HR Tech Marketplace Quick Take: ADP Acquires Workforce Software

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[00:00:25] Welcome everyone to a special edition of HR & Payroll 2.0. I'm Pete Tiliakis and as always I'm joined by the legendary Julie Fernandez. Welcome Julie.

[00:00:33] Thanks Pete. I think we figured we'd better quickly get on the horn because we got some big news we want to talk about.

[00:00:37] Yeah, yeah. We've got some marketplace updates here. A massive update that we want to share. If everyone saw the news, ADP has acquired Workforce Software which is I think going to have a ripple effect for them and a number of things. So I thought we could opine on that and share. I've been asked a lot of questions about it.

[00:00:54] Yeah, for sure. Same here and I think we both pushed out a quick social media note just to acknowledge that it happened. And I know people who listen to us understand that we bring complimentary perspectives.

[00:01:06] You from the provider side of the house and your clients and interactions with the provider markets, especially in me from the client side of the house. And so that sometimes is all the fun of us putting our heads together.

[00:01:17] Yeah, absolutely. Absolutely. And I think with this one, this is, you know, I'm going to give you my point of view kind of by the numbers for the business side of this and what I think it means for the market. But I'd love to hear from you what you think customers ought to be thinking about this because I think there's a lot of implications here for decision making.

[00:01:32] For sure. For sure. Well, do you want to go first here? Yeah. Let's start with the numbers.

[00:01:37] So look, ADP has acquired Workforce Software. If you're not familiar with Workforce Software, Workforce Software is a advanced scheduling and workforce management solution, globally capable.

[00:01:47] I'm not positive how many countries and I'm not positive how many customers right now, but basically bringing a very, very high end capability for workforce management to the ADP portfolio, which as most people know, has been candidly a gap for ADP, right?

[00:02:02] Up market, we should say. Yeah.

[00:02:04] Yeah, I would say up market, right? Now we're talking advanced scheduling, right? We're talking about capabilities that are not the basic sort of time and attendance, right? There's plenty of those solutions out there. ADP certainly has that. And they absolutely had an advanced capability with e-time, but I don't think it was aging quite or has advanced quite like the solutions in the marketplace that they were competing against.

[00:02:24] That's right.

[00:02:25] Yeah. I don't know your opinion on that, Julie, because you've kind of been messing with it, right?

[00:02:28] Well, I mean, it kind of shows in that, you know, besides e-time, which they have and most people know and understand that that's a longstanding go-to for ADP.

[00:02:38] Yeah.

[00:02:38] They also, a market have been-

[00:02:40] A lot of users on that too.

[00:02:41] Have been bringing forward workforce management, which is their white label, you know, UKG Kronos really, right?

[00:02:47] Yes.

[00:02:47] So when you need to get in the weeds and have something really robust, they of course have a solution and they have a great partnership there that they've leaned on for years and years and continue, I'm sure will continue to lean into.

[00:02:59] But I feel like that's why, that's what maybe points to the gap that you spoke about.

[00:03:05] Yeah, no, absolutely. And I would say it was both a gap, but also a big TAM suck, if you will, right?

[00:03:12] Yeah.

[00:03:12] So ADP's shipping a lot of TAM out the door. I can't say the number. I know the number. It's big. Out to their biggest partner, which was Kronos, now UKG, right?

[00:03:20] That's right.

[00:03:21] You know, and look, let's be honest, right? I mean, UKG is widely adopted in the enterprise space for this. You know, ADP is as well.

[00:03:28] It kind of made sense that they were going to have to work together and they will have to continue to work together regardless.

[00:03:33] But just to kind of give you the emphasis of how important this is, I mean, ADP, think about what ADP does, right? At its core, it is a payroll, you know, the payroll stalwart, right?

[00:03:43] The payroll gem in the world, you know, arguably the biggest, baddest gorilla in the room when it comes to payroll.

