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To help companies improve the efficiency and effectiveness of their payroll management processes, we have assembled our 2015 Value Index for Payroll Management. It evaluates vendors of payroll management software to provide a guide for selecting the right application to suit specific needs. The executive summary is available for download, and this analysis provides a snapshot of the findings. Ventana Research defines payroll management as all activities associated with paying employees correctly and efficiently. This set of processes crosses the human resources and finance functions; deployed properly it provides employees with access to their payroll information as well as improving payroll management effectiveness.
Our benchmark research on payroll management optimization finds that the majority (54%) of organizations have a priority to improve the efficiency of their payroll management processes. Almost as many (44%) cited a more strategic aim for payroll management: increasing the productivity of the workforce. Indeed, more generally almost three in four organizations (71%) said it is very important to improve the productivity of their workforce. Further evidence of this lies in the finding that the most-often cited driver (48%) motivating organizations to consider investments in payroll management is a demand for higher employee productivity.
For many years payroll was a separate process inside organizations, and payroll management often has been a stand-alone application or service. However, with the growth of integrated systems for human capital management, vendors of payroll management software have started to develop systems that integrate payroll applications with talent management and workforce management systems. Such integration can enable organizations to create a single employee record that managers can use to reach important goals such as satisfying compliance requirements, tracking all aspects of compensation and better aligning pay to performance. This, the research finds, most have not done. For example, currently fewer than one in 12 (8%) have integrated payroll management with their talent management system, and although 22 percent said they plan to do that in the next 12 to 18 months, fully half of organizations have no such plan. Similarly, 29 percent reported having a dedicated workforce management system, but only one in five have integrated their payroll management system with it.
The 2015 Value Index for Payroll Management uses the Ventana Research methodology, a framework that evaluates application vendors and their products in seven categories of requirements. Five are product-related, assessing usability, manageability, reliability, capability and adaptability, while two quantify the customer assurance issues of vendor validation and total cost of ownership and return on investment (TCO/ROI). To assess functionality, one of the components of capability, we applied the Ventana Research payroll management methodology and blueprint, which links the business process of payroll management to an organization’s information technology. We also applied best practices from our payroll management benchmark research that statistically look at the market of using payroll management applications in organizations. We weighted the seven categories and their importance in assessing vendors and their applications. This Value Index report evaluates the following vendors that offer products that address key elements of payroll management as we define it: ADP, Ceridian, Kronos, Oracle, SAP, Ultimate Software and Workday.
The Value Index for Payroll Management in 2015 shows that currently the top supplier is SAP, followed closely by ADP; both are rated Hot vendors. SAP was the only vendor to submit its on-premises product and ranks first in Reliability, Capability and TCO/ROI. In third place is Ceridian, slightly more than one percentage point behind ADP, which ranked first in Manageability and Validation. Ranked fourth is Workday, also rated Hot, which ranks first in Usability. In fifth place, only 0.3 percent lower, is Ultimate Software, which is rated Hot in all seven evaluation criteria.
Oracle also is a Hot vendor and came in sixth, separated by one percentage point from Ultimate Software. Oracle ranks first in Adaptability with strong integration capabilities and recent advancements in its cloud computing application platform as a service technology. Oracle did not provide a submission for this Value Index, but documentation of its product is publicly available and used along with knowledge of the product through briefings, customers and conferences. Rounding out this Value Index is Kronos, which is rated Warm; its product is suited to provide payroll management for small and midsize companies located in the U.S. Kronos did rank highest in Validation, being well established in the related workforce management software segment.
This Value Index evaluation finds that all the products assessed can handle the core payroll capabilities for domestic North American companies. These capabilities include calculating gross to net pay, executing multiple payrolls, managing tax calculations for most scenarios, and allowing configuration of business logic to accommodate most payroll scenarios. All the products provide some type of reporting and analytics to handle compliance reviews for zero net pay and other standard policy violations.
