger challenges, and probably optimize them and streamline them. You won’t see them in any of the other tech companies. It will be interesting to see, and if they’re able to do it financially and it makes sense in the books, then probably we’ll see other organizations maybe start to do this.

 

We should mention they also launched an onboarding product this week, or not this week, but with their new release. I thought that was also important because we haven’t seen that yet from all of the HRIS vendors in that way. I think that was …

 

hey had the Client Innovation Portal, which I thought was interesting. They’re getting clients now to vote on what they think is most important. Those are the other big takeaways I chose this week, not new to the industry, but new to Ceridian in the way they’re doing it.

 

John Sumser: Yeah, I think they’re evolving. Maybe the other thing that’s really worth noting is their core team has now been working together for five or six years, and it started out as a group of ambitious young people, and they’ve matured into strong executive leaders. It’s been remarkable to watch them go through that transformation, and some people I got to know first when they were a little wet behind the ears are now very comfortable in high-pressure executive roles, and that kind of home-grown talent is not common. They have made a deep commitment to growing and maturing the people on their team, and it shows.

 

Stacey Harris: I would agree. Many of their people came from pretty big roles in other software organizations in the HR space, right? Probably interview all of them, and they came … They’re a list of names of all the various spenders out there, and I think that’s also an interesting … Not interesting, it gives them a different perspective, right? If they can bring it all together cohesively, they’ll build the maturity of the team as a whole and bring some of the lessons learned from some of the other places they’ve been, it can be a very strong, strong group of leaders that they continue to expand the organization.

 

Talking about maturing organizations and then organizations that are sort of new to the market somewhat, one of the other news items I pulled out of the bag this week was Namely just got $30 million in funding from investment groups, and brings their total funding to $107.8 million, which I thought, “Wow.” I hadn’t realized they’d gotten quite that much. Namely is a small business, mid level, mid market HRIS technology, and they’re … Really it looked like they’re just taking this extra funding to expand their operations and really hit a couple milestones they’ve promised clients, but I was interested that we’re still seeing some money funneling in. Do you think that into the [check 00:23:07] space and particularly in these newer guys, do you think any of the evaluation stuff you’ve talked about is going to start to impact the venture capital space as well? We’ve seen so much of it going on in the insure space.

 

John Sumser: Well, what we’re watching is a lot like one of those 70 car pileups on the interstate, and we’re about 5 cars into the pileup. When the LinkedIn valuation stumbled and the Workday valuation stumbled, everybody behind them hit the brakes, but they’re still sliding into the train wreck. Slide … It’s probably not sliding into the train wreck. We’re sliding into the pileup.

 

It’s going to take a while for the venture people who have … When you run a venture capital company, you have money you have to loan. You don’t get to stop because things change, you just have to get smart because things change, because the demand is that you get the money out there and get a return on the money. You raise the money, and if you don’t get it placed and figure out how to get it secured, you don’t ever get to do it again. There will be forward momentum from the traffic behind these couple of crunches in the pileup, and it will take a while. Then things will dry up. In the trough of the 2008 2009 downturn, venture financing contracted significantly, but it didn’t contract until a bunch of mistakes got made.

 

We’re going to see that. We’re just going to see that, and there will be interesting things done along the way. Namely, it’s exciting to see Namely giving funding. Namely, although some of the claims are a little weird, Namely is an energetic part of the next wave of things. In the announcement about Namely, it says they process over $2.5 billion in annual payroll as if that was something.

 

Stacey Harris: Yeah.

 

John Sumser: Right? Big brag, $2.5 billion in annual payroll. That’s 2,500 million dollar companies, or 200 five million dollar companies, but it’s not a big base. It’s not a lot of business.

 

Stacey Harris: They actually have 400 clients is what they say, which I know they weren’t terribly large, but I know one of the guys that play in their space [inaudible 00:25:48] payroll HRIS [inaudible 00:25:54] much larger number of organizations that they’re serving. But yeah. That was why I was interested in the money that they’re getting at this point, yeah.

 

John Sumser: Yeah, it’s really hard to enter the payroll business, really hard, because if people spend their money with you, there are two risks. One is that you won’t get the payroll done on time, and then if I use you as my payroll provider and you don’t get the payroll done at time, my employees are made at me.

 

The other thing is in order to be a payroll company, you have to take my money and hold it for a while. That moment between the time I give it to you and the time you give it to my employees is where all the profit is in payroll, but it’s also where all the risk is. You can’t imagine anything more frightening than if I gave you all of the money for payroll and you went to the Bahamas instead of paying people. Holey moley. That would be bad for everybody.

