Payroll / HCM Industry Outlook Q&A

Jun 7, 2022 12:00 PM1:00 PM EDT

Key Discussion Takeaways

With the rapid fluctuations in the labor market, human capital management (HCM) has become a critical component for enhancing business value. Many mid-market companies are evaluating HCM software for HR and payroll functions. So, which platforms are gaining traction in the market, and how should you consider each one to make an informed decision for your business?

When measured by the number of RFPs (requests for proposals) issued, the most successful HCM platforms on the market are UKG, Ceridian, and Workday. Ceridian has each of its HR capabilities built onto a single platform, allowing businesses to manage their products in one convenient location. Although UKG requires consumers to purchase multiple platforms for use, the software is comprehensive, with robust HR, payroll, and workforce management capabilities. Conversely, Workday is most commonly utilized for HR purposes only, as it requires outsourcing expertise for payroll.

In today’s virtual event, Greg Irwin chats with Jacqueline Kuhn, Executive Vice President of Strategic Consulting at HRchitect, about the key market trends and considerations for HCM software. Jacqueline explains the best HCM platforms for payroll and HR capabilities, the per-employee-per-month (PEPM) mid-market trends, and recruitment efforts in today’s talent market.

Here’s a glimpse of what you’ll learn:

  • The key HR issues HRchitect solves for its clients
  • What are the benefits, drawbacks, and value-added prospects of the leading HCM platforms?
  • Evaluating HCM platforms for payroll and HR capabilities
  • Per-employee-per-month (PEPM) mid-market trends
  • How inflation has impacted RFP (request for proposal) requests and renewals
  • Three takeaways from September’s HR Technology Conference
  • Recruitment efforts in the current talent market

Event Partners


HRchitect is a consulting firm that specializes solely in Human Capital Management and delivers expertise around the full lifecycle of HCM technology. They've helped thousands of organizations across the globe create strategies, select, implement and support Talent Acquisition, Talent Management, HRIS, Workforce Management and Benefits systems.

Connect with HRchitect

Guest Speaker

Jacqueline Kuhn

Jacqueline Kuhn, HRIP LinkedIn

Executive Vice President Strategic Services at HRchitect

Jacqueline Kuhn is the Executive Vice President of Strategic Consulting Services at HRchitect, the only consulting firm that specializes solely in human capital management (HCM) and delivers expertise around the full lifecycle of HCM technology. In her role, she oversees HRchitect’s HCM strategic consulting group, which encompasses the company’s HCM systems strategic planning and evaluation and selection process.

Jacqueline has over 25 years of experience in HR, strategic planning, systems and project management, and services delivery. She is a Certified Professional of Human Resource Information (HRIP), a sought-after speaker at industry events, and has been published in professional magazines and journals.

Greg Irwin LinkedIn

Co-Founder, Co-CEO at BWG Strategy LLC

BWG Strategy is a research platform that provides market intelligence through Event Services, Business Development initiatives, and Market Research services. BWG hosts over 1,800 interactive executive strategy sessions (conference calls and in-person forums) annually that allow senior industry professionals across all sectors to debate fundamental business topics with peers, build brand awareness, gather market intelligence, network with customers/suppliers/partners, and pursue business development opportunities.

Event Moderator

Jacqueline Kuhn

Jacqueline Kuhn, HRIP LinkedIn

Executive Vice President Strategic Services at HRchitect

Jacqueline Kuhn is the Executive Vice President of Strategic Consulting Services at HRchitect, the only consulting firm that specializes solely in human capital management (HCM) and delivers expertise around the full lifecycle of HCM technology. In her role, she oversees HRchitect’s HCM strategic consulting group, which encompasses the company’s HCM systems strategic planning and evaluation and selection process.

Jacqueline has over 25 years of experience in HR, strategic planning, systems and project management, and services delivery. She is a Certified Professional of Human Resource Information (HRIP), a sought-after speaker at industry events, and has been published in professional magazines and journals.

Greg Irwin LinkedIn

Co-Founder, Co-CEO at BWG Strategy LLC

BWG Strategy is a research platform that provides market intelligence through Event Services, Business Development initiatives, and Market Research services. BWG hosts over 1,800 interactive executive strategy sessions (conference calls and in-person forums) annually that allow senior industry professionals across all sectors to debate fundamental business topics with peers, build brand awareness, gather market intelligence, network with customers/suppliers/partners, and pursue business development opportunities.

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Discussion Transcription

Greg Irwin  0:18

Good afternoon, everybody. Greg Irwin BWG. I'm thrilled to be here with some time with Jacqueline Kuhn at HRchitect talking about the current environment and Outlook around HCM, human capital management, software and systems. Quick reminder, please remember not to share any nonpublic info or anything covered by confidentiality and, of course, confirming that you're not bound by any obligations to maintain the confidentiality of any of the information being shared. No issues with Jacqueline being a recent former employee of a publicly traded company, and she's a principal at HRchitect. And, of course, as all necessary approvals to participate in these forums. We've been doing these for a long time. As I mentioned, HRchitect is a tremendous advisory firm with a specific focus here on hippo, human capital management systems and processes. Jacqueline, I'm gonna turn to you for the full intro. And then we'll get right into our into our q&a.