[00:03:49] So if you know anything about payroll, you know that the heavy lift for many high hourly, high touch organizations, frontline worker type organizations, the heavy lift is not payroll so much as the gross to net as it is the bill to gross and the source to gross and gathering and getting on collecting all that time.

[00:04:07] But more importantly, managing the schedules in a modern way.

[00:04:11] And we know all the ins and outs of shift swapping and the pains of, you know, making sure you've got the right people doing the right things at the right time in the right shifts, right?

[00:04:21] And so all of that is a lot of work. It's very gnarly.

[00:04:23] And it's very difficult for some of these companies to close payroll because of the fact that, you know, they're dealing with maybe multiple systems, outdated solutions, that sort of thing.

[00:04:32] This is a beautiful adjacency when you think about payroll and time together, right?

[00:04:38] Yeah.

[00:04:39] Especially for those, you know, again, those high messy organizations that have a lot of time needs.

[00:04:43] And when you look in the marketplace, right, if you subtract out the recent UKG marriage with Ametis where global payroll and global time capability were brought together, it didn't really exist, right?

[00:04:57] Like you can go out there and get plenty of time and attendance capabilities from your payroll providers, but you're not going to find a UKG grade enterprise solution that's going to be able to be paired with natively with a company that has a global payroll capability as well.

[00:05:11] Yeah.

[00:05:11] I think there's something really important about what you're saying there because it existed in as much as ADP time was well known, right?

[00:05:18] Right.

[00:05:18] Across the market.

[00:05:19] But what you were describing was really something beyond time and attendance or just time tracking, timekeeping, and the idea that scheduling is coming into play and that things are getting much more complex.

[00:05:32] That's really workforce management, right?

[00:05:34] Yes.

[00:05:34] It's broader than just timekeeping.

[00:05:36] And some organizations have never needed that because the scheduling part is part of their point of sale system.

[00:05:43] Yeah.

[00:05:43] Yeah.

[00:05:44] So they've only ever needed the timekeeping or time tracking and now organizations we see are more often leaning to that fuller, more robust workforce management product, suite of products.

[00:05:55] And that changes even the scope, right?

[00:05:58] And it changes the game a little bit for what buyers are looking for, especially with the hourly workforce.

[00:06:03] Oh, totally.

[00:06:03] Yeah.

[00:06:04] And let's emphasize that WFM, that workforce management side of things, you know, is going to be that resource allocation, your, you know, your labor planning, your labor insights.

[00:06:12] You know, all of that's very, very important, especially to the operational side of the business where, you know, when you look at WFM, it's often sold into the operational side versus so much the HR where HCM is more the HR side.

[00:06:24] So, yeah, this is bigger implications than just payroll and time, right?

[00:06:28] I mean, there's a lot to running the business in this and understanding your labor costs and allocations and timing of everything.

[00:06:35] So a big, you know, look, when you think about all the automation and capabilities and data and insights we have, this is a logical area where we've had a lot of gaps and struggles that has immense impact, right?

[00:06:44] So we need that.

[00:06:46] But yeah, I think, look, I think that's why you saw Amidas come closer together with UKG, right?

[00:06:51] The ability to now go out there and chase a global payroll, global time TAM is huge.

[00:06:57] And I think this is something that ADP can now do.

[00:06:59] And look, they're insulating a lot of money that they're sending off to partners that they can now keep in their own walls.

[00:07:05] So, you know, look, they paid allegedly a billion two, I guess, or that's the valuation, 1.2 billion.

[00:07:10] A little uncharacteristic historically, ADP hasn't always made acquisitions that big.

[00:07:15] So I think that tells you how important this is.

[00:07:18] And I'm excited for what it means for them.

[00:07:20] I'm excited for, you know, workforce software.

[00:07:23] I think there's implications to UKG and their partners we can talk about.

[00:07:26] But yeah, I just want to pause there, Julie, and see what you think about this maybe from the buyer's perspective.

