Ultimate Software, PeopleDoc Hint at the Shape of Things to Come

HR Service Delivery

HR Service Delivery

In mid-July, Ultimate Software acquired the Paris-based HR service delivery provider PeopleDoc for about $300 million in cash and stock. Ultimate said the combination would “improve the employee experience by offering new, person-centric features, such as an online employee help center, HR case management, and employee file management.”

In terms of dollars, it wasn’t a stunning transaction: Big fish Ultimate—with about 4,300 employees, 4,100 customers, 40 million users and annual revenue of around $1 billion—bought itself a well-funded, well-regarded startup with 265 employees, 1,000 customers and about 4 million users, most of them in Europe.

Ultimate positioned the deal as a way to improve the employee experience by offering PeopleDoc’s “person-centric features, such as an online employee help center, HR case management, and employee file management.” In addition, acquiring PeopleDoc gives Ultimate a stronger presence in Europe and the ability to make a better case for multinationals to buy its products.

While PeopleDoc will operate as a subsidiary, the companies’ presentations at HR Tech indicated you can expect much cross-selling of services. Indeed, Ultimate will begin offering its customers HR Service Delivery as part of UltiPro in January 2019.

More a Step Than a Leap

News of the deal didn’t make much of a splash when it was announced, and some observers wondered why. “This acquisition will open doors for Ultimate to further expand our presence in international markets,” founder and CEO Scott Scherr (admittedly not an “observer”) said at the time, and perhaps the notion of his company’s looking to grow its market overseas didn’t come as much of a surprise.

From PeopleDoc’s perspective, the company not only gained access to Ultimate’s customer base but its resources and R&D. “With Ultimate, we will be able to accelerate research and development for HR service delivery, including in our Paris innovation hub, to help customers bring to life the workplaces they imagine,” Clément Buyse, PeopleDoc’s co-founder and COO, said.

All of those are perfectly valid comments, but they’re also, well, logical. Both companies have traditionally focused their message on employee experience, though they’ve attacked the issue from different, but complementary, angles.

No one at Ultimate argues the point. “Ultimate’s acquisition of PeopleDoc is consistent with our strategy to expand the value of UltiPro, with a focus on improving the employee experience,” Pat Pickren, senior director of research and strategy, told the HCM Technology Report. “With faster, personalized and more responsive HR service delivery, we believe organizations can transform employees’ experiences with HR while reducing the administrative burden on HR and payroll teams.”

The Undercurrent of HR Service Delivery

As an example, Pickren described how PeopleDoc’s platform helps workers get information and help from HR more quickly, in a consumer-like way. By integrating service delivery into the HCM system, processes can be configured by “geography, level or situation,” then easily reconfigured as local requirements or workforce expectations change.

This completely fits with the idea of “the consumerization of HR.” As Marc Havercroft, SAP’s vice president of HCM Cloud & Digital Strategy and Transformation, wrote last year, “we [HR] need to make decisions based on the nature of our workforce rather than what appeals to us as a user.”

Pickren believes service delivery is fast becoming a standard HCM offering. Besides improving the employee experience, he argues, such technology will help deliver better service more cost-effectively, an important consideration as HR continues its push to be seen as something more than an administrative part of the business. Like all in-the-loop functions, it wants to show it spends money wisely.

The Ultimate-PeopleDoc deal won’t be the last to integrate dedicated service delivery with a company’s central HCM technology platform. Answering worker questions, automating processes and managing documents, storage and compliance is all dull stuff, but employees don’t see it that way when it’s their questions, time-off requests or what have you that have to be addressed. Bringing real domain expertise into the organization makes for better products that improve user experiences in subtle ways.

How dramatically PeopleDoc’s presence will impact Ultimate’s results remain to be seen. And it may be that, despite all the talk of user experience, this really is mostly about Ultimate expanding its market. Whatever the case, it was both rational and financially reasonable.

And bear in mind: The reasoning behind it can be applied to a number of companies across the HR technology spectrum. An awful lot of small, specialized solutions are still out there while both HR and IT worry about multiple implementations. Ultimate’s given us another reason to expect the pace of consolidation will increase over the next few years.

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