Jacqueline Kuhn  1:21

Fabulous. Hi, everybody, Jacqueline Kuhn here with HRchitect, I am one of the principals and I lead our practice where we help clients figure out what they want to buy. So we follow the industry very closely, we issue upwards of 30, various RFPs throughout the year, to give you a context of sort of the average size company we work with has about 2500 employees, often 80% or more are global. So that's what I would call that solid mid market. We've also done an awful lot of talent acquisition inquiries, and this year, as well as that becomes a hot topic. But thank you for having me. Wonderful.

Greg Irwin  2:06

I'm Jacqueline, year after year, we talked about your growth, which I think is not a bad litmus test for just the time and attention and investment that's going into human capital management overall. If you did 30, RFPs this year, how many did you do last year? 21? How many did you do? And 20? How many did you do in 19? Pellets? A little bit about your evolution?

Jacqueline Kuhn  2:32

Yeah. So in, let's just go back to like in 2018 2017, we probably did 10 to 15, RFPs. Through through COVID. We didn't do as many RFPs. But we had about 25 engagements, people were not necessarily wanting to pull the trigger during COVID. But they did all of the due diligence and all of the upfront process so so that the RFPs were then issued late 2021, and now into this year, and I think if you look at this year, we've issued somewhere maybe 33-35, somewhere in there RFPs went out the door this year. Well,

Greg Irwin  3:18

so what kind like you mentioned just a little bit, but let's talk. Let's, let's take these examples, again, as an indication for where the investments are in terms of what what are the problems and pain points that your clients are trying to address?

Jacqueline Kuhn  3:36

Yeah, so I put them into three categories. The first category is the organization that has outgrown what they're on today. There they they were three or three 300 ish employees. At one point they went, you know, off a PEO, I'm the one of the pays. Now they're 800 1500 1600 employees, and they've just outgrown what they're at what they're on. And they're looking for not necessarily the payroll part because yeah, that's not the challenge. The challenge is really on the HR side and the employee record side and, you know, you know, sophisticated benefit enrollment, managing talent. So really those core HR things is what they're looking looking to do. So that's one category. The other category is sort of the the client that is up for renewal. 16 17 18 We're been buying years, and all of those contracts are coming up for renewals. And people are not just going to renew for the sake of renewing they want to do a market scan because they know that it has changed dramatically since when they first blogged you know, seven, eight years ago. So we've got A lot of folks who are on something, they bought something, they're not unhappy. They just don't know if they want to invest in that renewal. So they're doing a market scan. And then the third is really I would say there's kind of a third and a fourth. The third is the customer who looking forward at the recession, things that maybe we overbought? Did we buy enterprise even though we're mid market? And are we using everything that we bought? Do we go down market? And are we will we be service better? Or will we be spending the same kind of money, right? It's sort of I bought that I bought that workday? And is it really the right thing for me, maybe i can use Ceridian and save some money and not lose any capability. And then now this last wave that we're seeing for next year, is the essentials customer. Earlier this year, UK G bought a census that included an HR component, as well as the Nova time time component. Obviously, UK GES intention is to take those customers and move them into the pro product. But a lot of customers don't just want to do that. And so we're engaging in a number of those organizations for for RFP work. So that's kind of what we're seeing out out in the landscape right now.

Greg Irwin  6:31

Okay, there's, there's so much for us to cover to unpack there. I'm not as familiar with the center. What is the center? If and how broad based? Is it in terms of how many customers are there out there that are looking for alternatives to UKG?

Jacqueline Kuhn  6:48

Yeah, so a sentence was a an SMB to mid market HR products, average, average client size is probably 700 employees. So kind of straddling that lower end of the mid market. I would say they have about 1200 Plus clients that were that are using that platform that would be migrating up to UKG or out to somewhere else. Jacqueline,

Greg Irwin  7:24

there's a question that you and I have covered for many years. It's if you have 10 RFPs, where are they ultimately going? And this is mid market, your mid market client, I should ask you if 30 to 35 RFPs. Maybe we'll do it as a breakdown of 10. So that, you know, we can just keep our minds straight here. But let's let's revisit that. Let's revisit that out of 10 RFPs. Where are your mid market customers go?

Jacqueline Kuhn  7:56

They are looking at Ceridian UKG, 100%. All of them look at that. Some may look at workday. Some may look at PE calm or Paylocity.

Greg Irwin  8:10

Give me the breakdown. And this is I know your guests, but it helps us kind of, you know, put it in context and talk about ups and downs. So how many? How many? I'm sorry, how many Ceridian? How many UKG? How many workday? How many PAYCOM.

Jacqueline Kuhn  8:26

So out of 20 valves, all 10 are going are looking at Ceridian and UKG. I would say five of the 10. We'll look at workday. Five of the 10 we'll look at the two pays. Got it?

Greg Irwin  8:47

Got it all right now swings up and swings down. Which ones which one is gaining and which one is is lagging? And then that brings the more interesting conversation about why. So what are the ups and downs? Some of the ups and downs

Jacqueline Kuhn  9:01

here? Yeah, so out of the 10. UK G is winning about half five of them. Ceridian is winning three of them. workday wins one and one of the payers wins the other depends if you know, either pay comm or Paylocity they would win the other.