[00:07:32] Yeah, well, I guess first and foremost, I think about it from an ADP client perspective, right?

[00:07:37] If you're an ADP client, how can you do anything other than think there's another arrow in the quiver?

[00:07:44] And it's a big, you know, and it's a big weighted one.

[00:07:46] It's awesome.

[00:07:47] You have choices.

[00:07:49] They have lots of capabilities.

[00:07:51] And so they're adding something more that arguably addresses additional and more market needs.

[00:07:57] And so just being aware of what it is when ADP talks to eTime and when they talk to, you know, their workforce management product, which is, in fact, underneath the skins.

[00:08:09] It's the UKG Kronos, you know, branded and sold by ADP with some extras added in there, right, for value.

[00:08:16] And then, you know, so what does that mean when workforce software comes into the family?

[00:08:21] It means, like with many other things in ADP, there are options and there are choices there.

[00:08:27] So that's the first angle, you know, that I think about it from.

[00:08:31] Any thoughts about that?

[00:08:32] And otherwise, I'll move on thinking about others.

[00:08:34] Well, look, let's be realistic and think through this a little bit, right?

[00:08:37] I mean, realistically, this isn't going to flip the switch overnight, right?

[00:08:40] I mean, I'm certainly ADP is not going to close the doors on eTime, you know, instantly.

[00:08:44] And I know that we're going to get an update from ADP as an analyst community here in a few weeks.

[00:08:49] So we'll have a little bit more detail on this.

[00:08:51] But I don't see them closing the doors on eTime immediately.

[00:08:54] I do see them obviously having to play with Kronos into the future and UKG into the future, right?

[00:09:01] You're going to have customers who are going to come in the door that want that.

[00:09:04] I think they'll stay in their marketplace.

[00:09:06] So that'll still be an option, I'm sure.

[00:09:09] Workforce software will certainly be the future go-to.

[00:09:11] But I think you now have more options.

[00:09:14] And I think that's where you're going to need to work with your consultants to make sure that you understand what those are and that you're making the right decision for your future.

[00:09:21] So I think this is really exciting.

[00:09:23] Let me play off of that just a little bit because I think you're right.

[00:09:25] First of all, there isn't just a blanket closing of doors.

[00:09:28] So when software moves like this are sold, it doesn't mean that the parent company is the only channel.

[00:09:35] This technology wants as many channels as possible.

[00:09:38] That's why ADP can sell and use a flavor of Kronos, right?

[00:09:43] I don't think that will cut out any other buyers or users of the technology, at least not in the foreseeable future.

[00:09:51] And eTime users, it's like there are products that will remain on the shelf and in production while there is a demand and a need for that.

[00:10:02] I do have some clients that have in their particular accounts have been told 2027.

[00:10:11] They're really actively looking to convert the eTime product into something else.

[00:10:17] But I don't believe, I'm not sure that that's a universal date.

[00:10:20] And as an advisor, I get a lot more information through clients than I do through the analyst channel, sadly.

[00:10:27] Yeah, yeah.

[00:10:28] It allows us to bring both forward, which is good for the listeners here.

[00:10:32] Yeah.

[00:10:33] Well, hopefully ADP will push something to their partners as well here because I think there is going to be a lot of questions from consultants as to what this means and that sort of thing.

[00:10:41] So go ahead, go ahead.

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[00:11:18] Well, I was just going to move on to the lens from UKG, right?

[00:11:22] Yeah.

[00:11:22] So if it's impactful, it's probably most impactful, again, not immediately, but certainly to UKG.

[00:11:29] So with ADP making up a very, very large part of their Kronos business, they can expect that some of that will eventually redirect in some other ways.

[00:11:42] Yeah.

[00:11:43] But Kronos has been out there and it's been the big dog product for a very long time.

[00:11:47] Now UKG Pro Time, right?

[00:11:50] Yeah.

[00:11:50] And so it not only survives, but thrives on its own.

[00:11:54] Dimensions. UKG Dimensions, yes.

