Vendor Landscape: SaaS HRIS/HRMS

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1 Vendor Landscape: SaaS HRIS/HRMS Automating and integrating HR for heightened strategic capabilities. McLean & Company 1

2 Introduction The strategic value of Human Resources is only gaining significance, and HRIS/HRMS must support this trend or lose out on this market of multiple needs. SaaS products provide the high functionality and usability required. This Research Is Designed For: This Research Will Help You: Enterprises seeking to select a SaaS solution for HRIS/HRMS. Understand what s new in the SaaS HRIS/HRMS market. Enterprises with a SaaS HRIS/HRMS use case that may include: Creating a central database of employee information for reporting and strategic planning. Integrating talent management or payroll with the employee information database. Centralizing all talent management modules including performance management into one system. Evaluate SaaS HRIS/HRMS vendors and products for your enterprise needs. Determine which SaaS products are most appropriate for particular use cases and scenarios. McLean & Company 2

3 Executive Summary McLean & Company evaluated seven competitors in the SaaS HRIS/HRMS market, including the following notable performers: Champions: Kronos Partners high functionality and intuitive usability, without the cost of a full ERP solution investment, for mid-market and large organizations. SuccessFactors Employee self-service that allows for high social collaboration through the system, along with strong predicative business analytics for strategic decision making. Ultimate Software An award winning SaaS solution with excellent strategic reporting capabilities and different solutions for the mid-market and large organizations. Innovation Award: Workday Intuitive usability with robust mobile functionality that focuses on managing international talent from hire-to-retire. McLean & Co. Insight 1. Insight One: SaaS HRIS/HRMS solutions are a less costly way to gain advanced functionality without hosting in-house. SaaS vendors are continuously innovating, increasing functionality through frequent updates for end users, which are easier to integrate than full-blown ERP solutions that treat HRIS/HRMS as add-ons. 2. Insight Two: Strategic HR departments should consider SaaS HRIS/HRMS solutions in order to remain competitive as talent managers and strategists since proper implementations yield favourable ROIs. 3. Insight Three: Not all SaaS providers are the same some focus on performance management, while others are payroll champions. Choose the one that fits your organization s needs and talent management strategy. McLean & Company 3

4 Market Overview How it got here HRIS products were originally the record keepers of employee data. They were essentially databases that collected demographic information, salary data, benefits administration, and performance appraisal results. The main objective of the systems was to maintain employee data integrity and centralization as opposed to the traditional model of using single-user spreadsheets and paper employee files. The HRIS was administered by the HR department with IT assistance. Reporting functionalities were basic and limited to employee lists, organizational charts, and historical salary information. HRIS began to integrate into ERP systems as HR became more complex, strategic, and less administratively focused in order to inform payroll and gain increased reporting capabilities. Large ERP vendors like Lawson, Oracle, and SAP capitalized by offering HRIS as part of their overall ERP offerings. Where it s going The highly strategic nature of HR has created a demand for more multi-functional products. Integrated talent management are the new buzz words. Vendors are now offering modules and partnerships that are easily integrated and configurable. o Integration dominates, giving HR the flexibility to choose the best fit for the organization. Enter SaaS HRIS/HRMS products, which are independent of ERP systems and offer functionality beyond mere data repository: o Configurable workflows, manager and employee selfservice, payroll integration, and compliance reporting are key to making HR more efficient. o Recruiting, performance management, succession planning, learning management, benchmarking, and analytics reporting are now high demand functions to assist HR in becoming more strategic. Mobile and predictive analytics are the new wave of functionality that will increase convenience and datadriven strategic decision-making. As the market evolves, capabilities that were once cutting edge become standard and new functionality becomes differentiating. Manager and employee self-service and payroll integration have become Table Stakes capabilities and should no longer be used to differentiate solutions. Instead, focus on talent management modules, integration capabilities, and usability to get the best fit for your requirements. McLean & Company 4