Greg Irwin  9:28

Let's let's go to the big one here UK GDP is that that's incredibly strong. I'd be surprised if that's a downtick but you tell me, are they on an upswing? And if so, what's going on here with UK G. They're holding

Jacqueline Kuhn  9:45

their own I wouldn't say right now. Our in our experience, they're on an upswing, I think they're, they're just holding. They're holding their own on on market share. They're just consistently winning. What, you know, half of the opportunities they get, and most of it is because they they have a pretty complete platform. And the how do I put it, there's like an intangible with them. There is a culture intangible, there's a sales process, they've got a really great personable sales team. I think, you know, the, the organizations that select them are looking for a type of partnership that they feel comfortable entering with with them. So it's just kind of a Yeah, the product there. But overall, they're really looking and they feel that they're going to be a better partner to them from a service support. Innovation, ongoing perspective. Got it? Got it.

Greg Irwin  11:03

Let's, so is anything changing here? They're the acquisitions. There's the full consolidation of Chronos. Know, what's what's changing with regards to UKG?

Jacqueline Kuhn  11:20

I cannot say exactly, because they will be launching it next week at their concert in two weeks at their conference. But they will be rolling out an innovation that the world will hear about very soon, that's going to make a big difference and impact the engagement and the whole employee experience. So I can't talk about it, but look for some true innovation coming out of them to be announced at their conference in two weeks. unique, unique innovation. unique innovation. Yes, no one else has.

Greg Irwin  12:03

So really interesting. I love the cliffhanger. And that's if there's if there's something that you could have said that would accept us on the edge of our seats. I think you hit it. So we're certainly going to go we're gonna pay attention. Let's, let's let's cover the next one. Ceridian Dayforce. Is that an uptick? Or a downtick? You know, getting selected? Three out of 10? RFPs? Yeah,

Jacqueline Kuhn  12:29

it's an uptick? Absolutely. It's an uptick. year ago, it was, you know, less than a year ago, or about a year ago, I say it was two out of 10 and 18. Plus months ago, it was one out of 10. So they continue to get more market share for a bunch of reasons, they built out more products, they've got more end to end HR products, and they resonate with the client that wants all of their products developed, built, etcetera, by the vendor, one, one platform. So it's kind of like, you know, how workday is all built on a single platform, the 3d is all built on a single platform. And it really resonates with those clients that that want that. Because, you know, UK is still, you know, depending on what you buy up to four different products, they are integrated, but it is four different products. When you look at pro and benefits and learning and time, you know, in dimensions, it's four different products, the 3d and has it all built on their platform. And I think that's right, what's resonating in the mid market. With those organizations. That's that's what we see the buyer and at least in the past 12 months, it's it's definitely a more affordable option than then UKG. Lately, Ceridian has, has come forth with some very aggressive pricing to win over the hearts and minds of new business. Have a question?

Greg Irwin  14:10

Thank you have gotten a couple of questions in perfect timing. Do me a favor. If you're listening and you have questions, email them to us here at RSVP at BW G or CPAP WD Okay. Understanding your focus is mid market. But recently Ceridian has won some of the largest ATM deployments that are publicized. 700,000 seats 300,000 feet 200,000 feet just recently. How does Jacqueline think about Ceridian momentum? Why are they winning these really big deployment and you know what has changed in their product or go to market that allows them to get into these big deals?

Jacqueline Kuhn  15:04

I don't believe anything necessarily has changed with the product. My understanding is those deals are really more payroll and time deals rather than full suite HCM. And so they've always been strong on payroll and time. They've also been able to execute well up market with their Global Payroll offerings. They have native payroll capabilities in a number of countries, and more countries than like a workday does, right. So the the native de force capabilities means you can have your HR and payroll and your time all in one place. And so that's really what they're winning. They're winning on the core, they're winning on their core payroll time. And with their native global, it is a very compelling story. They are not you, I think you have to keep in mind that those very large enterprise organizations are not buying the talent suite, right, they're going elsewhere for that. But that's really in this getting the core business payroll time, because that's what they do super well. And it sounds like they didn't do it well, before. I just think that with new leadership, the sales organization is focused a little differently, their go to market strategy in the enterprise, is a little different. And so they're able to sell the product they've already had, because now they have people who know how to sell enterprise software, you know, up to three, you know, two to three years ago, they still have a Salesforce that was primarily legacy from the payroll service bureau. And those folks, just no offense to them, but selling at the enterprise level is very different. And Ceridian has invested in some enterprise level sales folks, they took some from workday, they've taken some from UKG. And now they've got actual enterprise sales team that can go out and really do what you need to do to win that business.

Greg Irwin  17:17

Very good. What do you think the prospects are, for them to harden some of their HCM capabilities, maybe not all full stack A to Z, but harden some of those up the stack value added applications in the ACM stack? And and have them considered and deployed for large enterprises?