[00:11:55] Dimensions.

[00:11:56] Well, Dimensions, yeah, I think it's been renamed again since.

[00:11:59] But you're right.

[00:12:01] The Kronos Dimensions Pro, UKG Pro Time, whatever the latest label or name is for it, it's been the big dog in the market.

[00:12:10] And that's not going to change, I don't think, just as a result of this.

[00:12:15] I would agree.

[00:12:15] I would agree.

[00:12:16] Like, look, I kind of thought through this from the UKG lens, as you mentioned.

[00:12:20] And look, let's be realistic.

[00:12:22] ADP is a – I'll stop short of saying the number.

[00:12:26] I can't, but it is a material number in UKG's revenues.

[00:12:30] It always has been.

[00:12:31] It's been for a number of years.

[00:12:32] But I think that UKG is somewhat insulated from this.

[00:12:35] One, because, again, I don't think that there's going to be this mass exodus, right?

[00:12:40] A, you're going to have customers that are going to continue to want to keep Kronos in play – or UKG in place.

[00:12:47] They're going to want to potentially partner in the future.

[00:12:50] There's others that are going to want to go to them.

[00:12:51] But remember, UKG is also pushing further.

[00:12:55] I mean, they already have a great footprint globally with their workforce management.

[00:12:58] The HCM is getting creeping and growing that way.

[00:13:01] I think you're going to see them okay here.

[00:13:04] And the reason is I think they're certainly in some ways insulated too because of the fact that they can play up and down market with their solutions, right?

[00:13:12] They've got UKG ready HCM.

[00:13:15] They've got UKG pro.

[00:13:17] But I think that they are on a momentum right now where I think that they can weather this with broader adoption, right?

[00:13:24] And they've got other markets they can open up.

[00:13:26] And now their go-to – the ability for them to go to market – I wrote a lot about this.

[00:13:31] You can find it on my website when it got announced.

[00:13:34] But that buy with Ametis now means they can support customers from scheduling through to payment, right?

[00:13:39] That's huge.

[00:13:40] That's a huge value prop.

[00:13:41] So I think there's a broader global audience that they can touch, that they weren't touching before when they didn't have Ametis,

[00:13:49] that I think is going to help insulate with this.

[00:13:50] And also I think the push with – we talked the integrations recently with Ready, how Ready is now really has all of the best parts of UKG, great places to work.

[00:14:01] Certainly their Dimensions products, but also their Bright solution, right?

[00:14:05] UKG Bright for their Gen AI.

[00:14:07] All of that is now available in Ready.

[00:14:09] And UKG Ready as a down market solution is incredibly mature and doing very well outside the U.S., not just in the U.S.

[00:14:16] So I think you're going to see them being able to accommodate some of that with adoption through Ready, adoption through global payroll,

[00:14:23] and fundamentally maintaining their – they're the ADP of WFM, right?

[00:14:28] Globally.

[00:14:28] They're the go-to.

[00:14:29] And in many cases, a lot of organizations, big and small are using them.

[00:14:32] So I think UKG is going to be okay.

[00:14:34] You know, Pete, I don't have numbers to back this.

[00:14:37] You might be more likely to get a hold of them than me.

[00:14:39] But I believe, you know, Cronus has been global for a very long time.

[00:14:44] And so when you think about Dimensions or the UKG product and that stable, it is, I think, arguably existing,

[00:14:54] has more existing global footprint and global base and global customers.

[00:14:59] And that's probably not going to change instantly either.

[00:15:02] Yeah.

[00:15:03] Yeah.

[00:15:03] No, I would agree.

[00:15:03] And again, I think you're going to see ADP customers continuing to want to engage with the UKG product, right?

[00:15:10] It's still a very good product.

[00:15:11] It doesn't mean everyone that goes to ADP that needs advanced time is going to go, yeah, we want workforce software, right?

[00:15:16] Right.

