ADP Rewrites Payroll, Everything!
Thanks to my friendship with ADP’s first female vice president, Zena Brand, I have followed the company’s fortunes for 27 years. Longer than anyone who has worked there, I thought. So I was actually disappointed recently to learn that Ed Flynn, now president of global enterprise solutions, has an actual tenure that’s two years longer.
I remember watching and sometimes talking to four CEOs: Josh Weston, Art Weinbach, Gary Butler and now Carlos Rodriguez.
During the first 20 years, I saw ADP write only one software product itself, a connector called “PC Payroll for Windows” (a product Zena was responsible for) and acquire lots of other software vendors and use their products as primary offerings in various company divisions.
Many people know ADP licensed the source code for PeopleSoft, Ver. 3 or 4, in the early 90s to create what’s now called Enterprise, its HCM largely for companies with 1,000 or more employees sold by National Accounts.
Probably fewer remember Employease. Major Accounts — the ADP division widely recognized as its money machine, serving customers with 50 to 999 employees — bought that vendor in 2006, renamed the software “HR and Benefits” and sold it as its HCM. (Jasen Williams, the most senior Employease executive to stay at ADP, recently moved on.)
Just two examples of acquisitions, among many.
Payroll is the one area in which ADP, true to its heritage, always built the software itself. In fact, until recently, the largest percentage of ADP’s R&D budget was for patching, fixing, updating and maintaining Autopay, the mainframe software used now to pay one in six employees in the U.S.: a staggering 27 million in all. Autopay’s been doing it for about 50 years!
As they say about payroll: If it’s not broken, don’t fix it.
So I was gob-smacked at its recent Analyst Day in New York, when Stuart Sackman, head of global product and technology, revealed that ADP has been building an Autopay replacement (NextGen Payroll + Tax) from scratch since 2013 and planned to pay its first customer with it this month!
This new gross-to-net payroll engine will be remarkably configurable by clients. By choosing various “policies,” employees can individually be paid twice a week or even daily, important flexibility given the changing nature of work, which is incidentally eliminating the need for payroll batch processing.
On the user side, the mobile payroll experience will offer — I think for the first time anywhere — transparency into the math that goes into every payroll deduction, such as 401(k), or details for aggregated categories like federal taxes. It even breaks down the always enigmatic FICA (who outside HR even knows that means Federal Insurance Contributions Act?) into its component parts: Social Security and Medicare taxes. This results in a truly wondrously useful pay stub.
Maksim Ovsyannikov, who designed the current stub, will be heart-broken with the replacement but pleased with the improvement.
Considering the future of work, ADP even hopes to combine an individual’s income from a second gig or side business into its reporting of W-2 salaried income to offer suggestions for modifying savings or withholdings to cover taxes eventually due!