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isolved - the update edition

Brian Sommer Profile picture for user brianssommer November 15, 2023
Summary:

Summary: HRMS vendor isolved has been on the move. The company has created new applications, added new AI capabilities to many of its products, and experienced a lot of growth the last few years. I had a chance to get an update and here are the highlights.

HR

I checked in with HR technology vendor isolved  last week. I did a pretty deep-dive with them about a year ago (see this diginomica piece)  and thought an update was in order. This time I did a call with Geoff Webb (VP of Solution Strategy) and Amberly Dressler (VP- Brand & Customer Marketing) of isolved. 

Growth and business update

isolved continues to grow. Total employee count is now around 2,400. It had just under 1,200 employees in 2020. Revenues are now around $460 million. The company has around 168,000 customers in the 50 United States. That’s up from 118,000 just a couple of years ago. 6.9 million people are using isolved’s software at their employers. 

isolved has approximately 215 dedicated partners. 

Financially, the company is at or around the rule of 40 compliance and is not in need of capital to power its organic growth. Obviously, it may need some outside capital if it chooses to make a material acquisition. 

isolved remains 100% U.S. focused. It isn’t targeting multinationals and it has a solid SMB (small-to-medium business) customer base. 

isolved and AI

isolved is utilizing ‘thoughtful AI’ – It’s isolved’s way of providing high-benefit AI tools as part of its solutions. These tools are designed to provide lots of value but don’t impose significant risk management, support, training and other hurdles for these firms. Geoff stated that SMB buyers want “practical applications of AI”. I’d concur. I’d add that SMB buyers want AI solutions that are: practical, actionable, defensible and ethical. 

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isolved shared a number of insights on their new AI-enabled HR capabilities (see graphic above for a summary of these). The number of innovations that are now part of their suite make them quite competitive in the SMB space (and beyond). 

Since my last look at isolved, the products have also received a number of navigation improvements. 

Moving up-market

Companies will find isolved targeting larger firms, selling more modules to new & existing customers and making strategic acquisitions, where possible.  More specifically, the firm is moving to capture more customer firms with 500-2500 employees. Specific to the new modules, isolved is announcing the following new functionality:

  • Expense management
  • Predictive people analytics
  • A conversational virtual assistant
  • On-demand pay
  • Optimization services (March 2024)
  • Compensation management (June 2024)
  • Benchmark insights (July 2024)

isolved is more than just software. The company has a number of services they offer with their technology. The company continues to enhance/expand its services offerings (a key business need of SMB firms). These services include: leave management, optimization, recruitment process outsourcing (RPO) and  print/tax/migration services (via partner firms).

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Customer Acquisition

isolved has embarked on a 50+ city tour with more than 47 events completed so far. These in-person events are quite important as:

  • Smaller businesses have little or no budget for their HR team to register and travel to big HR shows or vendor events
  • Few HR personnel can afford to take off several days to attend a big HR show
  • Events like this help SMB HR leaders realize what is today’s art of the possible re: HR solutions

Many of these events were in mid-sized markets (e.g., Allentown, PA) which are often overlooked by big software firms who over-concentrate their marketing efforts in a handful of large markets (e.g., Chicago). The isolved events are getting a fair bit of attendance from both existing customers and prospects. 

My take

I like briefings where the company and its products have both changed materially (and in good ways). isolved grew a lot, expanded its product line and added a pile of new AI capabilities to its software. It’s also going upmarket. 

That upmarket trajectory may present some new challenges to isolved. Mid-market software buyers are notorious for having champagne tastes but beer budgets. isolved will see its (or its partners’) sales costs grow as they pursue larger, more complex accounts. Bigger accounts might mean that isolved:

  • Faces larger, deep-pocket competitors (e.g., Workday, UKG, Dayforce, etc.)
  • Longer sales cycles (i.e., bigger firms have more decision makers, approvals, etc.)
  • Tougher negotiations
  • Will need to support its partners in closing big deals and helping them with larger, more complex implementations
  • Etc.

But, those are all solvable, good problems to have. 

It’ll be interesting to see what isolved has to brief us on next year… 

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