The products differed in their standings in our seven categories. In our Usability assessment, we segment according to role, specifically payroll professionals or managers, employees and senior managers. In our benchmark research Usability is the evaluation criteria most often rated very important. All the products provide a functional user interface for payroll professionals, though some, such as Workday, provide a more intuitive experience. ADP and SAP followed closely. For employees, the largest group of users, the leading products have evolved robust mobile and Web-based employee self-service applications. For senior managers, the vendors of the leading products have combined new, more powerful analytics capabilities with mobile functionality to differentiate their offerings from others.
The Reliability category determines whether the products can deliver the performance and scalability required. The evaluation criteria include the nature of the product’s support for an organization’s IT architecture at the level of the enterprise, the network, the server and the data, and the sophistication of its development and customization capabilities. SAP ranks the highest in Reliability with ADP following closely and Ceridian and Ultimate Software also rated Hot.
In the Capability category, which in our benchmark research is the evaluation criterion third-most often rated very important, we found differences among products in advanced functionality, notably the degree to which they can handle international payrolls. Ultimate Software and Workday do not process international payroll within their products but through partnerships with payroll aggregators; they receive some amount of the information back into their product from the aggregators to be reported on or managed there. Conversely, SAP and ADP handle much of the international payroll processing directly while relying on partnerships for some cases. Nearly every vendor offers a broader product suite beyond payroll management. Most offer a human resources management system, most have workforce management, and some have a talent management product. The ERP vendors Oracle, SAP and Workday also offer a financial management product for posting payroll directly to the general ledger. SAP ranks highest in Capability; ADP and Ceridian are tied for second place. Ultimate Software, Workday and Oracle also are rated Hot.
Manageability assesses whether products meet business and IT needs for installation, deployment and administration. Here Ceridian ranks highest, with ADP and SAP following closely, though all vendors are rated Hot in this category. For Adaptability, there is value in providing an integrated approach to payroll and other human capital management products, but it also is useful for products to integrate well with third-party products for customers that prefer to use them. ADP, Oracle and SAP provide more established integration frameworks, which is reflected in our ratings. Workday provides integration tools but requires customers to use its HR management product as a condition of purchasing payroll. Oracle ranks first in Adaptability, followed by Workday and ADP.
Our Value Index also provides for customer assurance in two categories. Validation assesses the vendor’s commitment to the market segment and its products along with the breadth of its communication of relevant information. Here Ceridian, Ultimate Software and SAP rank highest though all are rated Hot. The TCO/ROI category applies evaluation criteria designed to assess the value the vendor delivers with its products. Here SAP and Workday lead the field, and Ceridian, ADP and Ultimate Software follow closely.
Organizations can use the Value Index realize other benefits from upgrading their software and match important priorities. For example, half of organization in our research that made such investments have gained efficiency and accuracy in the payroll management process, two-fifths are better able to comply with regulations, and three in 10 have better analytics and visibility into payroll metrics. Among considerations for establishing a business case for payroll management software, the most-often cited, audit and regulatory compliance (very important to 52%), addresses payroll effectiveness while the item ranked fifth is reducing the time for payroll tasks (very important to 33%). The research finds a variety of reasons organizations change their payroll management vendor, from operating faster (cited by 59%) to reducing resources (41%) required to operate the processes.
Our benchmark research and Value Index analysis are carefully crafted tools that can help any organization assess and improve payroll management. Please download the executive summaries of each as you begin to frame the challenge and opportunity for yours and reach out to us if you want to use the complete research for a methodical assessment of your organization and vendors.
CEO and Chief Research Officer
When organizations need to optimize their business processes and improve operations and decisions, the often speak of having the right information at the right time, but don’t always make that a priority. This information optimization is often thought to be expensive and time-consuming, especially with advent of big data and disparate data sources across cloud and on-premises environments, as I have articulated. Datawatch can help business get to information of any variety or volume at any time through its access and integration tools. When I published my last analysis of Datawatch, it had made significant advancements in its platform, with enterprise-class reliability and support for business analytics through its data discovery and virtualization processes. Over the last year Datawatch continued to grow its business worldwide, and through investments into its marketing, sales and product efforts is finding more potential from existing and new customers. The company’s energized product efforts earned it our 2012 Technology Innovation Award for Information Applications for its Information Optimization Suite.