5 SaaS HRIS/HRMS Vendor Landscape selection/knock-out criteria: Market share, mind share, and market consolidation For this Vendor Landscape, McLean & Company focused on those vendors that have SaaS offerings and are not competing in the ERP market. Pure play vendors those with many functionalities in addition to basic HRIS functionalities were included to compare the integrated talent management system landscape. However, talent management vendors without basic HRIS functionality were not considered. Only vendors that were at least SAS 70 II compliant were considered. Included in the Vendor Landscape: Ascentis. Strong payroll functionality for the mid-market. Kronos. The market leader, with major workforce management capabilities. NuView Systems Inc. A dedicated international player with multiple language capabilities. SilkRoad. The user-friendly suite with various module offerings. SuccessFactors. Performance management expert with strong HRIS collaboration and reporting capabilities. Ultimate. An award-winning system with high scalability capabilities. Workday. Innovative newcomer with a quickly growing presence. McLean & Company 5

6 SaaS HRIS/HRMS Criteria & Weighting Factors Product Evaluation Features Affordability The solution provides basic and advanced feature/functionality. The five year TCO of the solution is economical. Features 25% 10% Architecture 40% 25% Usability Affordability Usability Architecture Vendor Evaluation Viability The solution s dashboard and reporting tools are intuitive and easy to use. The delivery method of the solution aligns with what is expected within the space. Vendor is profitable, knowledgeable, and will be around for the long-term. Product 50% 50% Vendor Strategy Vendor is committed to the space and has a future product and portfolio roadmap. Viability 25% 30% Strategy Reach Channel Vendor offers global coverage and is able to sell and provide post-sales support. Vendor channel strategy is appropriate and the channels themselves are strong. Channel 15% 30% Reach McLean & Company 6

7 The McLean & Company HRIS/HRMS Vendor Landscape Champions receive high scores for most evaluation criteria and offer excellent value. They have a strong market presence and are usually the trend setters for the industry. Innovators have demonstrated innovative product strengths that act as their competitive advantage in appealing to niche segments of the market. Market Pillars are established players with very strong vendor credentials, but with more average product scores. Emerging Players are newer vendors who are starting to gain a foothold in the marketplace. They balance product and vendor attributes, though score lower relative to market Champions. For an explanation of how the McLean & Company Vendor Landscape is created, see the Vendor Evaluation Methodology slide in the appendix. McLean & Company 7

8 Every vendor has its strengths and weaknesses pick the one that works best for you Product Vendor Overall Features Usability Affordability* Architecture Overall Viability Strategy Reach Channel Ascentis Kronos NuView SilkRoad SuccessFactors Ultimate Workday *Sample pricing was only provided by one vendor, so Affordability was not evaluated. Legend =Exemplary = Good = Adequate =Inadequate = Inferior For an explanation of how the McLean & Company Harvey Balls are calculated, see the Vendor Evaluation Methodology slide in the appendix. McLean & Company 8

9 The McLean & Company SaaS HRIS/HRMS Value Index What is a Value Score? The Value Score indexes each vendor s product offering and business strength relative to its price point. It does not indicate vendor ranking. Champion Due to the unique nature of these services, sample pricing could not be provided by vendors, so a Value Index could not be calculated. Vendors that score high offer more bang for the buck (e.g. features, usability, stability, etc.) than the average vendor, while the inverse is true for those that score lower. SaaS HRIS/HRMS Software Price-conscious enterprises may wish to give the Value Score more consideration than those who are more focused on specific vendor/product attributes Ascentis Kronos NuView SilkRoad Success -Factors Ultimate Workday For an explanation of how the McLean & Company Value Index is calculated, see the Value Index Ranking Methodology slide in the appendix. For an explanation of how normalized pricing is determined, see the Product Pricing Scenario & Methodology slide in the appendix. McLean & Company 9