Jacqueline Kuhn  17:41

At the moment, I think it's highly unlikely, we'll have to see in 2023, they have been hinting and giving glimpses of what the new talent functionality is going to be all about. And we'll just have to see if what they roll out can stack up to the cornerstones of the world. And you know, the better works and lattices and all of those folks out there who are already doing it. They just, they just don't have what an enterprise organization is looking for from nimble nimbleness capability. So we'll see as 2023 rolls out if if they start delivering products that are more like what HR is looking for, then I think it would be, you know, highly likely, but have to kind of see what it looks What 2023 rollouts look like, because they they have said that there will be major enhancements to those areas coming next year. Of course, we just don't know what they are.

Greg Irwin  18:46

Right? Well, if somebody's coming in to you coming to HR to tech for the RFP, and they're, you know, over 5000 employees, and they want the full HCM stack maybe maybe 5000 is too small maybe I should say 10,000 or even 50,000 Do you I mean, are you comfortable positioning Ceridian in that kind of an opportunity?

Jacqueline Kuhn  19:12

No. It would I we would more than likely position Ceridian for core and and maybe maybe calm or maybe you know something else, but we would more than likely look to a talent suite for the other components because an organization of this size is probably highly highly complex. Yes.

Greg Irwin  19:39

Very good. Question we talk about every time we get on the line, real time pay. And Ceridian Ceridian Dayforce wallet. What are you seeing for adoption? How significant are these in within the RFP and the decision and is Their differentiation for Citians wallet versus others.

Jacqueline Kuhn  20:06

So definitely the Ceridian wallet is a very different product than everyone else because it is inherently built in and everyone else has partnerships. While we have yet to see anyone by Ceridian because of the wallet, what we have seen is everyone who has bought Ceridian has included the wallet in that purchase. So we still haven't seen it as the reason for purchase. But we do see it now as a as an as an inclusion and 100% of the contracts that we that we see. Because there is a value there there is absolutely a value in having it as a part of the product. As opposed to having to, you know, deal with a third party provider. Right? Right.

Greg Irwin  20:58

Very good. That's that speaks volumes. i Let's, let's go to let's go to workday. Let's talk about the pays. And I need to include ADP into the mix. That's the it's the the elephant that's not in the room that should be in the room. So let's go to workday. Next, tell us a little bit about Upswing or downswing on workday and talk about some of the changes you're seeing in the market related to workday.

Jacqueline Kuhn  21:27

Yeah, I kind of see, I see workday being steady to slight decline in the mid market. There are a couple of assumptions. And that's based really on on on type of organization. But it's still a big lift for a mid market organization to deploy and support workday. It has nothing to it, you know, the cost, yeah, could be a little bit more. But it's really more about it is an enterprise application, the, the environment requires enterprise like teams and staff to support and maintain it, whether you have your internal resources, or whether you you know, outsource that to an elite or something. It's just that's what keeps from mid market organizations who truly don't have the need for a platform like that, from leveraging it, you know, a mid market organization that, that we work with one of the mid market organizations that we're working with, that is 70%, outside of the US 30% within the US, they are absolutely purchasing workday because of that global footprint, right, because it can do the double by characters in China, it does the compliance and you know, 70 plus countries, you know, it has everything they need to manage HR comp, globally. And so they're they're making that investment. But that's kind of the anomaly in the mid market, because they're a little slip than a lot of other organizations, because they're mostly outside of the US. But yeah, but I mean, I still think that as you get to 5000 employees and up, it is almost a, you know, a 70% win on the workday side, as you start going down market it, it's just kind of the their percentage decreases.

Greg Irwin  23:37

So that's really, I that's a really important part of the picture here. And let's just play it out. So 1010 RFPs, or 10 selections for large enterprise 10,000 employees and above. I heard the seven out of 10 per workday. Who else was in the mix for the large?

Jacqueline Kuhn  23:58

Yeah, seven out of 10 to work day to two out of the other two would probably go to UKG. And the other one would more than likely go to Oracle unless there's a sap otherwise in the enterprise and then it would go to SAP.

Greg Irwin  24:20

Does that mean no ADP? No, no ADP wins. Let's use 30 to 35 RFPs. Does ADP going to be get selected

Jacqueline Kuhn  24:30

for any of them? No. No. In fact, I'll tell you, I'll tell you that um, the 35 of the 35 RFPs. They've only been they will only have been issued three of them. Our clients come to us because they they either have it on ADP don't want to go there or they know what ADP has to offer and they don't want it and the rest The market is confusing to them. So they need some help with that. They our clients typically come to us and in an important part of our processes, we educate our clients as to what it is, you know, what the market has who can do what? In relation to their requirements. And we always bring ADP up and give our clients the opportunity who they want to include and they self select out ADP.

Greg Irwin  25:29

How many of those 3035 RFPs are coming for are currently on ADP and looking for an alternative? Add 20% For not that much. That's actually an interesting. Has that changed? Maybe it's just my my thinking on it. I always felt like the market was still had a big ADP footprint out. They're

Jacqueline Kuhn  25:57

not in the mid market. I mean, ADP is quite solid in the mid market, but not not as big as most people think. Interesting.

