Aon Hewitt, the field changes for Mercer, ADP, Kenexa

My wife and I watched the full collection of West Wing episodes not to long ago and I couldn’t help but recall the conversation President Bartlet had with his Joint Chiefs about the virtue of a proportional response as I read this mornings news.  I was greeted with news that consulting giant Aon, Inc. has announced it’s acquisition of Hewitt Associates.  Looking back over the year, I have to wonder, if this the icing on the cake for Aon or just another course in the meal?

We know Aon as a global player in the risk management, reinsurance and Human Capital consulting space, but as a benefit provider?  You bet.  Aon has been in the HR Outsourcing market for quite a while and officially launched its seemingly successful and growing Benefits solution practice in November of 2008. They’ll now happily handle your employee life cycle from hire to retire and then some.

Interestingly though, the last several months have seen Aon picked up the pace in growing its benefit and HRO offerings and making several high-profile hires.  Let’s take a look.

Back in February, Aon promoted Bob Mongia as the VP of development for the global consulting organization and the Benefits Solution Practice.  Later that month, Aon announced that with adding 13 new benefits clients they’d passed the 100 client mark with over 1.5million participants within 14 months of launching the service.  At this point, Aon Shaka Maharajh, Senior VP and Client Solutions Leader said, “The improvements in our technology have been critical to our growth”.  File that quote away for later.

In March, Aon entered into an agreement to acquire J.P. Morgan Compensation and Benefit Strategies Division.  Then Aon picked up a small contract to provide benefits and human capital solutions services.  It was for the U.S. Army with a 5 year contract for $1.27 billion.

April saw the hiring of a new VP of development for the Recruitment Process Outsourcing in the central and west regions and Richard Kantor as a senior VP responsible for development and implementation of the total rewards service line as well as the global benefits and strategic human capital consulting opportunities.  Also in May, Aon issued a press release about the success of their Benefits SolutionsTM as a Canadian pioneer.  Again they mention the solutions that they have built.

In May it was announced that Jim Causey was to be another VP for the RPO practice and Kirby Bosley was brought on as the senior VP and H&B practice leader for the west region.

On June 3rd, Aon released an announcement calling out awards released by Risk & Insurance and HR Executive magazines in which 6 of their consultants were declared “Employee Benefits Power Brokers”.

June 29th, Aon sold of their subrogation business unit to Praxis , reducing their food-print in the reinsurance space.

And as you know, today, Aon acquired Hewitt, who incidentally joined forces with back in May.

So, as the dust settles, there is a new business unit at Aon call Aon Hewitt.  Good news for current Hewitt clients in that Hewitt chairman and CEO Russ Fradin who will report directly to the CEO of Aon.  Aon is now a marked leader in the Benefit administration arena having picked up Hewitt’s over 3000 clients.

Hewitt representatives are reeling from the announcement too and today are telling clients that their technology will prevail as it is much better than Aon’s, so clients need not worry about any impacts to them.  Is Aon really going to dump all that technology that they’ve invested in the past 18 months to build the Benefits business as they have?

Aon now has a fairly comprehensive product and services offing too – From its Recruitment Process Outsourcing to Benefits Admin, to Payroll and Talent Management, there is now less of a delta between them and other major employer services companies like ADP and solution providers like Kenexa and Taleo.

I don’t think we’ve seen the end of this yet.  My guess is that we’ll soon see some realignment within Aon between existing and new products and services and a cross selling which will make them a major player in some of these spaces they are just starting to dangle their feet into.

Will Mercer respond by moving another leg in the coming months?

Posted in Benefits Administration, Perspective | Leave a comment

Change management from a coral’s perspective

One of my hobbies is tending to salt water aquariums. I presently am running two, a 55 gallon and a 75 gallon.  My wife is now letting me get a 200 gallon tank and has agreed to my taking over the dinning room with it. To put it in context it will end up being a set up that is 8 ft tall, 7 ft wide, 2 ft deep and weigh in at a bit over 3500 lbs.

Getting ready for such a thing is no small undertaking and involves everything from plumbing the tanks to reinforcing the structure of the house where this will sit. The first step though was to relocate the other two aquariums.

