everest-group-peak-matrix-for-bao-service-provider-focus-on-adp-july-2016

Copyright © 2016 Everest Global, Inc.This document has been licensed for exclusive use and distribution by ADP

EGR-2016-3-E-1819

Focus on ADPJuly 2016

Everest Group PEAK Matrix™ for BAO Service Provider

Copyright © 2016, Everest Global, Inc.EGR-2016-3-E-1819

2

Introduction and scope

Everest Group recently released its Benefits Administration Outsourcing (BAO) Service Provider Landscape with PEAK Matrix™ Assessment for 2016. This report analyzes the changing dynamics of the BAO landscape and assesses each service providers’ key strengths and areas of improvement.

As a part of this report, Everest Group updated its classification of 11 service providers on the Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for BAO into Leaders, Major Contenders, and Aspirants. The PEAK Matrix is a framework that provides an objective, data-driven, and comparative assessment of BAO service providers based on their absolute market success and delivery capability. Everest Group also identified four service providers as the “2016 BAO Star Performers” based on the strongest year-on-year (YoY) forward movement demonstrated on the PEAK Matrix.

Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand the service providers’ relative strengths and gaps. However, it is also important to note that while the PEAK Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each buyer. Individual buyers will have to consider their unique situation and requirements, and match them against service provider capability for an ideal fit.

This document focuses on ADP’s BAO experience and capabilities, and includes: ADP’s positioning on the BAO PEAK Matrix Detailed BAO profile of ADP

https://research.everestgrp.com/Product/EGR-2016-3-R-1811/Benefits-Administration-Outsourcing-BAO-Service-Provider-Lands

https://research.everestgrp.com/Product/EGR-2016-1-R-1773/Procurement-Outsourcing-PO-Service-Provider-Landscape-with-PEA

https://research.everestgrp.com/Product/EGR-2016-3-R-1811/Benefits-Administration-Outsourcing-BAO-Service-Provider-Lands


3

High75th percentile

25th percentile High

Leaders

Low

75th

perc

entil

e

Major Contenders

Mar

ket s

ucce

ss(B

AO re

venu

e, a

ctiv

e BA

O d

eals

, and

MPE

s)

BAO delivery capability(Scale, scope, technology solutions & innovation, and delivery footprint)

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for BAO

Note: This assessment excludes Empyrean’s and Fidelity’s inputs on this particular study and is based on Everest Group’s estimates that leverage its proprietary Transaction Intelligence (TI) database, ongoing coverage of Empyrean and Fidelity, service provider public disclosures, and interaction with buyers

Source: Everest Group (2016)

Businessolver

ADP Xerox

Fidelity

25th

perc

entil

e

Low Aspirants

Bswift

EmpyreanOneSource Virtual

Secova

Mercer

Willis Towers Watson

Everest Group PEAK Matrix – 2016 BAO market standingPerformance | Experience | Ability | KnowledgeADP is a Major Contender and a Star Performer

Major Contenders

Aspirants

Leaders

Star Performers

Aon Hewitt


4

ADPEverest Group assessment


Delivery capability

Market successScale ScopeTechnology and

innovation Delivery footprint Overall

With significant BAO revenue and good delivery capabilities, ADP is a Major Contender and a Star Performer on the BAO PEAK Matrix

ADP continues to be one of the strongest H&W providers in North America – its sweet spot lying in the small to mid-end of the buyer-size spectrum

Its private HIX, ADP Private Exchange, is a comprehensive broker-agnostic solution, fully integrated with the ADP HCM solution, enabling a unified user experience. ADP also has a partnership with GoHealth to offer support for non-ACA eligible employees

USI, ADP’s benefits design partner, adds another dimension to ADP’s offerings enabling it to offer a holistic end-to-end benefits solution

Also, ADP recently launched its multi-country benefits tool – ADP Enterprise Benefits, in partnership with Thomsons Online Benefits, which can be customized for all buyer types. Buyers looking for a one-stop multi-country benefits tool will find this offering compelling

ADP has a healthy onshore-offshore mix, however, it can further increase its offshore presence to not only benefit from the associated cost savings, but also to tap into the emerging markets

The need for analytics in the benefits administration space has been ever increasing. Leveraging ADP DataCloud to offer more insightful and advanced analytics could prove to be a market disruptor

Strengths

Leaders Major Contenders Aspirants

Measure of capability: Best-in-class Very high High Medium high Medium Medium low Low Not mature

Areas of improvement


5

BAO-related technology and investments

ADPBAO service capability and strategy

Company profile: Automatic Data Processing Inc. (ADP) is a provider of business outsourcing solutions to employers. ADP Employer Services offers a range of human capital management solutions including HR information, payroll processing, tax, and benefits administration products and services, including traditional and web-based outsourcing solutions.Headquarter: New Jersey, United StatesLeadership: Carlos. A. Rodriguez (President & CEO)Website: www.adp.com

Partnerships BAO service provider – USI and Hays Companies (benefits plan design

strategic partner); Go Health (HIX partner for ACA ineligible employees) HRO service provider – none Technology vendors – First Data / Alegeus (card processing); Corestream

(voluntary benefits platform)

Recent BAO-related developments/announcements Q3 2015 – entered into a partnership with Thomsons Online Benefits to offer

global benefits solutions Q3 2015 – signed an agreement with USI, Go Health, and Hays Companies

to offer Private Exchange Q4 2014 – launched ADP marketplace

Offshore(India + China +Southeast Asia)

Nearshore (Eastern Europe + Latin America)

Onshore(U.S. + Canada + Western Europe)

