Will the Affordability Care Act be a Catalyst for HCM Analytics?

PPACA_2HR leaders on the fence about investing in an analytics platform may now have the  justification needed for moving forward, courtesy of the US Federal Government and its impending Patient Protection and Affordable Care Act (PPACA), which goes into effect on January 1, 2014.  With complex requirements and potentially significant financial consequences, the PPACA will require many employers to move beyond standard tracking and reporting platforms to more advanced, real-time decision support tools to proactively manage the many aspects of this complex legislation.

Fundamentally, the PPACA is about reducing the number of uninsured Americans  (numbered at more than 50 million in 2010) while attempting to address the affordability and quality of that healthcare coverage overall.  State-level health insurance exchanges (HIX) are being formed to make available the minimum requirements across benefit coverage and cost-sharing standards, while employers grapple with tradeoffs in health benefit plan designs and premium costs vs. the federal tax credits and subsidies available to low- and middle-income workers.

For employers, the requirements of the PPACA quickly get complicated with look-back and ongoing calculations of hours worked and future hours, benefits eligibility vs. enrollment, premiums to wages ratios, and evidentiary reporting to government agencies.  Non-compliance with this still-being-clarified legislation can lead  to significant penalties for employers, not to mention the many downstream impacts on employee relations and employer brand.

For some organizations, calculating and paying the penalty will be the quickest route to compliance while others will want to weigh various workforce modeling scenarios to determine their best approach (provide coverage as intended, reduce worker hours for a percentage of employees, etc.).  Leading payroll and workforce management platforms such as ADP, Ceridian and Kronos are actively enhancing their software to deliver the calculations and reporting required by the ACA, often including the ability to anticipate when benefits eligibility will be triggered based on future labor schedules.

Across the many mandates of the PPACA, (employer mandates, healthcare tax credits and individual mandates), behaviors at work will change that will affect the costs – both direct and hidden – of compliance choices.  Shifting workers to part-time will result in increased unemployment claims; additional part-time staff may be hired to fill the gaps of the reduced workforce; turnover may be adversely affected; workforce tax credit eligibility can be affected and additional training and ramp-up time needs to be factored in.  As they evaluate the direct costs of their compliance alternatives such as benefits premiums, labor expenses and penalties, employers must also take into account these and other indirect or hidden costs associated with their choices.

Getting to a clear understanding of the direct and indirect costs requires complex analysis and modeling, a prime use case for an analytics platform.

One of the players in this market is Equifax,  which recently augmented its Equifax Workforce Solutions division with the acquisition of analytics technology provider eThority in 2011.  Leveraging the eThority platform, Equifax is introducing a new solution called the “Affordable Care Act Impact Analysis and Management” tool to help employers model and monitor the impacts of PPACA on their business. The tool enables employers to see costs (including labor, benefit premiums and potential fines) at group or detail levels based on different modeling scenarios. It also highlights the associated costs resulting from anticipated new hires and increased unemployment claims that can offset savings from those initial scenarios, a level of analysis that many traditional payroll and workforce software providers are not offering.  Equifax can also leverage the data reported to them by thousands of employers across the country, representing tens of millions of workers, to report on labor and payroll trends across regions, industry and other segments, further augmenting the modeling scenario evaluations.  As desired, Equifax also provides additional consulting services including evaluation of new assumptions as well as overall program management and audit support.

The modeling platform is interactive, adapting to changes in law and assumptions. Delivered via subscription or available on premises, employers can access data beyond their own workforce data to make better, more informed choices with regard to how they will achieve compliance with PPACA mandates.

Investing in an analytics platform can bring more than just workforce insight and modeling capabilities: it can be a powerful tool in managing risk and compliance across the entire enterprise.  In the case of the Affordable Care Act, it may be the only tool that will effectively support employers in their daily need to monitor and manage the complexities of this legislation.  The requirements of PPACA actually begin before January 2014, with employers needing to make decisions and communicate benefit options, costs and coverage to employees during the Fall Open Enrollment schedule. Employers should be evaluating their options now, and the availability of new tools like the Equifax ACA Impact Analysis and Management solution are timely additions to the market.

Event Report: One Year Later, Ceridian Dayforce HCM Delivering on its Vision

Last year’s acquisition of Dayforce heralded Ceridian’s pivot from a payroll service bureau to an HCM vendor focused on technology and innovation. One year later, Ceridian demonstrates strong customer adoption of its new platform and continued HCM process transformation to enable HR organizations to create a more effective workforce.

 

Last month I attended Ceridian’s annual analyst forum, where members of the executive team shared their vision and strategies for the future. Ceridian HCM CEO David Ossip put an interesting spin on the role of HR in the future when he stated,

The value of HR isn’t in becoming a strategic partner. The goal of HR should be to help the company create the most effective workforce.”

This sentiment reflects the pragmatism of a team committed to innovation with tangible value; a focus on the processes, tools and information needed to create and maximize the value of the workforce.  Below are the highlights I took away from this most recent analyst briefing.

