Beyond payroll HR midmarket Landscape

Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046
HR Midmarket Landscape

A summary of retainer/subscription HR Tech & Services

HRO Midmarket Beyond Payroll Solution Providers
Payroll Staffing Services Administration Service Providers

2012
Ephor Group, LLC
1/30/2013

6
Payroll Market Landscape Summary
The goal of HR software is to automate key elements, coordinate the human aspects, and
measure and analyze it all. To satisfy customer demand, payroll service providers must move
beyond payroll services to offer HRMS software technology as well as HR services. The market
is currently on the cusp of a major shift between legacy client-server technology and cloud
SaaS. Along with the technology platform, demand by consumers has shifted. HR is
increasingly being asked to not only manage “employee transactions” through “System of
Record HRMS solutions” but to also enable the worker through “Systems of Engagement” which
utilize social, mobile, and analytics capabilities embedded in the technology software
applications.
While the payroll market for small businesses with less than 100 employees is highly competitive
(“red ocean”) between several different vendor types; there are approximately 50 players with
significant, meaningful revenues ($10M - $100M in annual recurring non “pass-through / non-
reseller revenues).
In addition to local accounting firms and banks, which are increasingly choosing to be referral
sources and private-label partners for payroll vendors, the landscape can be grouped into the
following primary buckets of competitive players:
 The big four “umbrella” brands – ADP and Paychex together control a significant share of the
target market and continue to grow based on their sheer brand recognition and referral base.
ADP primarily focuses on the mid-market and Paychex targets the lower end. Ceridian
focuses up market and Intuit’s focus is with very small businesses. ADP and Paychex are the
big targets and are showing vulnerabilities to the up and comers based on technology,
service, and price.
 Licensees – there are ~300 service bureaus ranging from $1-10M in revenue that are
delivering their service based on licensed technology from a handful of small software
vendors in the market who in turn receive an average of 3-9% of the service bureaus’
revenue.
 Home-grown, legacy providers – there are ~50 smaller payroll providers and a “handful” of
larger players who are operating older proprietary systems that do traditional payroll
processing but lack a differentiated technology strategy including WFM capabilities.
 Software only providers – Intuit and Sage provide software only solutions for the very
smallest of businesses (< 50 ees) with simple needs. These do-it-yourself solutions come
with tax table updates for an annual fee, but do not guarantee compliance and keep the
burden of processing payroll on the small business itself.

8
Payroll Services Landscape
 Payroll outsourcing driven by Finance and supported by HR.
 Employers demanding more holistic set of services from payroll providers from payroll
providers.
 Payroll vendors partner for delivery of payroll in additional geographies and for access to
systems integration expertise.
 Top vendor selection criteria is service provider experience, followed by price........
followed by capabilities to be a strong partner, vendor financial stability and strength of
technology. Cost savings is a "switching cost" requirement.
Perceived Benefits of Consolidated HR Platform:
 Streamlined processes. In many instances, employers are able to eliminate headcount or
reallocate duties as manual processes become automated and less error prone.
 Multiple service offerings allow for the most competitive pricing structure. A bundled
offering includes the benefit of economies of scale. The more revenue that a vendor
earns, the more leverage a company has for negotiating volume discounts. This also holds
true for guaranteeing higher service-level agreements or contract terms.
 Simplified employee experience. Having one point of contact or one system to access for
managing multiple requests or transactions creates an efficient employee experience. This
heightens employee productivity and increases employee satisfaction.

7
Payroll Software Market Landscape
Payroll Software Payroll Service Providers and BPOs
 Internal “Do it Yourself Software” such as
QuickBooks Payroll from Intuit.
Payroll Service Bureaus
 300 single location service bureaus.
 Big Four Payroll Providers (ADP, Paychex, Ceridian,
Intuit).
 Payroll software to the payroll service bureaus:
 Professional Employer Organizations (PEO’s) such as
TriNet, Insperity, AlphaStaff.
 PEO Software such as:
 HR Outsourcers (HROs and ASOs) as highlighted in the
table below.
 Accountants, Bookkeepers and FAO
5
Outsourcers.
 Banks (Wells Fargo), Insurance (Fidelity), & Staffing
(Kelly, Manpower).
The middle market of small and medium organizations with 100 to 1,000 employees represents a million USA businesses is wide open as no dominant
nationwide leader exists. Regional and industry specific payroll and beyond service providers do exist as highlighted in the table below.
5
Both FAO & F&A is abbreviated for “Finance and Administration” outsourcing solution providers. Scope of services vary widely among these providers.