Working with salt water is a bit more complicated than fresh. You don’t only have to worry about the temperature of the water when you introduce something, but you also have to be concerned about the salinity, PH, water hardness, calcium levels.  Many corals are particularly sensitive to the change and can be harmed or killed by a rapid change in the water. I have it set up so that water continually circulates between the two current tanks and the sump so in theory, there shouldn’t be any difference in the water quality from one tank to the other, which makes it easier when you relocate things as I had to do.

As I started to move things from one tank to the other, I drained the water back to the sump and started catching fish and removing corals as the water level decreased in the tank to be moved.  As it got lower, a lot of sediment was stirred up and the water became pretty murky.  One the level was low enough, I pulled out the largest of my corals, which is also the most sensitive, and moved it to the other tank.  The goal was to keep it in the water as long as possible and moved as quickly as I could so that he wouldn’t be impacted.

That happened 3 days ago and he’s still not adjusting well. I don’t know if it was the mess that was stirred up just before the transition or if it was the transition itself. Maybe the new environment wasn’t as ready as I thought It was.

As I was looking at him this morning, I thought about a recent conversation I had about Self-Service with one of my key stakeholders.  He’s very excited to introduce ESS and MSS to the business because of the efficiencies it will introduce and the money it will save.  However, he recognizes that we have to take it slow and acclimate the business to it first otherwise it won’t be adopted.  If we introduce small changes and improvements over time though, they will be using Self-Service before they know it.

We’ve all heard about the frog in a boiling pot of water, but I don’t think we realize how often we are just like that.  We will push back against sudden change, but if it’s done gradually and we are given time to adjust before we realize it, we’ve adopted the change without even knowing it.  Without out adoption from the organization, even the best of solutions will won’t succeed.

Posted in Change Management, ESS/MSS, Projects | Leave a comment

Putting a man on the moon proves easier than California payroll

There are two things that I’ve learned over the years of working in and around payroll.

First, the hardest part of most any project is justifying the cost of major projects to the executive suite in order to get funding.  It can require persistence and a great deal of creativity, and sometime just dumb luck to get the planets to align in the right way.

Secondly, California is my least favorite state.  Sure, I love the weather in San Diego many of the exports we get from our 3rd largest state, but I have to say, with it comes their employment, labor and payroll tax laws, they can keep ‘em.  I can’t tell you how many times I’ve had to develop special processes or solutions to address the California regulatory issues.

You’ve no idea what I’m talking with what I’m talking about?  Allow me to give you an example.  Most are familiar with the basic rules around FLSA overtime calculation, even if you don’t know it.  With a few exceptions, time worked over 40 hours in a work week is paid at time and a half.  This is what is used in most states.  Now, take a look at the multiple pages of rules, exceptions and flaming hoops of death that a payroll system has to not only able to jump through, but know when to jump through them in California.

I could pull out many other examples of what I call the ‘except California’ rules, but I won’t try to confuse you any further.  Suffice to say, their laws have resulted in many of my bills being paid as a consultant.

This morning as I was scanning the news headlines, I came across a wire piece from Associated Press with the headline “California minimum wage fight heads back to court”.  Preparing to grab my bottle of Advil and go talk to my payroll queen, I open the link to see what new head-ache we were in for.

In the article, I learned that the state legislature and the Governator are at odds over the state budget. With the last fiscal years budget having run out on June 30th, Governor Schwarzenegger is looking for a way to apply some political pressure and to limit the State’s exposure.  He proposed, and through a court battle, has won the right to temporarily reduce the pay of non-union state employees to the Federal minimum wage until the budget is approved. Once the budget is approved, all employees will get back pay. An interesting tactic I have to admit.

I started to chuckle though when I got to the reason he was heading back to court again.  It turns out that the state controller, the guy responsible for payroll for the state, says that their payroll system can’t do it.  The article claims that the limitation is due to the system being more than 60 years old and not having a redesign since 1970.  More than 60 years ago puts you to the 1940’s – remembering that ENIAC was completed in 1946.  Assuming that in 1970 when it was rewritten, it used current technology, which means that it was most likely created using technology similar to what got Neil Armstrong to the moon on July 20, 1969.