  • Ceridian continues its pivot from an HRO service provider to SaaS technology provider. With the advent of cloud services and the ability to centralize the skills and knowledge needed for optimized compliance and support, it only makes sense that businesses would look to the cloud for specialized support of processes such as Payroll and global HR. With Dayforce HCM, Ceridian is helping its customers move from former “lift and shift’” HR Outsourcing (HRO) deals to the advanced benefits of software in the cloud coupled with centralized specialization and compliance support. The platform itself includes capabilities for messaging, analytics, workforce activities, mobile access via native iOS and Android support, and other foundational items necessary for comprehensive HCM support, with collaboration advances underway as described further below.
  • Accelerating customer momentum validates the data-fueled platform. Available in the US and Canada, momentum is strong, with over 700 clients live on the Dayforce platform (of more than 1000 total clients), with roughly 30-50 clients going live each month. Approximately 15% of the live Dayforce HCM clients are those that have migrated from core Ceridian applications. One of the key benefits touted by the Dayforce clients is their ability to view and act on data BEFORE the time is worked, before payroll is processed, tackling potential problems before they happen. Other benefits include the ability to see fully burdened costs before the time is actually worked, and soon, to manage the rolling eligibility requirements of the PPACA (Patient Protection and Affordable Care Act), all through a real-time engine designed to support compliance and information needs proactively, not reactively. Batch processes or after-the-fact alerts will eventually become the purview of “legacy” vendors unable to keep pace with the demands for instant data analysis and decision support.
  • The unified, end-to-end HCM platform is emerging, but still a year or more away. Today the Dayforce HCM platform delivers core HR, Payroll, Workforce Management (Time & Labor, Absence, Leave Management) and Benefits functionality, targeted primarily to North American operations. Expanded global HR support is on the roadmap, but for global payroll, clients can immediately tap into payroll services across almost 60 countries via Ceridian’s international payroll solutions (IPS). Through this managed services offering, consolidated payroll results across global and local payroll providers can be fed back from the IPS aggregator to Dayforce payroll for global reporting.Support for more strategic talent management processes will begin with the launch of Dayforce Recruiting, targeted for Fall 2013. Ceridian today has a standalone recruiting offering, but that solution will be sunsetted as the next generation recruiting offering from Dayforce becomes available. The initial Dayforce recruiting solution will support managing the candidate’s status and progression through the recruiting lifecycle. (However, I also expect to see some innovations in scheduling and onboarding from this development team that demonstrates at every opportunity the advantages of a unified platform and real-time rules processing.) In 2012, the analyst community was advised that advanced compensation and performance management was slated for 2013, but recruiting has now taken top priority for the Dayforce HCM team. As a result, these and other investments in strategic talent management will be pushed out to 2014. There are no current plans for delivery of a learning offering (LMS) and we can expect partner solutions to fill this gap for the next few years.
  • The experiential platform takes center stage over transactional systems. The Dayforce HCM team introduced Engage, its new social platform due later this year that will become the new front-end User Interface (UI) for its applications. Ceridian clearly understands that social enablement is more than just conversations, it’s about getting real work done. In fact, collaboration is viewed as such a fundamental component to today’s workforce processes that Engage will be included in all Dayforce HCM offerings at no additional cost. Clients not yet ready for such collaboration in their core workforce can simply turn it off, accessing it in the future as desired.Continued investment will be needed before it achieves competitor status in this space, as the current focus is largely engagement via activity streams, but the initial offering of Engage will be a good first step toward both augmenting and transforming traditional work processes through social collaboration. While I agree with David Ossip that the “mobile” hype is giving way to broader considerations of “accessibility,” I do not agree that “social” is giving way to “activity streams.” The term “social” often has a conversational, non-work-related connotation; however the idea of purposeful social – social collaboration that is contextual and event-support driven – is an entirely intuitive and evolutionary approach to getting work done. Activity stream integration is important (and the initial Engage offering will include single sign-on (SSO) to facilitate this with Salesforce Chatter and Microsoft Yammer), but collaboration should also happen at the transaction itself; at the point of need.  It’s too early to know the depth of social support planned by the Dayforce team or how it will integrate more deeply with broader social enterprise networking tools.
  • Contextual content will increase in prominence. This is a continuing and interesting play for Ceridian: their EAP (employee assistance program) services via LifeWorks, acquired by Ceridian 1998. Usually we think about EAP services as a pool of resources available for employees to call when needed, or as a repository of research and information available through onsite and internet access. This market is transitioning, however, from SaaS-based solutions to a focus on more contextual content delivered to the end users (a push rather than a pull model). Ceridian has a vision to evolve its LifeWorks offering by embedding EAP content into talent-related events in the Dayforce platform, ensuring context-relevant information at the time of need. Such a move will begin to move Ceridian into the knowledge enablement space of vendors like Infor Enwisen and Peoplefluent (formerly Authoria), but they’ll have a network of EAP counselors driving much of that content development behind their offering. Ceridian’s social platform and context engine requires additional development to achieve its full potential. Regardless, it is good to hear that team thinking about enabling transactions with contextual content as they build out the future Dayforce HCM talent management offerings.
  • Continuing core investments demonstrate customer commitment. Mindful of not disenfranchising its core customer base, Ceridian continues to invest in its current applications and other service lines including international payroll, pay cards, tax filing and others. It should also be noted that Ceridian not requiring a forced migration to the Dayforce platform, allowing clients to move as appropriate for their needs.

The Bottom Line

As I indicated in my write-up last year, Dayforce HCM is positioned to perform well in a market ready for process transformation.  It has delivered a large amount of functionality in the single year since the acquisition, and net-new customer uptake validates its market readiness. Strong leadership, an unwavering commitment to customer success for new and install base clients, and innovative approaches to traditional processes make Ceridian a viable and disruptive force to watch in the HCM market.

Ceridian Claims its Seat at the SaaS HCM Table

With its acquisition of Dayforce now complete, Ceridian becomes the latest entrant in the SaaS HCM marketplace. Timely execution of strategies and leveraging its differentiators to retain and eventually migrate Ceridian customers to the new platform will be critical factors of success in Ceridian’s transformation from a portfolio-based services bureau company to a leading provider of SaaS HCM.

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