Greg Irwin  26:11

Let's stay on, let's stay on workday here can get distracted easily and I question why would somebody go with Workday? Versus a question from a listener? Why would someone go to workday versus another payroll vendor? Certainly understanding? Well, let's let's let's get right at it. Why would someone choose workday versus another

Jacqueline Kuhn  26:33

payroll vendor? That's kind of apples to grapes. So workday is first and foremost. A human resource management system, not a payroll system. It is not uncommon for someone to choose Workday for human resources and someone else for payroll. Many of the largest of enterprises are doing that. They have Ceridian payroll, workday, global HR, UK, G payroll, workday, global HR. So, workdays an HR purchase, not a payroll purchase. Right, that's that's I think everybody needs to really understand you don't buy Workday for payroll, you buy Workday for HR, you may or may not take the payroll piece of it.

Greg Irwin  27:21

Are they are they improving? Is the pay, we've talked about this, this line? And the challenges or the competitive gaps? Global gap is workday payroll, getting better.

Jacqueline Kuhn  27:35

Now, yeah, it's not like it's not like it's bad. And it. So here's the scenario, I guess that I that, I believe, gets lost somewhere among the most. So an organization that is currently managing all their payroll in house because they were an on prem PeopleSoft, or an on prem, Oracle, or Lawson. And so they're doing all their tax filing, and they're running their own ACH. And if they're doing all of that already in house, moving to a workday is not a big deal, because they already have people doing those post processes. Anyone who has a payroll service provider doing those things for them today, when you go to workday, you have to find someone to do that for you on workday, whether it's always v or you go to ADP or you go to a light, you you have to go somewhere else. So now it's yet another contract. And some of those organizations, we find just keep plugging along on payroll, where they're at. And just by Workday for HR. So it's not that the payroll doesn't work. It's just that for organizations who are used to not having to manage those post processes, workday becomes more complex for them.

Greg Irwin  29:05

Is it easier than so let's say I do. Well, what percentage of large enterprise want to manage their own payroll versus go to an outsource provider?

Jacqueline Kuhn  29:18

large enterprise, I would say maybe 30%, don't, you know, will are willing, I don't say want to are willing to manage their own payroll, probably about 30%

Greg Irwin  29:31

or so. Even the third parties?

Jacqueline Kuhn  29:35

Yeah. And even then, like we worked with a 30,000 employee manufacturing company, who did have who were running there were running payroll on workday. And we helped them take a look at all their processes. And they actually ended up giving the payroll to ADP and said, You know, it's not worth it for us to be doing this anymore. We're going to keep Workday for HR because that's working really well. But we're gonna just farm out our payroll to ADP and have them run it. And that's all ADP will do is just run our payroll

Greg Irwin  30:09

got so here's the comparison. So if I'm, if they're going to outsource it, they're going to take it and put it to an ally or somebody like that. What's the what's the synergy or the improvement of saying, instead of me handing it pending workday to a light? I'd like UKG or Ceridian to do it for me. They're both managed. They're both managed services. So is there much of a difference? As you're making the broader decision of, it's better for me, therefore, is it better to go with Ceridian because they're going to have my payroll and my HCM versus choose workday up and down the stack, but just have a like doing the managed service rather than, you know, the vendor themselves?

Jacqueline Kuhn  30:54

Yeah, oh, wow. What a question, Greg. Okay. So if with it with a light, a light, we'll be using your workday instance, to run the payroll on your behalf. So you have still bought payroll from workday, you still have to go through all of the payroll updates and upgrades and all the care and feeding of that module. A light is just running it for you, as opposed to here, Ceridian here. UKG. Here, ADP, we're gonna send you our records. Once a week, you do all that payroll compliance for us? Yeah, that's the difference.

Greg Irwin  31:42

There's still infrastructure to be managed. If you don't want it, then the only way to go then then that then the workday model isn't, isn't as good. Because you still have the infrastructure to manage. Interesting, really interesting. Let's keep going. Great. Great, great stuff. Let's head on the pace, the pace in the mid market, pay calm paychecks paid off. How are the payers doing competitively in the market? If you want to call out anyone? I think it'll make it a probably a bit more interesting, rather than speaking generically. Yeah,

Jacqueline Kuhn  32:22

we don't see paychecks, because they're way down market right there, you know, 50 to 100, employee company, we just don't see paycheck, we assume they're doing really well, but we don't see them. So I can't really comment on them. Take Paylocity sold a ton during COVID and post COVID. And the only thing we are hearing about them is that while the applications seem to be okay, they haven't really been able to keep up with the service end of things. So we definitely have had feedback from current Paylocity customers that, yeah, we're happy with how the application works. But it's really hard to get service. And I think they're, they they grew. They grew tremendously over the last 24 months. And they can't find the folks to, you know, in the service organizations. So there's a service issue. Haven't seen this completely impact new sales, but it eventually will, when the HR community in payroll community is pretty small, they talk to each other all the time, and eventually that'll that'll catch up to them. So they have they have the work to do on the service end. But where they are winning, is through their purchase of blue marble. The fact that it's the CEO of Paylocity actually founded blue marble, but they were two separate companies until I don't know step 1718 months ago, they merge and more slowly, but surely, they are integrating the two products so that they are seamless. And with that, you now have an SMB mid market product with a Global Payroll component. And the promise of that is is really where Paylocity can excel in the market because they're they're really the only ones at that level that'll have that kind of capability all in one house for for that that solid mid market or even smaller organization because blue Marvels really solid Global Payroll service and Global Payroll technology. Pay com continues to continues to win based on their local market strategy. So pay calm has local support local sales team really resonate with the organizations that really value that kind of service and support. Some of what they're doing is kind of gimmicky I you know, Bedi is a cool product. But I have yet to know anyone that actually buys pay comm because of Betty. I don't even know, I personally don't know, I have clients who are using pay comm that actually have turned Betty on I'm sure some have, but I don't know of any. And, you know, from a, from a payroll service bureau perspective, they've got adequate enough other capabilities that I think they're they're really holding their own, they're definitely Holding, holding on the retention on the retention line. But in certain markets, we see them to have weakness because of their local support model. So really with pay comm Your support is as good as that local team that's servicing you. So it's kind of a pro and a con in some markets. We're seeing they're hitting it out of the park and other markets, we're seeing that there's a service issue. Have a question about

