iSolved wants to move up the HCM food chain - is that possible?
- Summary:
- James Norwood, newly minted CMO at iSolved has bold ambitions for the company. Here is our conversation.
iSolved has appointed Industry veteran James Norwood as CMO and chief strategy officer. Who? What? It's an interesting pair of questions in a market that's wide, deep and fragmented. First some market background.
The HCM and work tech markets are super hot. After decades of relatively sleepy action, an already fragmented market is alive with activity. This is good news from the buyer's perspective but navigating the field is far from straightforward. Outside of the well-known providers - think Oracle, SAP SuccessFactors, Oracle, Ceridian, ADP, Kronos, Ultimate, and Dayforce there are hundreds of other players vying for a seat at the C-suite table. In assessing the current state of play, Brian Sommer said of the HR Tech 2020 virtual event:
There is a lot of guessing and wishing occurring about when 'normalcy' will return to work and what that will look like. There are also a lot of questions like:
- Are HR vendors building the right applications now?
- Are HR vendors overly focused on short-term applications (e.g., employee safety and tracking apps) at the expense of building out long-term value-creating apps?
- What will work look like in the future? Most everyone will concede that it will be different, but specifics are quite scarce with little factual underpinning.
- What are the HR technologies that customers are actually buying now? Suites? Analytics? Cloud apps?
Old HR issues like engagement, talent wars, diversity and inclusion (D&I), correct use of AI, etc. are all still there albeit a bit more sub rosa due to the coronavirus. Nonetheless, these old issues still require attention despite current events.
That doesn't sound promising for an executive landing in a company that's been around since 1986, is owned by Accel-KKR and was formerly known as Qqest Software Systems. An interesting aspect of the company is its (quiet) £78 million acquisition of Sage Payroll Solutions in January 2019. What is perhaps more interesting is that iSolved enjoys north of $200 million in revenue, is profitable, has over 1,000 employees, and 45,000 customers. Among those customers, iSolved says that five million employees go through the payroll solution.
As further background, I've known Norwood since his days at Kana. That's so long ago I can't remember when we first met except to say that I've followed his work as CMO and strategist at both Epicor and Episerver. I count him as one of the 'good guys' who tells the company's story in a purposeful yet straightforward manner. With that background in mind, I explained my current interest which falls into two main areas. First, who are the companies that are future-directed and not admin directed and are firms in the HR space sufficiently verticalized in their offerings to meet the demands of different segments. Norwood answered in the following way:
To your point on the future of work, historically, iSolved would pitch up and say 'can I demo you the payroll?' Now they're finding that a lot of the inbound is coming from C- level folks, Chief People Officers Chief Human Resource Officers, or even the C-suite where those people are saying, we're interested in employee experience and how we can align that with customer experience objectives.On verticalisation I completely agree. We have professional services, hospitality, although that's taken a hit as you can imagine, transportation and wholesale plus healthcare. We think that our partner network, from which 50% of our business derives is key here because they sell to very specific customers. Professional services firms like tax and tax accountants, staffing firms, and allied health care are doing really well. So they have so many health care organizations from senior living to assisted living to primary providers. They're starting to deliver capabilities around those specific industries. There is some vertical functionality, but we're going to go deeper into those areas to try to carve out a little bit of a niche.
So there's work ahead. As an example, Norwood noted that seasonal and gig workers are becoming an increasingly important part of the wholesale and logistics markets and iSolved is bringing modules to market that help with recruitment and onboarding. But what about customer size? Norwood says that iSolved's traditional market is the 50-500 person business but has moved into the 500-1500 person business in recent times. These are fundamentally different markets. In the sub-500 person business for example, it is rare to find dedicated HR resources while the 1,500 person business has the potential to put them in competition with Workday and SAP SuccessFactors. Norwood said that in the larger customer case, iSolved would not compete with the HR mega-vendors.
I asked how iSolved defines and addresses the employee experience topic. Here, Norwood said:
Employers are talking about connecting with their employees who are not coming into the office. There's a lot of concern about the health, well-being and general wellness of employees, particularly the younger workforce. You're seeing depression is rising, because a lot of young people like to be in offices, they like to be around other people. So a lot of the time, customers are coming in saying we need to find a way to communicate and connect more effectively, and get our employees a feeling of being a part of something that they're not getting when they're spending all day on Zoom. The virtual experience might be more effective from the employer's standpoint but it doesn't do it for the employee. There's a nervousness about how you build that engagement, how you get people still feeling a purpose. And that's across the board, not just at the larger customer.
Given that iSolved is primarily aimed at the SMB market I wondered how it could compete with its larger peers. Norwood says that in those 500-1,500 person businesses, it's not uncommon to find five or more applications that operate in siloes but, more to the point, come in at a total cost that's much higher than a single integrated system.
We make a dramatic difference to their cost of operating HR processes. On one case I am looking at today, a 1,400 person business can make a saving of over $100,000 a year without sacrificing functionality but while getting full price for our offering. That's a powerful incentive for any organization at any time but right now, is a significant selling point.
I then switched gears to discuss how iSolved meets the needs of a contingent workforce and their needs. For example, we see vendors that are adopting a mobile-first approach to design as a way of lowering the onboarding and administration costs of the contingent workforce. Norwood says that iSolved has undertaken a significant refresh to provide mobile solutions for this segment that require no training.
I know we vendors all like to talk about responsive design and a consumer-grade experience but that's the benchmark today. That's table stakes so yes, it's something to which we've paid a lot of attention. I wouldn't say people enjoy using these apps, but they find it semi easy to use, and it doesn't get in their way. It helps them get on and get the job done.
In recent times, the company has rebranded but from my perspective, brand values alone don't win the day. Going forward, I asked Norwood how he plans to get iSolved story into the market. He replied that one of his most important priorities is to get customers talking about their experience. This will come in a variety of flavors that demonstrate iSolved's ability to do a clean lift and shift from a set of siloed applications with the cost and integrated benefits that brings along with demonstrating how value is added through a modern approach to HR functions that typically have been seen as more focused on managing the workforce rather than helping workers.
My take
Launching any software company into busy and congested markets is a challenge. That's especially true in HR, where the competitive environment is intense and where there are highly critical analysts looking for examples of modernity rather than a recreation of the past. iSolved has plenty going for it. I'd like to better understand how the partner network participates in helping iSolved prioritize functional needs across verticals. It's a topic that seems to present special challenges for ISV's and for which I've not yet seen examples that demonstrate a genuine commitment to a two-way partnership.
I'm in two minds about the value of rebranding. For me, it only works if the company can adequately demonstrate a parallel development track that is validated by the customer experience. That, in turn, will come from the customer stories Norwood is promising.
We will be sure to check back with iSolved in a few month's time to assess progress.