5
HR Payroll Services & Beyond
*There are numerous other regional providers and point specific solutions. Email us at ephor[at]ephorgroup.com for a complete list.
Payroll Mid-Market Illustrative Landscape
3
:
Payroll + Benefits + HR Payroll + HR National Payroll Providers4
: HR ASO
~$100M
Millennium + other platforms for payroll +
benefits.
<$10M
Millennium + HRMS.
InfiniSource-Qqest
~95M
Millennium + HRMS / HCM.
~10M.
Millennium + HRMS.
PayPro Corporation
$8M avg client 100 ee
Millennium + HR SS.
~$50M
Millennium + HRMS + TM.
~$50M
Millennium + HR SS.
~$15M.
Millennium
~$20M
Isystems Evolution + HR Services.
~$10M
ISystems Evolution Payroll +
HRMS.
~$50M
iSystems Evolution + HRMS.
~$20M
Proprietary HR, Payroll, Benefits Platform.
~$100M
Platform Proprietary with
Payroll + Staffing + PEO.
~$10M
Proprietary Payroll + HRMS.
PrimePay
~$20M
Proprietary payroll + HR Services.
CTR Systems
~$25M
Proprietary payroll + parking and
facilities management.
Icon
~$20M
Contingent Workforce Management.
~25M
Payroll + FAO for restaurants.
EmployerFlexible
~10M.
Darwin platform.
Co-Advantage
~$55M
Proprietary.
Valiant Solutions
~$10M
Proprietary.
CheckPointHR NJ
~$25M
CheckPoint Florida
~$15M
TritonHR
~$5M
Discovery Outsourcing
~$40M
3
Payroll Landscape does not include PEOs such as: TriNet, Insperity, EmpowerHR, AMCheck, Alpastaff, see NAPEO for a complete list.
Sources: Inc 5000, American Payroll Association, IPPA, Ephor Payroll Software Providers3
database, LinkedIn.
4
Major global providers include Celergo and Patterons, Talent2, NorthgateARinso euHReka 11, http://www.fullymanagedpayroll.com/, Canada payroll CGI, GlobalPay

10
Staffing Payroll Services
The marketplace for workforce management staffing and related BPO including content, software, services, and
outsourcing solutions consists of thousands of firms worldwide. However, by function and by industry leaders do
exist. The mid-market and global enterprises listed below highlight the diversity of the sector in 2012.
Payroll Staffing6
Staffing + ASO >$1B Staffing Portfolio
Rapid Global Business Solutions
Human Capital Management Solutions ~$55M
LinkedIn Followers = 956
Klout score = NA
HowSociable score = 1
MozRank = 0
External Traffic Links = 28
SheakleyHR Solutions
Reduce Liability and Increase Profitability Through
Outsourcing
~$140M
Klout score = 19
HowSociable score = 1.3
MozRank = 5
Act1Group
Portfolio of workforce companies: AppleOne.
LinkedIn Followers =7783
Klout score =56
MozRank = 2
WorkMarket
Online Staffing for Onsite Workers, Labor
Resource Platform
~$55M
Klout score = 45
MozRank = 6
Discovery Outsourcing, LLC
PEO, Staffing, HRO, Payroll
~$40M
Klout score = NA
MozRank = 5
RecruitCo LTD
Portfolio of workforce companies including
Staffmark Holdings Inc,
VenturiStaffingPartners, CBS Personnel
Holdings.
LinkedIn Followers =NA
Klout score =NA
HowSociable score =1.1
MozRank = NA
External Traffic Links = NA
Frontline Source Group Inc.
Temporary Staffing Agency And Direct
Hire Employment Career Firm
~$10M
Klout score = 35
MozRank = 3
Doherty
Employment Group, Staffing, HRO
~$10M
Klout score = 30
MozRank = 5
Impellam Group, plc
LON:IPEL
subsidiaries include Guidant Group Inc.
CoreStaff
Klout score = NA
MozRank =NA
External Traffic Links = <10
Global Employment Solutions
~$185
Klout score =0
MozRank = 5
Landrum Human Resource Companies
~$10M
Klout score = NA
MozRank = 2
KForce
Klout score = 52
MozRank = 4
External Traffic Links =1106
6
Sources:
http://www.generationequityadvisors.com/files/GEA_IT_Services_MnA_Update_Q4_2011_.pdf
http://www.capstonellc.com/research/industryreports/Capstone%20Staffing%20Report%20Q1%202012.pdf
http://www.staffingindustry.com/Research-Publications/Blogs/Subadhra-Sriram-s-Blog/Eight-CW-Changes-to-Look-Out-For-in-2013%20

