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SaaS partnerships open up new BPO opportunities for NGA HR

Phil Wainewright Profile picture for user pwainewright July 29, 2014
Summary:
By persuading CEOs to see HR as strategic, Workday and SuccessFactors have opened up new opportunities for payroll and HR BPO provider NGA, says its CEO

NGA HR logo
For a company that often signs up customers for ten or twelve years at a time, NGA Human Resources has seen a lot more change in the past two to three years than it's been used to. These go much deeper than the 40-year-old BPO provider's name change last September, when it rebranded from NorthgateArinso to NGA.

Most notable is the blossoming of relationships with SaaS vendors that were barely on the radar just a few years ago. As NorthgateArinso, the company was once closely identified with SAP, whose on-premise HRIS it had reengineered as a shared services BPO platform called EuHReka.

Nowadays it is going to market with Workday and SuccessFactors as much as with SAP and occasionally Oracle.

The common ingredient in these deals is its ability to deliver global payroll — the company's "killer application," according to CEO Adel Al Saleh, who spoke to analysts in depth at a briefing in London last week.

Our key application as the foundation of our services continues to be payroll, everywhere in the world. In addition we see workforce administration being an important part of our solution to our clients.

Payroll and related BPO make up the bulk of the privately held company's revenues, with the rest made up of application management and implementation consulting. With 8500 employees worldwide, it delivers BPO services from a combination of large-scale global centers and more specialized regional offices. Al Saleh explained:

Across the world we are a services company that uses technology to deliver our services. Not just HR software specifically, but also software in our delivery centers — tools we use to make sure our processes are automated and we can deliver the service commitments on economies.

While there has been some rebalancing of priorities over the past year or two, Al Saleh was confident the company is positioned for growth, and boasted of setting a new record after signing $1 billion in contracts last year.

SaaS and the C-suite

SaaS has been an important enabler of that growth story, he said.

SaaS dynamics are very favourable to us. We've seen a very significant uptick in demand over the last three years, working both with SaaS providers — the Workdays, SuccessFactors, Oracles of this world — but also with our clients, who are not just looking at the technology, but evaluating to see if they need to do a different delivery mechanism, given the fact [an upgrade] would potentially be changing the software technology in their stack.

Al Saleh added that the SaaS newcomers had been instrumental in changing executive attitudes to HR and its strategic role within the enterprise.

The SaaS providers — specifically Workday and SuccessFactors — have been able to get to the CEO and the C-suite very successfully.

Their pitch has been very much around talent — not talent modules within their SaaS platform, but about how do you manage your talent? Do you really know what's the makeup of your talent? Do you really understand what you need to do in the future? Is your talent matching your strategy?

That drove a significant activity from the C-suite down to the HR function, to not just focus on administrative aspects which always exist as part of the normal business activities, to a much more strategic agenda, driven by software.

The software vendors were very successful in saying, 'If you have this software, you can actually change the dynamics of your company and become much more strategic in how you manage your talent.'

That refocusing on the strategic role of HR has been very helpful to NGA's cause, he explained.

[It] accelerated the opportunity for us, because we're coming in and saying, 'We can actually take a lot of the administrative burden away from you, transform your business into new technologies and platforms, and allow you to have a lot more time to focus on the strategic nature of what the CEO's looking for.' That's resonated very well.

We've seen folks move more and more into shared services to try and isolate the administrative, task-oriented parts, and create a stronger business partner model — which everyone talked about for years and years but we hadn't seen it in action.

It's been a huge catalyst, and their ability to get to the CEO has been a huge factor.

Managing transition

Adel Al Saleh NGAHR
Adel Al Saleh

In many cases, the change in thinking has been a catalyst for transitioning from a legacy on-premise system to a SaaS replacement, which NGA has helped its clients to manage, sometimes within a longer-term contract:

Many of them who bought initially an on-premise solution, or our entire technology stack, have decided they really like what they see in some of the SaaS players. So we are working very closely with them in transitions to the new platforms, while we maintain the functionality of payroll as well as the BPO wrappers around the SaaS providers.

We have multiple examples of how do you transition to a new technology, how do you make it work as you evolve your thinking — and as their enterprise evolves as well.

Companies that we signed deals with four years ago are very different companies today — and the contract length could be much longer than four years.

With payroll being such a cornerstone of NGA's offering, the company has been investing in a new SaaS cloud service called Payroll Exchange to provide global payroll integration between multiple payroll providers and HR applications.



Using a proprietary extension to HR XML, the service will allow customers to manage payroll integration mostly by rules and exceptions. It has been designed to allow an administrator to deal with exceptions without needing to call on an IT specialist. The mediation platform will be especially useful during migration to a new application or payroll provider, or when onboarding acquisitions.

Another area of focus is application maintenance, said Al Saleh.

We have application maintenance capabilities that very few in the industry possess around HR systems ... people who understand how the HR system works, how it connects to the different ERP foundations within the enterprise.

That was a business that we had for a period of time that was de facto buried within our solution as we provided a BPO solution to our clients. We're now focussed on building that business as a standalone solution that clients can leverage ...

In the past people thought that the big players in IT outsourcing and application services would be very difficult to displace here. What we've learned over the last three or four years is that it's the opposite. The client does want somebody who understands their HR systems and continues to support those HR systems for them within the big umbrella of large applications providers that they have.

This could become as much as a quarter of NGA's revenues, he said. Technology investments in this area include a complete user experience overhaul of the former HR Workplace support platform, which has been renamed MyHRW.

In addition to these initiatives to consolidate and scale NGA's presence in the global enterprise market, it also has designs on the midmarket sector, building on its existing presence in markets such as the UK, Australia and New Zealand, where it markets its ResourceLink payroll and Preceda workforce management solutions. The midmarket represents 70 percent of the potential market for outsourced payroll and other workforce services, said Al Saleh.

Midmarket is a really critical new expansion area for us. It is something we're very excited about, we're investing in it and we're using UK and ANZ as a proxy of success.

Verdict

  • It's interesting to see NGA has moved so deftly to build relationships with SaaS providers such as Workday and SuccessFactors.
  • Also interesting to see that, rather than disintermediating the BPO provider, the SaaS vendors are creating opportunities to market its intellectual property in integration, management and payroll.
  • At the same time, it is taking steps to standardize its offerings, moving away from customization to a more SaaS-like approach of configuration from a menu of options.
  • One of the bigger challenges in an outsourcing relationship is supporting the more rapid process change that SaaS delivery enables through ocntinuous functional refresh. NGA is smart to see this as an opportunity to market its application management expertise.
  • NGA is playing to its strengths with a plan to differentiate by leveraging a configurable global payroll integration platform. There is significant market opportunity over the next few years in plugging the many gaps between SaaS and on-premise IT assets.

Disclosure: Oracle, SAP and Workday are diginomica premier partners.

Image credits: Feature image © cherezoff - Fotolia.com; Adel Al Saleh portrait and logo courtesy of NGA HR

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