Posted by Tom Foremski - May 19, 2011
"I'm so bored with the cloud," laughs Mike Capone, CIO of Automatic Data Processing (ADP), the payroll processing giant and the original "cloud computing" company, also known as SAAS (Software As A Service).
"Cloud" has become a hugely popular term in the tech world as software moves outside of the data center. It is also showing up in advertising aimed at consumers.
ADP is the original "cloud" company and this year celebrates its 50th year as a public company, with more than half-a-million companies using its payroll services.
It's not surprising Mr Capone is bored with talk about "cloud" computing companies; ADP has been tremendously successful with this particular form of tech "innovation" for decades.
So, what is there beyond the cloud?
"Analytics," says Mr Capone. "We have a lot of data that yields important analytics for our customers. We can advise them on where to hire, what skills are hot, we can benchmark their HR against others in their sector. There is a lot more beyond payroll."
About five years ago ADP spun out business groups such as its brokerage operations to refocus on its core business: payroll. Now, it's branching out again, making small acquisitions in adjacent sectors, such as AdvancedMD, which provides business management software for doctor's offices
While ADP has the claim of the original cloud company, Mr Capone admits it doesn't have the same stock market valuation as a cloud company, such as Salesforce.com.
"We get the respect on Wall Street but also the penalty for being the oldest cloud company," says Mr Capone.
However, with a $27 billion valuation, and a 60 year history, ADP has heft and reliability: It has nearly $9 billion in annual revenues, and is one of only a handful of companies with a triple-A rating by S&P and Moody's.
ADP is also a large employer with 47,000 staff. This shows that being a "cloud" company is not about the technology but about being the "Service" in Software As A Service. There's a lesson here for other "cloud" companies. It's easy to forget that services need to be sold and supported by people -- there is only so much that you can do via technology alone.
ADP is a giant but is it something that a startup would choose?
"Yes," says Mr Capone. "I pay my nanny through ADP. With other solutions, if your business gets too large you have to switch. We can take you from one employee to thousands globally."
Expanding globally is tough for businesses because there are many different tax and compliance issues in each country and even within specific geographies. ADP keeps track of everything and makes changes to payroll in real-time. And with new apps such as its mobile app, employees can self-service a lot of their HR needs, including retirement benefits.
Intuit competes with ADP in the small business space but in the large enterprise space ADP has a commanding presence and services many of the world's largest companies, such as Microsoft's global operations.
Its insider relationship with so many companies provides ADP with a unique view into employment patterns and it shares some of this data in its monthly ADP National Employment Report, which often has more accurate numbers than the government reports.
The latest report found:
Employment in the non-farm private business sector rose 179,000 from March to April on a seasonally adjusted basis... [It] shows that labor market conditions continued to improve in April, but only at a moderate pace.
Mr Capone says that a return to jobs growth is around the corner. ADP has seen a large use of independent contractors by clients, which is typical before a wave of job hiring.