Friday, May 27, 2005

HR Market Health & Vendor Updates

This info is now old (May 17), but I always find it interesting to see how vendors are doing. has a quarterly review of some trends. Here are a couple of comments I have:

Paychex will always do well. They have an incredible business model and a rediculous record of profits. Their next move should be to move into the large employer space, but they need MUCH better software to do that. They may also not have the appropriate service model for that space yet. ADP dominates that space for outsourcers, but they do not consider Paychex a real competitor (except in the small market). ADP sees mevement away from ERP's as the real opportunity. ADP is also the only vendor that can beat Paychex in terms of profitability. They are back to double digit growth which was the corporate mantra for over 40 years (something like 160 consecutive quarters of double digit growth). It's good to see ADP there again.

Ultimate Software keeps claiming they are an outsourcer, but I just don't understand that. Based on prior comments, I don't get how these guys are making money. I think their software achritecture is crap, but they certainly do market well and the functionality is pretty cool.

Ceridian is spiraling towards death. Being under investigation by the SEC is never good, but here it means sales as low, moral is terrible, and they are losing market share. Simply put, why outsource an accounting function like PR to someone who had poor accounting controls???

Watson Wyatt was a surprise. They done ok since going public, but I'm surprised HRmarketer hi-lighted them as a positive. With a huge amount of their revenues coming from actuarial services, WWW is the riskiest of the 3 major HR consulting firms (mercer and TP). However, they do have alot of brainpower and hopefully they can transform their brand image slightly away from DB as the DB market will shrink over then next few decades.

Hewitt is a negative? Sure they fell short on revenues, but lets look at client aqcuisition. Hewitt is not taking any new implementations. As it is, they have an implementation backlog of almost a year. Hewitt has more business than they can implement and this is a great example (unlike WWW) of a consulting firm that has successfully transformed their brand for the economic future.