[00:15:17] Makes a lot of sense, certainly.

[00:15:18] But I think there's still – you know, Cronus is still an option.

[00:15:21] Or UKG, I keep saying Cronus, is still an option.

[00:15:24] It's certainly going to be still a stalwart leader out there.

[00:15:28] It's definitely setting the pace for WFM, I believe.

[00:15:32] And yeah, I think it's going to be interesting to see what we do going forward here, though.

[00:15:36] It's going to be – yeah, more consolidation, right?

[00:15:38] We keep saying that.

[00:15:39] Well, Pete, and I thought there were two other things that came to my mind that I thought we ought to at least spend a second on.

[00:15:44] The first is what else is out there, right?

[00:15:46] Because we're really talking about a couple of the biggest, the most in play, the most known players.

[00:15:51] But there are some other solutions out there, and I'm going to rattle off a few, and then you tell me what I missed that might be notable.

[00:15:57] But what was once upon a time and was for a long time, Workbrain went over to Infor.

[00:16:03] And so Infor has time and workforce management solution.

[00:16:07] So that's there, and that's not insignificant.

[00:16:10] Yeah, great call out on that one.

[00:16:11] Very sector-specific over there.

[00:16:12] Yeah, yeah.

[00:16:13] Yeah, a lot of sector alignment there.

[00:16:15] The other thing is, do folks forget that Dayforce really began as workforce management and payroll and then kind of crept up into HR?

[00:16:24] And so its workforce management solution and its time capabilities are really quite mature and were a core foundation of their product versus starting from the HR side and moving down into the more complex.

[00:16:37] So you can't forget about that.

[00:16:39] Yeah, no, and I would say one of the stronger WFMs when you're talking an HCM integrated, you know, native HCM.

[00:16:46] So yeah.

[00:16:46] That's right.

[00:16:46] That's right.

[00:16:47] And then, you know, I just, I also think about a regional play.

[00:16:51] So if I'm in Europe, I know we have listeners all around the world.

[00:16:55] ProTime that SDWorks has is another multi-country call out.

[00:16:59] But I'm pretty sure that it's still limited mostly to Europe and not more global than that.

[00:17:04] But that one also kind of hit, you know, hit me as a call out, an obvious call out that is still, you know, quite a competitor and a recognized name in this space.

[00:17:15] Did I miss any?

[00:17:16] I would say, yeah, one more I would call your attention to that I've poked around on over the years as an analyst, it would be Quinix.

[00:17:22] Q-U-I-N-Y-X.

[00:17:24] They are a global capability, very AI driven.

[00:17:27] Actually founded, if I recall correctly, by a gentleman who was working at McDonald's and saw how crappy the time solutions were and how hard it was to deal with that and actually created this software.

[00:17:37] So a great origin story.

[00:17:38] But Quinix would be another one I would keep your eye on if you're looking for a global capability.

[00:17:42] Okay, great.

[00:17:43] And of course, you know, there's just tons of things out there that are industry specific, that are tied to, you know, industry applications or that have been around for a long time but don't maybe necessarily have the same footprint.

[00:17:54] So, you know, these aren't the only two big dogs in the market, but they certainly are the most well-known, the most robust.

[00:18:00] And that's why we're shouting them out.

[00:18:01] Yeah, yeah.

[00:18:02] How much of what work you're doing, Julie, just curious, is including time now or advanced scheduling or any of that?

[00:18:08] Just WFM in general?

[00:18:09] You know what?

[00:18:10] Thanks for asking that.

[00:18:11] Seen a rise of it?

[00:18:12] Well, yes.

[00:18:12] And I would say there has been a rise of it specifically because, you know, folks that follow some of these players know that before acquiring Kronos Dimensions, UKG had a couple of legacy time systems that needed to go away.

[00:18:26] They weren't robust enough.

[00:18:28] And as you, you know, wind down some of those things, you end up finding more, a greater and greater need for advisors, consultants, you know, somebody to help you unwind or unravel legacy time systems.