 

Stacey Harris: That would be bad. No, honest to Mary I don’t think any small business wants to get in to, but we do know of organizations that had this sort of happened with, right, where things have not gone as expected, right? Yeah.

 

John Sumser: I just closed out a business that didn’t do what it was expected to do, and that happens, right? That’s just part of being in business, but when you have payroll, it’s a different layer of things. In payroll, what wins is reliability. That’s what wins, is reliability. Big splashy advertising campaigns are the opposite of what makes people who buy payroll feel comfortable.

 

Stacey Harris: Well, and that’s true. I mean, they would definitely [inaudible 00:27:44] from a marketing persepective, and [inaudible 00:27:49] built some [inaudible 00:27:54] pricing models and some other things they’ve done that are different, but I think probably what most of us [inaudible 00:28:00] marketing, which I think has definitely outpaced most of their competition.

 

John Sumser: Oh, they’re amazing. They’re amazing.

 

Stacey Harris: Yeah. Yeah. It will be interesting to see where all of that heads to. The other thing I think that Ceridian mentioned which was pretty great conversation to have, which was the need to take your HR data, and whether it should all fit in the cloud in the HR system, or whether you should be able to extract it, move it around, connect it with Outlook, connect it with your Office tools. The idea that the data inside the HR technology is really most valuable when it’s outside the HR technology on some level, right? I thought it was an interesting concept that Ceridian has started to build out, which is … I think they’re calling it hrAnywhere, is the term they were coining. I could be wrong on that, because I did not write that one term down. If I’m wrong, I’ll have to go look it up, but the concept is that we’re taking our data anywhere and using it.

 

Another story that I picked up this week was Halogen Software announced about a week ago that they are offering a synchronization tool called the [inaudible 00:29:12] Halogen TalentSpace, which basically is a pre-build connector on the Dell Boomi platform for the Halogen talent management technology. [inaudible 00:29:22] stories connect is that Halogen is the only vendor in [inaudible 00:29:26] space at least to succeed in parallel on the talent management side and that Halogen is a just talent management platform who has made the deepest connections I’ve ever seen in the Microsoft Office Suite, the Halogen’s whole concept is that if it’s a small business, they want to do their talent management work where they’re at every day, which in their world is in email and in their work environments. Everything with Halogen is portable into something else.

 

I was getting the sense, and I’m hearing it from Ceridian as well in their context. That’s a different … It’s a perspective that I think is very interesting that we’re talking about, because a lot of the other vendors right now are saying, “No, we want everything in our state, and this is where everything’s going to be housed. Everybody will bring it in to our system.” What do you think about that, John? Do you think … Are we going to see more Halogens and Ceridians do, or do you think we’re just going to see more of the other side, or is this going to be a war of the systems at some level?

 

John Sumser: Well, I think it’s going to get even more like what Ceridian is pointing out. Great, it’s in Microsoft Office. I want it in the software that I actually use to do my job. If you’re a white collar worker, great, then it will be in Microsoft Office. If you’re a retail / hospitality / hospital / health care / public services employee, the software that you use to do your job isn’t Microsoft Office. It’s not everywhere when you do it there. It’s deeply integrated into the Point of Sale system, or the inventory management system, or the dispatch system for transportation, and so we’re going to see more software emerge, more HCM-related software emerge inside of those other operational tools I think.

 

Stacey Harris: And possibly more portable data models as well, which I think will be interesting to figure out what standards will be followed, particularly when we’re talking about security requirements and passing security [inaudible 00:31:43] with data. It will be interesting to see.

 

John, we have hit our 30 minutes already. This has been a pretty big conversation. We were sort of worried that we may not have enough to talk about today. We should never worry that, should we?

 

John Sumser: Well yeah, and we can get all [inaudible 00:31:58] up about next week, where I’ll be telling you about my new acting contract.

 

Stacey Harris: Yeah. Actually, after the agent who saw you on the street here in Hollywood [crosstalk 00:32:12]

 

John Sumser: I can’t believe that Brad’s willing to be my co-star. That is so cool.

 

Yeah, so it’s been another great conversation, Stacey. Thank you so much for doing this. You have been listening to HRTech Weekly: One Step Closer with Stacey Harris and John Sumser, and I’m obviously not Stacey Harris. Have a great rest of your day, and we will see you here the same time next week. Thanks again, Stacey. Bye-bye.

 

Stacey Harris: Thanks John. Thanks everyone. Bye.

 

 

End Transcript



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