Greg Irwin  36:19

the per, per employee per month. And and the rate. We've just gone through six or seven. Excellent, excellent vendors in the space. The thought could be that they're competing with viable, all viable solutions. And they're beating each other on pricing, basically beating each other up on pricing to win deals. And you mentioned that earlier on with regards to Ceridian. What's the trend you're seeing recently in ppm? For these back to your core of mid market, peak continuing declines? Or people or is the market collectively starting to hold the

Jacqueline Kuhn  37:00

line? Oh, the P hands are going up. For everybody. It's it's I would say they're they're they're anything but declining. They're absolutely going up. And our counsel to folks that we've been working with this year is if you have any interest in buying and signing a contract this year do so because we know next year you're going to see more price increases 1015, maybe even 20%. The reason being every vendor, every employer, right is really struggling with finding enough people to do the work. Do the support work, do the implementation work even as an implementation consulting firm, you know, the other half of my business? We we could have, we could have an even better revenue year than we've had if we could people. Right now, for all the major vendors. If you sign a contract today, you're waiting four to six weeks for a team to be assigned to you because there are no people around to implement. It is that big of a problem. And so you got to pay people a little bit more cost of living is going up. So yeah, prices are going up all across the board. Well, amen. I'm I'm

Greg Irwin  38:36

I'm trying to to absorb it, particularly in terms of my next My follow on here, which is the market because I think the headline is recession and concerns of economic slowdown. Are you seeing any of that impact, the activity or willingness to pay or the investments? Let me let me try and be clear. Have you seen any slowdown in the new opportunities? The new new RFP requests?

Jacqueline Kuhn  39:15

Yes. So my pipeline for next year is less about HCM RFPs. And more about creating technology strategy, and maybe RFPs for a targeted solution like talent acquisition or learning or development. So yes, I am apt I am seeing that my pipeline is beginning to shift as to what the majority of what we're seeing for next year is

Greg Irwin  39:53

price related. So if prices did not go up, you know, it doesn't make sense if you were As the product manager over at Ceridian, would you say, cut your prices? Because you're gonna win? Because lower prices means more deals? Or is is there that elasticity between price and deal?

Jacqueline Kuhn  40:14

I don't I don't think it has anything to do with the overall with, with the price per se as much as the end to end investment for a holistic replacement and the appetite for organizations to do that next year. They're going to quant they're what we're hearing from HR leaders is I want to I want to invest in what is my biggest pain point and get the best technology that I can afford for that. As opposed to holistically looking at replacing a whole platform. Now there are still there will be some hole placement, you know, hole replacements because you know the assumptive scenario, the folks who might have who might either need to buy up or buy down, I mean, you're still going to have some of that. But I think it's going to be much more targeted purchases than animals. And it's just going to be a lot of assessments and strategy. I I just asked them seeing proposals come across that are more strategy and assessments. And then maybe we'll issue an RFP at the end if we feel we need to.

Greg Irwin  41:27

Got it. Got it. So slow down. All right. You know, the other indication is those renewals, the talked about four legs of the kinds of opportunities that are coming to you. And those that are either reevaluating what they've got where their renewal is up this year, and they're trying to figure out what to do with it either with a market check or so what I the way I think about that is what are you seeing in terms of price increases on those RFPs on those renewals? And what are the vendors trying to do in terms of, you know, trying to, you know, hey, if you go one year at a high price, three years for a lower price, tell us a little bit about the contract terms and how these renewals are being approached both by the by the customer and by the vendors.

Jacqueline Kuhn  42:17

Yeah, so, for the most part, the price increase on renewal was governed by an original MSA. And in a lot of them that were inked back in 18 and 19. Or or 16 1718, there was a inflationary increase baked in which, with inflation, the way it is right now, has driving the renewal price up significantly more than it ever has been. There's a formula

Greg Irwin  42:52

within the agreement that says we will that the pricing title inflation, we will adjust for inflation. Yes, absolutely.

Yes, is that most vendors?

That's somebody was really smart and writing that contract? I don't know who it is that they they earned their bonus.