Datawatch has simplified its product portfolio over the last year, focusing on how organizations transform, distribute and optimize information. Its Monarch Professional, Data Pump and Enterprise Server products respectively support these common functions. It has expanded its support for big data to ensure that no matter where information exists, it can be optimized for use across business and IT. In its 11.6 release Datawatch added support for Hadoop and Hive through its Data Pump product. It also works with commercialized Hadoop providers such as MapR, which provides enterprise-scale deployments. Datawatch supports other types of big data technologies, including RDBMS, appliances and systems, which a third of organizations in our big data research are planning to adopt.
Datawatch brings information into business processes through support for a range of environments. For instance, in cloud computing, it partners with Amazon Web Services, a rapidly growing Infrastructure as a Service (IaaS) provider, for a range of applications and tools. Our research finds that business has led the way to cloud computing. Datawatch can operate safely and securely across these environments with little impact to IT.
Datawatch continues to advance in many small but critical capabilities, such as document approval and state management. It optimizes information processing through prefetching data needed by the operating environment. It has added visual presentation methods to its product, including traffic lights and thermometer gauges, and lets users drill down to any level of detail. It now provides Section 508 compliance for supporting the disabled, for which it has created a template that can be adapted to an organization’s specific needs. Datawatch products are used for a wide range of governance and compliance needs. Our research finds that the cost of compliance is rising faster in the last three years, according to 53 percent of organizations in heavily regulated industries.
Datawatch now provides more power to analysts and individuals who need to facilitate information optimization through the Monarch Power Client, a visual environment that was part of the Monarch Professional 11.5 release. This product helps address assembling information into a view, a process that almost half (47%) of organizations in our information applications research found challenging. Monarch Context for Excel helps address the issues in using personal productivity tools with support for secured embedding of information inside spreadsheets and for data lineage. Data is always more valuable when it is a click away, rather than accessible only upon request from a separate analyst.
To support specific needs of IT, Datawatch supports machine data that is generated by applications and systems, which, if shaped in the right format, can help optimize not only IT systems and resources but also business processes. Datawatch can take data in log files and database and combine it with information in reports, documents and HTML pages. Datawatch recently announced it can utilize machine data from Microsoft Windows.
Datawatch has grown through partnerships with software providers such as Qlikview, helping them get access to semistructured data, and solution providers such as Asta Systems. Resellers use Datawatch as a new business enabler to empower the optimized use of information across an enterprise. For global deployments, Datawatch supports languages like Japanese and Chinese and unique character sets. Support for and focus on partners is a critical investment for Datawatch as it seeks to grow globally. I would like to see Datawatch provide a version of its product for free trial on its website, operating either in the cloud or on the desktop.
Datawatch makes information optimization more readily available at an affordable price. Its software’s ability to access content and semistructured information and blend it with structured data is what organizations require to optimize business processes and make more informed actions and decisions. Our research into business technology innovation finds the needs to improve and drive better quality in processes are important to more than half of organizations. We are busy researching information optimization to see how the best practices and efforts of organizations are changing how technologies are used for business.
Datawatch finds itself at the intersection of information needs for an enterprise. I would like to see more support from the company for mobile technology, and simpler methods to flip through information assets and even collaborate on them, but with its current focus on its foundation and enterprise-class requirements, those features represent potential for providing more value by harvesting its investments in big data and cloud computing. Organizations should examine Datawatch to see how it can help them leverage investments to access and integrate information and meet business needs while meeting IT requirements for security and policy compliance. Its progressive software earned Datawatch our 2012 Ventana Research Leadership Award for Information Applications for its deployment at Piedmont Henry Hospital. If you are looking to get information from any source to any form for any business need, see how Datawatch meets the requirements of the next generation of information optimization.
CEO & Chief Research Officer