11
Tempworks, Inc.
Back-office including staffing, logistical
services, payroll, and more
~$15M
Klout score = 31
MozRank =4
HR Knowledge, Inc.
~$10M
Klout score = NA
MozRank = 6
RobertHalf
LinkedIn Followers =>20k
Klout score =57
MozRank = 4
The Fountain Group
Our precision workforce is your contingent
labor solution
~$55M
Klout score = NA
MozRank = 4
Access Point, LLC
~$61M
Klout score = 0
MozRank = 2
Adecco
Klout score = 45
MozRank = 7
Exact Staff Inc.
Precision in personnel, Jobs and Staffing
Services ~$40M
Klout score = 18
MozRank = 4
Co-Advantage
~$55M
Klout score = 0
HowSociable score =1
MozRank =5
Manpower
Klout score = 50
MozRank = 5
Corporate Brokers, LLC
Strategic Staffing Services
~$25M
Klout score = 27
MozRank =3
Orion Associates
Dedicated to providing management services of
the highest quality
~$50M
Klout score = 0
HowSociable score =1
MozRank = 4
Kelly Services
LinkedIn Followers =~10k
Klout score = 49
MozRank = 5
Populus Group, LLC
~500M
The firms selected above are intended to be an illustrative introduction to the mid-market leaders. The list is neither exhaustive nor complete. Firms highlighted are market or
niche leaders. For more information please email us at ephor[at]ephorgroup.com. Read more online here: American Staffing Association StaffingToday.net, HRO today Resource
Guide, Inc 5000 2012. Klout measures more than 35 different variables grouped into three basic areas: True Reach, the size of the engaged audience; Amplification, the
likelihood content will be acted upon by others; and Network, the influence level of the engaged audience. Your company's True Reach, Amplication, and Network combine to
create the overall Klout score, which is a number 1 to 100. The Online Brand Rankings are taken from LinkedIn, Klout, HowSociable, and HubSpot.

20
Mid-Market HRO Outsourcing Service Providers & Software Implementation VARs
FAO USA Market Landscape Non-Healthcare regional providers:
The Future of 21st
Century Online Accounting.
Payroll, HRO, Accounting, FAO, Global.
The Leader in Back Office Services.
AR, AP, GL, Payroll, HRO
Cloud Finance and Accounting Solutions
FAO, Global
Information is Power.
Payroll + GL
Your Total Financial Solution.
AP, AR, Payroll, GL, VBO, Project
THE PREMIER U.S. BASED FINANCE AND ACCOUNTING
OUTSOURCING FIRM™
FAO, Technology, Compliance
Accounting Outsourcing Solutions.
Certified Public Accountants & Advisors
Payroll, Consulting, AP, AR, FL, FAO
Outsourced F&A
Accounting advisory plus outsourced bookkeeping
*There are numerous other regional providers and point specific solutions. Email us at ephor[at]ephorgroup.com for a complete list.
FAOToday Guide

3
HR Technology Software Platform Midmarket Star Performers
The market leaders for small and lower midmarket technology solution are as follows:
 ADP – missing some performance and recruiting features, but strong core HRIS and strong mobile.
 Ultimate Software, UltiPro – their newest version is very cool. Integrates social features.
The midmarket tier for HRMS technology:
 Ceridian’s Dayforce
 SaasHR from Kronos
 Sentric (Epicor platform)
 Mangrove (proprietary platform)
SaaS HR Software USA Mid-Market Leaders Greater than $10M annual recurring revenues
FOCUS Leaders
ERP
Platform:
Oracle-PeopleSoft/Taleo, SAP-SuccessFactors Workday, NetSuite, Infor, Intaact, Sage, Zoho (SMB focused),
Epicor, Microsoft
SaaS
HRMS
Platform
ADP, UltimateSoftware, Kronos-SaaSHR, Sentric, SyncHR, PeopleStrategy, NorthgateArinso, Patersons,
Celergo, TalentSoft, HRAccess, Meta4, SumTotal (Accerro + Cyborg + Softscape), Paychex, Ceridian
(DayForce), Peoplefluent, Lumesse
National
Service
Providers
Payroll: ADP, Ceridian, Intuit, Paychex, CompuPay, ExecuPay, TriCore, PayDay, PayChoice, Qquest, Paycom,
Paylocity, Paycor, Ovation, APS, InfoSync, PrimePay, CTR Systems, Icon, EmployeeMax, InfiniSource, PayPro
PEO: TriNet, Insperity, AccordHR, EmpowerHR, Emplicity, OdysseyOne, Sheakley, Discovery, Landrum,
SCICompanies, SOIHoldings, Barrett, AlphaStaff, Oasis. Ambrose, Co-Advantage, EmpowerHR, CheckPoint HR
(2 divisions)
ASO: Co-Advantage, Advantec, HRAmerica, VSManagement, Basic, Ascentis, CheckPoint, Doherty,
HRKnowedge, AccessPoint, Orion
HR staffing firms: Addecco, Kelly, Manpower, HRQ, AlphaStaff
Recruitment Process Outsourcing: YOH, iRPO, AMN Healthcare, RPOworldwide, SelectIntl, The RightThing,
HudsonRPO, Kenexa
Background: Kroll, Hireright, Talentwise, ISP, Verifications
Assessments: PSI,P&I Worldwide, Profiles International, Kenexa, RCI, Bigby Havis, Hogan, Skillsoft, SHL, DDI
HRO: CorbanOneSource, ZeroChaos, Infosynch, Tag, AccessPointHR, Sheakley, Qqest, IES, UnicornHRO, CPEhr
Software
Providers
to HRO
Service
Providers:
For Payroll: Isystems Evolution, Millenium, ExecuPay
For PEOs: Darwin, Evolution, Pyramid, ExecuPay, ISymmetry
For Time: NetTime Legiant, Cybershift, InfoTronics, WorkforceSoftware, AttendanceonDemand, NovaTime
For HRMS: UltimateSoftware (UltiPro), SaaSHR, Sentric, 2Interact
Recruiting: Taleo, iCIMS, HodesIQ, Jobvite, NuView, BondTalent
Social Performance: Work.com, Yammer, Bullseye, PeopleFluent, SuccessFactors, Halogen.
Jobs: LinkedIn, Monster, CareerBuilder.
Training: TRGI, BizLibrary, Covey, HRSG.
Benefits: Benetrac, Bswft, BenefitFocus, BenefitsXpress
Integration
Firms:
VARs: BlytheCo, TriBridge, Tectura, Professional Advantage, Crowe Horwath, Fullscope (Edgewater),
ArmaninoMcKenna, ClientsFirst, WesternComputer, Net@Work, Wiplifi
For HR technology: OnesourceHR, Jeitosa Group Intl, Sability, HumanConcepts, CollectiveHRSolutions, RCM
Technologies, Wise Consulting, Sibson, Towers, Talent2, PWC, Hackett, Pilat HR Solutions, IBM-Kenexa,
Analysts: Avero-KnowledgeInfusion, Bloom & Wallace, Deloitte-Bersin, Oracle-Cedar Crestone, HRchitect