Jacqueline Kuhn  43:16

Is that or is almost every, almost every vendor unless Unless your legal team did something to negotiate that out or negotiate that to a max, there is inflationary language in every contract that I see. Yes.

Greg Irwin  43:35

Give us 111 example. Somebody that was paying 100 bucks in, you know, in the last contract that are coming in? And what kind of escalation is is resulting in on the number no.

Jacqueline Kuhn  43:51

So at a at 100 bucks, the the increase is coming 25%.

Greg Irwin  44:03

Knowing why they're shopping and saying Did we ever buy or is there an alternative out there? Yeah, of course, of course. And nor do we, you know,

Jacqueline Kuhn  44:13

can we renegotiate the master services agreements?

Greg Irwin  44:19

So what So now, how is this playing out? In other words, this has to do with how easy it is to move. And, you know, and what's your willingness? What's your ability to find a better? A better deal?

Jacqueline Kuhn  44:33

Yeah, yeah, it's the better deal and is not just the better deal. Are we getting can we get more for even the same price? So, you know, watch the whole package. You know, we'll we'll get it really, it's really a complex. It's really complex because you've got a contract I'm with a vendor A, and you're looking at at this increase, and now you're looking at vendor B, C, and D. And maybe you'll get a, a preferable fee, you know, one time price, that's more preferable, but now you have the cost of implementation, the cost of change, and the impact and the risk and all of that. So it really is about building a business case. Does it make sense? Does do are we going to get more? Is the price going to be just an incremental loss? Or are we going to be you know, investing, because we have to now re implement something. It's a big decision. And in some cases, there are significant savings and other cases, it's a wash and the risk of doing it all is too great. So they pivot and try to renegotiate at a new price point.

Greg Irwin  45:58

Or any vendors seeing this happening and saying, here's our opportunity, and they're coming forward with an attractive and attractive offer. Anybody doing something smart here to take advantage of it?

Jacqueline Kuhn  46:11

Yes, but I'm not allowed to say who? Because that's something that I've got under an NDA. But yes, there is a vendor in the market that is doing spectacularly well. At at the coming in and taking over business. And yeah, absolutely.

Greg Irwin  46:32

Is it one of the ones we've been talking about? I won't go any further. Just wondering if it's one. Yeah, there's another, there's another cliffhanger. So I'm sure this group would like to hear you want to go directly and talk to Jacqueline, you know that that's fine. And those who joined late, we had a lot of people who joined. Yeah, at pace here. We're speaking with Jacqueline Kuhn. She's SVP of at HRchitect, which obviously does the experts here in human capital management, software and systems. Jacqueline, what about extended deals? So extended terms? You know, I'm, I'm wondering if the vendors are using this as an opportunity to say, well, the renewal says 25%. But but if you agree to a five year deal, Let me lock in and we'll get we'll get you in at 21% or whatever, whatever it might be.

Jacqueline Kuhn  47:27

Yeah, we're actually we're seeing some Yeah, we are seeing some of that. The other thing that we're seeing is like a, a minor module add on, so maybe you didn't buy it initially, but you know, you're gonna you're subject to 25%. But hey, you didn't buy comm will give it to you for no charge on this renewal. Right. So they're, they're very willing to upsell, a new product that you don't already have to make it even more sticky for you to leave. Then yeah, then to reduce the overall price.

Greg Irwin  48:13

I wondered quite drastically from some of the core topics that you and I had set up prior to the session. So I'm going to wrap back to them, and use this as the last opportunity for folks to drop some questions. And we got some great questions along the way. you'll email us any final ones here for Jacqueline, and I'll do my best to try and bring them into the session. Jacqueline, we were supposed to start here with takeaways from September's HR tech conference. Anything you saw there that you could highlight for us? I don't want to I don't want to miss the you know, the opening to our session.

Jacqueline Kuhn  48:48

Yeah, sure. I think I saw three big things I saw there were more talent acquisition add on product than ever before on the floor. So everything from different ways of doing assessments the candidate engagement you know, mid Connect Connect or products connecting you know, in the in the Quick apply to your application connecting LinkedIn better, you know, just all kinds of technology around talent acquisition to bolt on to your ATS there were there were tons of those products out there. Which to me means that that this is still a big buying the big buying area talent acquisition as people try to solve how to get applicants. The more interesting thing that I saw were the HR only vendors from Europe and the Mideast coming to this show, selling their product units for which I believe that the Netherlands Hi Bob, I would have somewhere in the middle east A couple other products, because in the US, there really are very few HR only applications because most of the vendors, you know, in the in the SMB market, so these would be for that mid to small to small. Most of them require you to take payroll, right, there's a pain. And so we've got these HR only products who are now coming into this market to just say, Hey, you don't, you can keep your payroll there. But hey, look what we can do for you on HR. So I found that was really interesting that they're hitting the North American market, and then all the engagement products, and, and the reward and recognition, the motor velocities, etc. Huge giant foods like big, you know, big big giveaways. They, you know, almost taking up, you know, significant space on the vendor floor. It's obvious that that is top of mind of everyone. And these vendors have invested heavily. So those were the three the three big themes that I saw. Pretty good. Very good.