Since then, the state hasn’t done any major enhancements or upgrades, which makes me wonder if the laws aren’t just created to legalize their software glitches.  Now, their track record for complex legislation and not investing in technology seems to be catching up with them, since, after years of trying, they finally came up with a rule that is harder to implement than putting a man on the moon.

It seems that the controller may have justification for that replacement project now.  Sometimes, the only way to get the funding you need is to fall flat on your face.  What do you want to bet that a system replacement project makes it into the next budget?

Posted in Management, Payroll, Perspective | Leave a comment

Why SaaS doesn’t serve

SaaS vendors, continue to debate which flavor of SaaS will ultimately win out.  Vendors fall largely into one of two camps – the purest such as WorkDay, Taleo or SuccessFactors who host their customers out of data centers running on the same code base. The other camp is occupied by those that host separate instances of their product for customers to not only consume, but also to control.  Is the small savings worth the lower cost?

Generally speaking, the term ‘Cloud Computing’ refers to applications that are hosted with a more ‘purest’ approach.  To understand this a bit better, let’s walk through an example of how it works.  At Bob’s Business Systems’ data center, they host clients of their core product.  They have each client’s data stored in a large shared database and then have a series of application and web servers all running the same version of the same software for their customers.  This is great for Bob because he’s able maintain only one line of code and one server configuration for all his clients.  This make upgrades easy because everyone is upgraded at once.  All this translates to lower cost for Bob and savings for his customers.

There are a few issues with this model though such as security, quality and control.  For now, let’s talk about the quality side of the house and those cost-effective upgrades.

Bob’s company is a young company that started in his Mom’s basement but quickly grew in once he received that first round of VC funding.  Sure, he’s now a top player with $150 million in revenue and has seen double-digit growth for the last few years. Reality though is that it is still a young company that has spent its entire existence focusing on getting product to market quickly and adding as many features that will attract new customers so that they can continue to see 30% – 40% growth.

Let me ask you though, have you ever noticed that when you ask your IT team to make a significant enhancement to your core system as quickly as they can that you seem to have more bumps and bugs than when you don’t rush it?  Or maybe you’ve noticed that things are as smooth when you are working with that new developer.  The truth is that when you are rushing to get product to market, you don’t always take the time to test and rarely have the hundreds of hours been spent developing your processes to manage release, changes, testing, etc.  The result?  Young teams can run the risk of developing products that aren’t clearly thought out, well designed or thoroughly tested.

In a recent article syndicated on BNET, SilkRoad co-founder Brian Platz said one of the reasons his purest vision of SaaS will win out is because if the vendor sells software that can run on internal computers, in other words something I can bring in-house, is it will be more expensive because ‘extensive testing may be needed in advance of new releases.’

Hold the phone their Brian, so what you are saying is that you can get by with minimal testing of products since you are hosting them?  My guess would be you feel comfortable with that because you feel you have control of your environment.  Glad you aren’t losing sleep at night, but I’m as nervous as a long tail cat in a room full of rocking chairs.  Personally, I like the comfort regression testing gives me.

The other thing the purest don’t like to talk about is those bugs that they create (every vendor has them so I’m not suggesting others don’t).  When they give it to one client, they give it to every client.  Everyone is on the bleeding edge together.

At the end of the day, the risk is that cloud computing will continue to leave customers without a firm footing.

Posted in Perspective, SaaS | 2 Comments

We just don’t care

Normally, I agree with Steve Boese and his pontifications on his blog.  However, yesterday I think the kool-aid was bad.  In his posting, Comfortable Being Scarred, he suggests that one of the reasons that Social Media hasn’t been integrated in the work place is because HR professionals are comfortable being scared.  I just don’t think they see the value.

He ended asking 4 questions.

  • Pointing out that we as a society focus on the negative aspects of things giving the example of the World Cup and the officiating, annoying vuvuzelas and poor team dynamics.  He queries why don’t we focus on the positive?
  • Why are we so drawn to the negative?
  • Why do we try to avoid, mitigate, reduce, manage and every possible other thing except embrace risk?
  • Why are so many of us ‘comfortable being scared?’

Let’s deal with these.  First we shouldn’t be surprised about the focus on the negative aspects of the World Cup.  Starting at an early age, many kids learn to focus on the negative of others to avoid dealing with their own problems.  When dealing with play ground bullies, how many times did you hear something along the lines of just ignore them, they are just teasing you because they are jealous.