~680 - ~2,170

Total BAO delivery FTEs = ~2,850

Functional capabilities within key BAO areas

Regions Defined benefitsDefined contributions Health & welfare

North America

Europe

LATAM

Asia Pacific

Coverage – self Through partners Not offered

Solutions/investments Offered Name of solutions and details

Technology platform ADP Benefits

Health Insurance Exchange (HIX)

ADP Private Exchange focused on active employees

Online benefits portal

ADP Benefits Marketplace (for clients and participants)

Decision support tools

Integrated offering with its benefits administration technology

Analytical tools for buyers ADP Reporting

Mobile/smartphone applications

ADP Mobile Solutions – enrollment can be enabled through the native mobile app or responsive technology

Multi-country BAO platform

ADP Enterprise Benefits, powered by Darwin – globally centralized benefits administration technology and managed service integrated with ADP Global Payroll – available in ~100 countries


http://www.adp.com/


6

ADPBAO client portfolio

BAO experience Total number of current BAO clients: 1,324 Total number of participants managed: ~3,400,000

Major BAO clients

Frequency of inclusion of geographies in BAO contracts

0%

0%

100%

0%

Asia Pacific

EMEA

North America

LATAM

24%

15%

13%7%6%

5%

30%

100% = 1,324 clients

Spread of participants across BAO segments

BAO split of clients by industry BAO buyer-size mix

100% = ~3,400,000

Manufacturing

HealthcareBFSI

Government Retail

Others

Energy & utilities

100% = 1,324 clients

50%42%

8%

100% = 1,324 clients

Small-market (<3,000 employees)

Large market (>15,000 employees)

H&W

100%Mid-market

(3,000-15,000 employees)



7

ADPKey BAO delivery locations

Alpharetta

Durham

Prague

Louisville

Minneapolis

PhiladelphiaSalt Lake City

West Des Moines

India

Philippines

Augusta

Elk Grove

MarlboroughRoseland



8

Appendix


9

Top quartile performance across market success and capability

2nd or 3rd quartile performance across market success and capability

4th quartile performance across market success and capability

High

Low

25th

perc

entil

e

75th

perc

entil

e

75th percentile

Mar

ket s

ucce

ss(B

AO

reve

nue,

act

ive

BA

O d

eals

, and

MP

Es)

Everest Group Performance | Experience | Ability | Knowledge (PEAKTM) Matrix

Aspirants

Leaders

Major Contenders

BAO delivery capability1

(Scale, scope, technology solutions & innovation, and delivery footprint)

Low High25th percentile

Everest Group classifies the BAO service provider landscape into Leaders, Major Contenders, and Aspirants on the Everest Group PEAK Matrix

1 Service providers scored using Everest Group’s proprietary scoring methodology described on the following pageSource: Everest Group (2016)


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Service providers are positioned on the PEAK Matrix based on evaluation across two key dimensions

Aspirants

Leaders

Major Contenders

Mar

ket s

ucce

ssMeasures success achieved in the market. Captured through a combination of: BAO revenue Active BAO deals Total number of Managed

Participant Equivalents (MPEs)1

Measures the scope of services provided through: Breadth of BAO services –

H&W, DB, and DC Geographic scope Buyer size (small, medium, or

large) Variety of industries served

Measures ability to deliver services successfully. Captured through four subdimensions

Measures the scale of operations through: Share of the BAO revenue in

the overall company revenue Overall company revenue

Scale Scope

Measures the capability in technology through the solutions offered: BAO technology platform Health insurance exchange Online benefits portals and

mobile applications Decision support tools for

participants Analytical tools for buyers Multi-country BAO platform

Technology capability

Measures the delivery footprint and the global sourcing mix through: Delivery footprint across

regions Spread of FTEs across

onshore and offshore/nearshore locations

Delivery footprint

Delivery capability

1 Managed Participant Equivalents (MPE) = sum of non-unique participants managed in each BAO segment (H&W, DB, and DC) individually


11

FAQs (page 1 of 2)

Does the PEAK Matrix assessment incorporate any subjective criteria? Everest Group’s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service

provider RFIs and Everest Group’s proprietary databases containing providers’ deals and operational capability information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction, and provider briefings

Is being a “Major Contender” or “Aspirant” on the PEAK Matrix, an unfavorable outcome? No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical

services area. There are a number of providers from the broader universe that are assessed and do not make it to the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is itself a favorable recognition

What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the “PEAK Matrix position”? PEAK Matrix position is only one aspect of Everest Group’s overall assessment. In addition to assigning a “Leader”,

“Major Contender” or “Aspirant” title, Everest Group highlights the distinctive capabilities and unique attributes of all PEAK Matrix providers assessed in its report. The detailed metric level assessment and associated commentary is helpful for buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas

What are the incentives for buyers and providers to participate/provide input to PEAK Matrix research? Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment Participation incentives for providers include adequate representation and recognition of their capabilities/success in

the market place, and a copy of their own “profile” that is published by Everest Group as part of the “compendium of PEAK Matrix providers” profiles


12

FAQs (page 2 of 2)

What is the process for a service provider to leverage their PEAK Matrix positioning status ? Providers can use their PEAK Matrix positioning rating in multiple ways including:

– Issue a press release declaring their positioning/rating– Customized PEAK Matrix profile for circulation (with clients, prospects, etc.)– Quotes from Everest Group analysts could be disseminated to the media – Leverage PEAK Matrix branding across communications (e-mail signatures, marketing brochures, credential

packs, client presentations, etc.)

The provider must obtain the requisite licensing and distribution rights for the above activities through an agreement with the designated POC at Everest Group

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Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility, and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at www.everestgrp.com and research.everestgrp.com.

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