12
HRMS Landscape for the Mid-Market 7
HRMS
8
Landscape Mid-Market
9
Landscape
10
Exhibit
11
:
~$15M
Klout score = 29
MozRank = 5
SilkRoad
12
7
Upmarket Key Players include: Oracle/Taleo, SAP/SuccessFactors, SumTotal/Softscare, Cornerstone, VistaEquity,Saba (Public) IBM-KeneXa (Kenexa is the #2 provider of
employee assessments in the market (After SHL, which was just acquired by Corporate Executive Board). the assessment market is over $1.1 billion today and it’s one of the
highest margin businesses in HR.
8
Driving HR SaaS Work Management is the demand for bundled (multi-process, multi-function) outsourced solutions such as Workforce Management (WFM) and Human Capital
Management (HCM). These outsourcing solutions represent a large market due to limited overall penetration in the small & medium sized businesses (~50% of all business). In
secondary and tertiary markets, enterprise providers with their “bundled” outsource service offerings are not present. With this unsatisfied demand, there is an opportunity for
accelerated organic revenue growth (18%-22% per year).
10
The market potential for SaaS HR solutions including human capital management and talent management is estimated to be $10B and growing at 18% CAGR10
worldwide10
.
The demand for SaaS HR solutions, may actually be greater as the use of mobile devices and tablets is accelerating the market appetite for adoption of SaaS applications and
SaaS HR solutions are also being integrated with ERP and other work management applications.
11
HRMS Landscape Top Ten is focused on SaaS. Does not include upmarket products such as Oracle, SAP, Workday, or Lawson/Infor. HRMS does not include ERP vendors. HRMS
vendors not including payroll directly with excluded.
12
Silroad source = http://www.hreonline.com/HRE/story.jsp?storyId=533350246. unified SaaS HRMS and talent-management product largely for SMBs (500 to 5,000 employees
but with some much larger clients, as always) that hews to that tradition -- while constantly questioning the marketing wisdom of it internally. With 1,500 customers in 2011
(adding 130 new ones every quarter, according to Flip), SilkRoad says that 150 of them have bought four products and 500 more than one.
Very well done for HR. still forms driven, global enterprise focus is nicely targeted at SME and mid-market.

26
HR Software M&A Transactions 2012 YTD Recap
The marketplace for workforce management software and related HCM (human capital management) including
content, software, services, and outsourcing solutions consists of thousands of firms worldwide. However, by function
and by industry leaders exist. Technology giants are paying hefty premiums to rapidly expand their geographic social
footprint. Notable M&A transactions YTD 2012 include:
HR Software Technology Landscape
HR technology solutions have evolved beyond simple automation of HR and employee transactions. The combination
of cloud solutions and consumer friendly application interfaces coupled with enterprise strength analytical capabilities
is enabling widespread adoption.
HR Software Technology Mergers & Acquisitions
M&A activity over the last 9 months has been very robust. Greater than $9 billion in disclosed transaction value.

Beyond payroll HR midmarket Landscape

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