We learn through this that using other peoples problems is a good distraction from our own.  One of the comments on Steve’s blog points out that people aren’t responsible.  The commenter was right, we live in a society in which many want to abort the consequences of their actions instead of rearing them into a positive thing.  That would be hard work and people are lazy.  It’s easier to sit around and watch Jerry Springer.

Why are people lazy?  I’ll argue it’s largely apathy due to the seeking of a utilitarian happiness based on an individualistic understanding of freedom without responsibility.  In short, the opposite of love isn’t hate, it is  indifference and people aren’t vested in things, so why should they be anything by indifferent.  Natural law disagrees with this. We should be engaged in the world but society tells us not to be, so people run from the truth. They seek to point out the negative in others instead of stepping up and dealing with what really matters in their own lives.  That is why we are drawn to the negative, because we don’t vest ourselves in the positive.  This goes much deeper, and if you are interested, I’d point you to John Paul II’s book Love and Responsibility or Gratissimam Sane.

It’s interesting though, because we want to avoid that negative in our own life.  This is why we work to “avoid, mitigate, reduce, manage and every possible other thing”. Embracing risk would be counter to this, we are risk averse which is just a fancy way to say that we are scared and we aren’t comfortable being scared.

As Beth Carvin, CEO of Nobscot points out, we have business roles dedicated to addressing our fears – HR in particular is there to protect us from risk and our fear of being drawn into court.  If we are passionate about something, if we care enough, we can see past the risk to the opportunity and not just avoid the risk, but embrace it.

Last April, a homeless man came to the aid of a Queen’s woman who was being mugged.  He was stabbed several times and lay dieing in a pool of his own blood while 25 people walked by, one even rolling him over and then back.  They didn’t want to get involved.  They weren’t scared, the were indifferent and they figured someone else would take care of it.  He died because nobody cared.

When someone cares enough, Social Media will be embraced, which is why you are seeing it recruiting and in a few other isolated pockets.  For the rest of it, the value remains to be seen.  So, for now, I’m sticking with my original premise, companies aren’t scared of social media, they just don’t care.

Posted in Perspective | Leave a comment

Self-Service and Mobility and an EPT

After starting this blog a few weeks ago, I have to admit, I’m addicted to checking my blog stats. It’s become a personal challenge to myself to see if I can draw more readers today than I did yesterday. I frequently look and wait for the stats page to load with the hopeful excitement of a wanna be daddy watching for that plus sign to the EPT.

I just downloaded the BlackBerry WordPress application while sitting at lunch. Now I can not only write and publish posts but I nervously see how many more people are reading what I have to say. As I was waiting for that WordPress “plus-sign”to load and wondering if people would think my baby was ugly, my mind wandered to our mobility strategy.  I maintain that we’ve yet to scratch the surface when it comes to the benefits of mobility in HR apps. The last time I raised the point I was asked, “how often do you really need to change your direct deposit information while you are waiting for you latte anyway?”

Self-Service is so much more than just allowing you to change your information as an employee.  For starters, as managers, we need to keep tabs on many things for our employees, from needing to be able to look up PTO balances and approve vacation requests to make comments on the Employee Performance Profile.

One of mandates of the business is to keep distractions from the associates so that they can focus on the customers. Makes sense.  This particular business unit has a number of large call centers and the managers in those centers handle are charged with removing those distractions.  What would a distraction be?  Let’s say Sally CSR wants to take the day off and asks her boss about it.  She tells her to send an email and she’ll check the schedule and her balances and let her know.  From that point forward, Sally is distracted by waiting for a response from her boss.

Enter MMSS (Mobile Manager Self Service – I came up with that all on my own!).  The manager has a nifty tablet device other than the iPad because those come from the competition and are illegal here.  Sally CSR asks about the vacation day and Molly Manager is able to pull up the schedule on the spot, check Sally’s PTO balance and then approve the request while updating the schedule, all in a matter of second, all without taking a step.  The distraction is removed.

Another problem is that the managers need to be on the floor instead of in their office.  Managerial tasks like maintaining notes on your employees for performance reviews take time off the floor, which lowers customer service as well.  With MMSS and that nifty tablet again, the manager can be making notes in the employee’s performance profile as she encounters something noteworthy.