[00:18:40] So, you know, just like, you know, with a lot of these people that have been able to do with you, you know,

[00:19:10] in my world that payroll conversations usually have a time dimension or a big time focus.

[00:19:16] That's great. I mean, I think, like I said, I've been to so many organizations over my

[00:19:20] consulting career where it's like, even if we solved payroll, it wouldn't really have mattered

[00:19:26] a whole lot because of the time just struggles, right? And the access databases and the crazy

[00:19:31] things they were doing to patch time together, just the gnarliest part. I mean, even at Disney,

[00:19:36] when I was there, interestingly used, partly we use work brain, but a lot of the transformation

[00:19:41] left time out of scope because it was just so complicated. And at the time, nothing could

[00:19:46] really handle it. So we had a mix of everything. So I had one more thing. I don't have a lot,

[00:19:51] you know, I don't have a lot to say other than say, Hey, watch out. Cause this is part of the

[00:19:55] whole conversation. If you're, you know, if you're looking at what you have to do with time and that

[00:19:59] is clocks, right? And that's been messy all along. And I'll tell you why it's, it's partly messy. And

[00:20:06] a lot of times buyers don't necessarily know this. And that is, you know, when these big

[00:20:11] intra-company deals are made and somebody is white labeling somebody else's solution, you know,

[00:20:16] there are other components in play. And sometimes that hardware is one of them. And so, you know,

[00:20:22] one of the, one of the things that surprised me when I learned it, but the more I know, the more

[00:20:27] I understand why it's there, but the, the very same dimension shared software that has forever been,

[00:20:34] you know, not a UKG product, but also sold by ADP. There are broader economic arrangements that might

[00:20:41] keep a buyer from using the same clock, the same hardware that works with that same software.

[00:20:47] You, you can't necessarily use one when you shift your software to the other. And so sometimes that has

[00:20:54] nothing to do with the technical aspects of the product. It has more to do with the intercompany

[00:20:59] arrangements between providers that have solutions and, and have their own markets that they're making

[00:21:06] in a space. So that's a great call. No clue how this is going to work out, you know, for software

[00:21:11] clients that were clients direct, you know, direct, but it's something to watch for. Yeah. That's a good

[00:21:17] point. I'll have to bring that up when I talked to ADP to understand what the clock capability is at

[00:21:22] workforce software and how they're going to kind of look at that. Cause I know ADP does clock,

[00:21:25] certainly Kronos or UKG has those and offers them. A lot of firms will, um, and, and they typically

[00:21:31] partner enabled, but, uh, you're right. You're right. It doesn't all, it doesn't all play, right?

[00:21:36] It doesn't always make sense. Yeah. There are rules, rules of the road that are struck when,

[00:21:40] when folks are collaborating together that sometimes don't make sense from the buyer's point of view.

[00:21:45] They're completely non-sensical, right? Yeah. Yeah. Yeah. No doubt. No doubt. Well,

[00:21:50] look, this has been great. I, uh, Julie, I hope, I hope you enjoy this. I had fun. I learned,

[00:21:54] and we're going to try to do more of these little market pulses, if you will, as and when news comes

[00:21:58] about, I know we do our market news kind of, kind of on a monthly basis or every other month. So, uh,

[00:22:03] yeah, hopefully you enjoy these. And if we can, we can answer any questions or opine with you about,

[00:22:08] about this move, we'd love to certainly reach out and engage with us. We'd be happy to help and,

[00:22:11] uh, more to come on this, right? We'll, I'll be getting more updates. I know you will, Julie,

[00:22:15] and we'll certainly be talking about this as it, as it goes forward. Absolutely. Thanks Pete for

[00:22:19] hopping on. And I, I hope folks, uh, folks enjoy the listen and I'm sure we'll learn more as we go

[00:22:24] along. Likewise. Take care of everyone. I get it. The podcast just isn't enough. That's all right.

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