Greg Irwin  51:14

I have a question from a listener about the macro economic backdrop. The effort of the federal government here is to start loosen up the employment environment. Do you see that changing, creating a change here in terms of investments in payroll and HR systems?

Jacqueline Kuhn  51:39

I don't, I don't. The fundamental problem is that there, you have to do something even more dramatic to get people who have opted out of the workforce, to come back to the workforce. That's the fundamental problem today. We don't have people that they don't have enough people to do the work. If I don't have enough people doing the work, I can't get my products out. If I can't get my products out. I don't have the money to invest. And so I think we're in that point where until we can solve for people coming back to the workforce and for GDP to be where it was, you know, two plus years ago. We're we're not going to solve the problem, my pod.

Greg Irwin  52:38

Right? Alright. So just because unemployment is, you know, ticks up from three and a half percent to something higher, doesn't mean that the talent shortage and the skills, mismatches that we've got here are going to suddenly become a lesser priority.

Jacqueline Kuhn  52:55

No, because they're there. That's the conundrum of the market today is we we, we have we are in a recessionary period. But everybody is hiring because we came into this period understaffed. It's normally not like this. Normally, when you go into a recessionary period, you see a bunch of layoffs. But because we came into this period, understaffed, everybody is still hiring, or trying to hire trying to find those people out there who are willing to do the work and therefore, salaries are going up substantially in order and perks and bonuses and everything in order to get the to get people on board. And I will use one anecdotal thing. Very large manufacturing client of ours is struggling to get workers on their line, because the McDonald's down the street is hiring at $18 An hour and their manufacturing process can't afford that.

Greg Irwin  54:07

That's, that's wage growth. And then, yeah, I've got a slug. I asked for questions and our carpet our cup runneth over. So I'm gonna try and hit a couple of these and then I'll have to direct people to reach out to Jacqueline and her team directly. Just Jacqueline have aggregate spend growth for payroll software mix year compared to the growth this year. Do you have a macro number for what the growth spend is in the market for payroll software?

Jacqueline Kuhn  54:42

Honestly, I don't I don't, I don't keep those numbers. Great number to have no food for thought.

Greg Irwin  54:49

Okay. Do you get the sense and I heard it a little bit but do you get the sense that that growth rate whatever it might be 5% 8% 12% that that you're got Do you think that growth It stays the same or accelerates or slows next year.

Jacqueline Kuhn  55:08

Um my gut says it's been a slow a little okay. What is Jacqueline's

Greg Irwin  55:15

view of indeed LinkedIn, zip recruiters competitive positioning? What are what are thoughts on zip recruiters competitive positioning and views around? General trajectory and advertising rates cost per application in the online recruiting category? Okay. What are your views? Do you have a view or where you see where they fit? Indeed, LinkedIn and zip recruiter?

Jacqueline Kuhn  55:43

Yeah, I'm in the incredible, um, you know, in all honesty, everyone is out on LinkedIn posting jobs and farming farming for folks. Especially in professional for professional jobs, indeed, some professional jobs but a lot of the entry level professional and you know, specialty worker, Service Worker kind of things. Zip recruiter is, is is a little different. To me, zip recruiter is kind of more, one off, it's not you're not, I don't know of many enterprise organizations that use zip recruiter as a primary vehicle for sourcing, I, I'm not quite sure why I haven't dug into that. But all of them and the ancillary products around them continue to grow in their use, as people are trying. Because every every employer knows, my competition is out there on these platforms, I have to be out there too. If I'm not I am missing out on passive candidates, I'm missing out on an opportunity. So I see the growth continuing, I don't see it slowing down for any of those platforms. And in fact, I actually also see the market for headhunters to be exploding as well. So your bull horns and things of that store. That's going to be exploding too, as people continue to look for for talents.

Greg Irwin  57:21

Are those are those budget also increasing? I heard you, I one of my big takeaways was just the resilience and strength of PE PM. Can you is that hold true for the budgets and spend on these recruiting systems and campaigns and programs?

Jacqueline Kuhn  57:42

Yeah, it's, it's almost like I have talked to some recruiters that said, Well, I don't really have a budget, it's do whatever you can to get the best person in the in the organization and will will will pay the appropriate fees. So that is one area where organizations are spending money and and may then be, you know, but not even budget sensitive, right? It's, it's where we're going to get the guests. Where are we going to get the person for the job? I heard a number and then the general Chicago area and I heard a number that there's something like 1000 HR professional positions open in the Chicagoland area. Right, crazy, like crazy.

Greg Irwin  58:38

Yeah, there's no rules that are supposed to be helping solve the problem. And we're here to the problem. Very good week, Jacqueline, we always squeezes so much into these hours. I'm gonna pause this here. I gotta remind folks, Jacqueline toons with HRchitect. I'll encourage you lots of great questions. And there are some that I couldn't get to in my apologies there. I welcome you know, setting up follow up here with Jacqueline and her team, and they can dig into the specifics that that you all care about. Jacqueline, thanks so much for our great, great session.

Jacqueline Kuhn  59:15

You're welcome, Greg. Thank you, and thank you all for listening in.

Greg Irwin  59:19

Thank you. Thanks, everybody. Have a great day.

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