Large enterprises can afford to get a core HRMS and a slew of best of breed HR applications, but mid-sized and small firms cannot. Why? There are two principal reasons:
- The cost to integrate and maintain these numerous integrations can really tax an overburdened and lightly staffed IT group
- The HR team has too much to do without piling on them more systems that they must help employees with
Let’s examine these points further. A typical HR team has about 2.5 team members for every 100 employees. That means a 200-employee business might have 5 or so HR people who are responsible for:
- Benefits Administration
- Retirement matters
- And a lot more
Simply put, they lack the time, skills and energy to source, maintain, patch, integrate, etc. a bunch of solutions acquired from a cornucopia of different software firms. And, yes, I know integration technologies have improved markedly in recent years but integrations do break from time to time and HR team members were never in the data model or integration business. None of these activities are core competencies of HR professionals. It’s also problematic that HR and employees don’t like dealing with so many different user interfaces/experiences.
HR professionals that are stretched too thin to support so many functions and hundreds of employees are in danger of becoming Jacks (or Jills) of all trades and masters of none. One thing that could help is to get as much pre-integrated HR technology as possible from a single vendor. Better still is to get an integrated suite of multi-tenant cloud solutions.
So, what do small and mid-sized HR groups do? They focus on a few key HR applications (e.g., core HR and Payroll), outsource some others (eg: benefits administration) and ignore other HR tech opportunities (eg: LMS). It’s sub-optimal, but it’s all they can do with the time, personnel and budget they have.
While not the only firm offering a fairly full suite of HR applications for the SMB market, Namely is one of the larger and better-known firms in this space. I recently spoke with their CEO Larry Dunivan about their progress of late. Dunivan, by the way, is also Chairman of ThinkHR/Mammoth. I first met him when he was with Ceridian.
Namely – the company
Namely now has over 1,300 clients and more than 270,000 users. The company processes over $14 billion in annual payrolls for its clients. Namely’s headcount is between 250-275 employees.
The company’s target market includes mid-market firms as well as high-growth smaller enterprises. Most customer have outgrown solutions like Intuit and some payroll service bureau solutions. Most clients have between 50-500 EEs (employee equivalents).
The company has been very popular in the high tech and financial services verticals. Namely’s primary verticals are high tech, financial services and professional services.
Namely serves mostly US clients for now, about 20% of whom also track employees outside of the USA for HR purposes.
The company is also a broker of benefit programs.
Namely’s Talent Acquisition/Recruiting functionality is provided via an alliance with JazzHR. The company also partners with SyncHR. A key portion of Namely’s compliance, Diversity & Inclusion, Health Safety & Environment functionality is bolstered via a partnership they have with ThinkHR. That’s important as it makes experts on these topics available to clients. Time & attendance functionality is supported via a partnership with TCP Software (TimeClock Plus).
In addition to its application software suite, Namely also has managed services for benefits management and managed payroll.
Namely is experimenting with some bot technology and may soon offer these as a service.
Namely also has partnerships with a number of other software technology firms. These include Adobe, OKTA, NetSuite (ERP), BlueMarble (a global payroll solution), JobVite, Greenhouse, Lever and more.
The path forward
Namely was founded in 2012 and it added new modules to its suite at a pace of approximately one per year. Specifically, Talent Management was released in 2013. Time Management and Managed Services were released in 2017. Analytics were released in 2018. Benchmarking was released in 2019. Managed Benefits and Managed Payroll were released in 2020.
In eight years, Namely has raised some $220mm in venture capital. In my opinion, that’s a lot of funding for an HR vendor. I suspect their venture backers will be looking for an exit soon (it is, after all, an eight-year-old company) and I also suspect they’re looking for Dunivan to manage the remaining venture capital tightly while ramping up revenues. An exit (eg: an IPO) will only work if Dunivan et al can create a highly valued firm.
Since Dunivan's installation, the company has undergone changes – changes that appear focused on solidifying its product/solution mix and in bolstering its financial condition. He's clearly focused on using partnerships (along with tight integration of same) to broaden the suite and its relevance to the mid-market. I also think he understands which advanced technologies (eg: AI, ML, bots etc.) are relevant and practical for many mid-market firms and which ones might not be.
Around December 2017, the company had over 400 employees and five offices. Namely got a new CEO in 2018 and another one (Dunivan) in mid-2019. Headcount is down and this might help conserve capital. Dunivan is clearly a work-from-home fan and the pandemic has kept people out of the Namely offices (another capital conservation technique).
These changes appear appropriate to Namely, position it well in its target market, and should help the company grow for a long time. I believe Dunivan was the right person to bring in at this stage of the company’s evolution. Since he joined, the firm has won new Comparably awards and Dunivan himself was ranked seventh out of 25 top SMB CEOs. (Other awards the company has won can be found here.)