ADP’s recently announced acquisition of Workscape, a provider of compensation-planning tools, will be “hugely disruptive” to the talent management marketplace, says Josh Bersin, CEO of Bersin Associates, who was briefed on the deal by ADP earlier today.
The acquisition will enable ADP, the $9 billion provider of HR, payroll and ben. admin. services to 570,000 clients throughout the U.S. and the world, to offer Workscape’s world-class compensation planning tools to the thousands upon thousands of small-to-medium-sized companies that already use ADP for payroll processing.
ADP already distributes Cornerstone OnDemand’s suite of performance management and succession planning tools. The Workscape acquisition (ADP did not disclose the terms of the deal) will enable the Roseland, N.J.-based behemoth to gobble up an even bigger share of the TM marketplace by reaching out to the vast number of mid-sized firms that are just starting to focus on talent management, he says.
“The compensation-management platform from Workscape is the most sophisticated of its kind out there,” says Bersin. “If ADP is already providing payroll services, not to mention performance management [through Cornerstone] to these companies, and now they can sell comp planning as well, they’re going to have a huge leg up on other TM vendors. ”
ADP may also be able to differentiate itself from other software vendors through its pricing, says Bersin.
“They get paid by their clients via a monthly charge, on a per-employee, per-check basis,” he says. “My guess is, they’ll embed the Workscape services into that monthly charge, just adding to it slightly, which will enable them to price it in a way that a typical software company could never price it. This will help them gain a lot of market share.”
“The big question is how aggressive ADP will get with it–how well will they train their salesforce and how heavily they’ll promote it,” says Bersin.
“I like to think of ADP as the General Electric of the software industry–they don’t think of it as tools, but as a business,” he adds. “When they buy a company, they look at how rapidly they can integrate it into their sales organization and sell it. I think they’re going to get a lot of traction, and other vendors–especially in the mid-sized market that ADP sells into–they’re going to have to deal with ADP.”