Highlights from ADP Analyst Day: It’s Not All Permanent, It’s Also Contingent

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Spend Matters attended ADP Analyst Day last week, held at the ADP Innovation Lab in New York City. At more than $13 billion in annual revenue, ADP is the largest provider of payroll services and one of the largest providers of human capital management (HCM) solutions in the world.

Over the past six decades, ADP built its business by helping businesses pay and manage their permanent W2 employee workforce. But as we all know, nothing is permanent — particularly in workforce, where for businesses and workers relationships are becoming increasingly contingent. And ADP, which acquired WorkMarket earlier this year, is clearly rising to meet the changes in the market, on both the business and worker side. As you might expect, this is not a casual undertaking for ADP but a studied, strategic initiative now moving into gear.

The analyst event provided considerable insight into how ADP is evolving as a business on a number of fronts, not just the new and growing strategic focus on contingent labor. For example, ADP is launching what it calls Next Gen HCM (and Payroll), which are basically state-of-the-art renditions of its venerable services and solutions based on ADP’s entirely new federated architecture/cloud technology stack. ADP also spoke of an expansion of its traditional HR focus to a focus on the needs of front-line managers (e.g., user-centric solutions) and workers (e.g., payment options, such as accelerated payments) as well as on the organization of how works gets done (e.g., in teams) and by whom (e.g., non-employees).

Beyond Permanent

We will return to the above areas in a subsequent in-depth research brief. In this article we will provide a high-level overview of the most visible non-employee workforce developments occurring at ADP at this time, while noting that these are part of a larger total workforce/HCM strategy.

First, WorkMarket is now an integrated ADP company and solution, with seamless API-based integration with at least one of ADP’s HCM solutions. In some ways, WorkMarket, recently recommended as a provider in Spend Matters Q3 2018 Contingent Workforce and Services Technology SolutionMap, is now ADP’s extended capability for its clients to compliantly manage their independent contract (freelance) workforce.

Second, ADP acquired Global Cash Card Solutions in October 2017. According to the acquisition press release, the company is a leader in digital payments, including paycards and other electronic accounts. Paycards, the press release continued, have been the fastest growing method of pay in recent years, in part because of their popularity with millennials and generation z. Global Cash Card Solutions “offers solutions for both Form W-2 employees and Form 1099 contractors, as well as online tools that help customers manage their digital accounts, including online bill pay, rewards plan enrollment, multi-purse capability for providing secondary account holders access to a portion of available balances, and an expense manager that allows customers to organize, categorize and budget their expenses. All of this helps workers by bringing together in one place both their wages and their most significant financial transactions and providing a more complete picture of their financial well-being.”

Last, and based on the Global Cash Card Solutions acquisition, ADP has introduced the Wisely Paycard and free mobile app.

This is in effect not only an independent contract (freelance) worker payment and financial management solution but also one that can be used by W2 employees and by those employees who also freelance on the side (an increasing pattern).

Wisely provides these moonlighters, as well as full time freelancers, with the ability to receive, track and manage income (and taxes) from all W2 and 1099 sources. To be discussed in the PRO brief, it also, within certain limits, enables accelerated payments for freelancers. ADP’s Chief Strategy Officer Don Weinstein said that Wisely may be the biggest payroll innovation since direct deposit. (And it could very well be.)

What Next?

As noted above, these are all visible developments that are also converging with the other developments, such as the Next Gen HCM solution and technology platform, as a part of ADP’s strategy to address the non-employee, independent contract (freelance) workforce and, eventually, a business’ total blended employee and non-employee workforce. Times are changing the potential significance and impact of ADP’s new focus and actions on the evolution of the contingent workforce space should not be underestimated. We’re no longer talking about your grandfather’s ADP.

We will have much more to say on all of this — the ADP developments and the contingent workforce industry implications — in our subsequent PRO brief.

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