Molly manager can review call metrics and pull up analytical reports on the fly that might show that Billy is taking too long to resolve calls today.  While listening on calls, she might learn that Billy is taking longer because he continually has to look up the answers to questions and needs more training.  On the spot, she can register him for the next available training class to resolve the issue.

When thinking about mobility, the question is often asked, what would the employee or manager want to see as a mobile application.  We need to stop thinking that way and instead think of it in terms of allowing the manager to take their desk with them.  That is empowerment.

Posted in ESS/MSS, Management, Perspective, Reporting | 1 Comment

ADP’s WorkScape acqusition good for CornerStone

Another of those big dogs has moved.  Yesterday, ADP made its own announcement.  The employer services giant intends to acquire Workscape, Inc.  Workscape is based in the Boston area and is a global provider of benefit and HR services.  Interestingly, they have not only been ADP’s competitor, but also the competitor of Talent Management.  Why interesting?  Don’t forget in may of 2009, ADP announced a strategic partnership with CornerStone OnDemand so that could round out their product offerings with what was that again? Talent Management.

In its press release, ADP is putting the attention on the Benefits piece saying that the “acquisition will significantly expand ADP’s presence in the benefits marketplace.”  Some are already asking if ADP’s acquisition intentions mark the handwriting on the wall for CornerStone already.  I don’t think so.

ADP got as big as they are by being smart, being conservative and by buying up the competition.  I think this is actually more of a move to solidify themselves on multiple both fronts, Benefit Services, Talent Management and their BPO offering. Back in 2003 when ADP acquired ProBusiness, they did it as they themselves were entering the BPO market.

Pro as you might remember, was one of the first companies to successfully create a BPO offering in the HR/Payroll space.  For a number of reasons, Pro made itself a target to be acquired and in late 2001 when their stock price fell through the floor, they started getting ready.  19 months later, it was done and they had been assimilated by ADP.  They weren’t after what Pro had done so much as they were interested in the name and their clients.

I worked in the BPO group at Pro before the acquisition and then spent 5 years at ADP in the BPO group after.  Most of what we had built at Pro had been thrown out with the exception of the tools used to run the service center (the called it DASH).  Acquiring Pro gave ADP a stronger foothold in the marketplace not only because it got the clients and took out one of its key competitors’, but also because of the name and the tenure in the market place that they inherited.  Don’t believe me?  ADP still has maintained Pro as a separate division and kept the name.

What ADP did do though is to migrate most of the clients off of Pro’s products.  GoldenGate is a thing of the past and few remember Whitney as a payroll engine.

I think something similar is going on here.  ADP has long been a smart follower and is looking to grow in both the Benefits admin space as well as in the Talent Management space and adding Workscape will help them do that by adding clients, credibility and experience.  The fact that Workscape has some nice Self Service tools in the MSS and HR Central products, which I would expect to be integrated as the new front end to Ev6 (yes I said Ev6 and not Ev5) won’t hurt a bit either.

We also have to remember where these products are in the market place.  If you look at Gartner’s famous Magic Quadrant report from 2009 for Employee Performance Management systems, you’ll see that CornerStone OnDemand isn’t in the top quadrant, but they are pretty close to the line listed as a visionary, with only 3 others reported as having a more complete vision.  They were just south of center on the ‘ability to execute axis’.

Where is Workscape?  They are firmly in the lower left corner listed as a niche player.  To be fair, the chart for EPM player’s looks like someone’s had a decent grouping in the center during target practice, but Workscape is as further from center than most.  Even Taleo isn’t doing a better job of executing, although Gartner does report that they have a more complete vision.

In short, CornerStone OnDemand isn’t going anywhere from the ADP lineup. It will only benefit in the long run from this because potential clients will take ADP all the more seriously in the talent market and they will most likely seek to merge their new clients onto a single platform, which will most likely be CornerStone OnDemand.  The merger will add to their vision and certainly their revenue, lack of the latter being the primary impediment to execution.

My prediction, we’ll soon see CornerStone OnDemand as a leader in execution in their space.

Posted in Benefits Administration, EPM, Perspective | Leave a comment