10 Table Stakes represent the minimum standard without these, a product doesn t even get reviewed The Table Stakes Feature Employee Data Capture Payroll Administration Reporting Capabilities Role-based Interfaces Workflow SaaS Compliance Employment Compliance Description Records demographic information about employees, including name, address, salary, department, etc. Hours worked, commissions, vacation, leaves of absence, overtime, deductions, bonuses, taxes, and contributions are properly documented and distributed in a timely manner. Provides standard templates and custom options to pull data into meaningful reports (e.g. turnover, absenteeism, diversity) for both HR and business use. Both employee and manager self-service options available to change or modify information and generate reports. Tasks can be configured to an authorization process that notifies individuals of outstanding authorization requirements. Meets SAS 70 Type II certification or higher for data security. Preset or configurable options to track, monitor, and alert administrators on common workplace compliance requirements like OSHA, COBRA, etc. What Does This Mean? The products assessed in this Vendor Landscape TM meet, at the very least, the requirements outlined as Table Stakes. Many of the vendors go above and beyond the outlined Table Stakes, and some even do so in multiple categories. This section aims to highlight each product s capabilities in excess of the criteria listed here. If Table Stakes are all you need from your SaaS HRIS/HRMS solution, all the vendors evaluated here will meet your functionality needs. However, usability, configurability, international capabilities, and future use cases should still be considered. McLean & Company 10

11 Advanced features are the market differentiators that make or break a product Scoring Methodology Advanced Features McLean & Company scored each vendor s offering as a summation of its individual scores across the listed advanced features. Vendors were given one point for each feature the product inherently provided. Some categories were scored on a more granular scale with vendors receiving half points. Feature Time & Attendance Benefits Administration Position Management Performance Management Expense Management Succession Planning Absence Management Learning & Development Predictive Analytics Recruiting What We Looked For Documents employee labor hours (including lunches and breaks, overtime, etc.), and tracks attendance data for payroll purposes. Monitors programs and plans, including pension, insurance, and healthcare, and ensures payments and deductions are made correctly. Employees can be assigned a position grade, promoted, and moved into different departments, allowing for workforce planning. Evaluates and documents performance so that each employee effectively meets business goals. Reports and tracks that employee expense claims are processed, paid, and documented in compliance with the organization s policies. Identifies and tracks development of personnel who demonstrate potential for increased responsibility and key leadership roles. Measures and monitors employee absences to ensure maximum workforce productivity as well as employee support. Facilitates training to improve employee performance. Examines statistically relevant data for significant relationships and patterns to aid predictions about future trends, opportunities, and risks. Tracks job applicants throughout the recruiting process. McLean & Company 11

12 Each vendor offers a different feature set concentrate on what you need Time and Attendance Position Mgmt. Perf. Mgmt. Expense Mgmt. Succession Planning Absence Mgmt. Learning and Dev. Predictive Analytics Recruiting Benefits Admin. Ascentis Kronos NuView SilkRoad SuccessFactors Ultimate Workday Legend = Feature fully present = Feature partially present / pending = Feature absent McLean & Company 12

13 Kronos is a workforce titan with healthcare expertise and a strong global presence Champion Product: Employees: Headquarters: Website: Founded: Presence: $1 Kronos Workforce Central 3,100 Chelmsford, Massachusetts kronos.com 1977 $740 M in revenue (2010) Private equity owned $1M+ 3 Year TCO: Based on pricing scenario (see Appendix) Overview Founded in 1977, Kronos was a publically traded company, which became privately held again in Kronos boasts 30 million users a day in over 60 countries. Although it has an impressively large enterprise customer base, it predominately focuses its strategy on the mid-market. Strengths Global scalability, with great success in India. Expertise in all industry verticals, with an excellent record in healthcare. Training is available onsite, in person, as well as through remote customer-guided training sessions, training materials, and customer communities. Drag and drop usability simplifies complex reporting. Challenges Despite considerable international presence, the HR and Payroll system is only available in English. Kronos standard reports are written in Crystal, although any ODBC report writer can be used in conjunction with the database. McLean & Company Recommends: North American healthcare will benefit greatly from Kronos expertise; globally, Kronos s proficiency, service, and integration with workforce management is unprecedented in any other solution. McLean & Company 13

14 SuccessFactors is an innovative solution with robust employee collaboration functionality and advanced reporting Champion Product: Employees: Headquarters: Website: Founded: Presence: Employee Central San Mateo, CA successfactors.com 2001 NYSE: SFSF FY10 Revenue: $209.4 M Overview Leveraging its deep performance management beginnings, SuccessFactors has developed an innovative HR Business Suite product for small, mid, and large sized organizations using a highly usable, collaboration-friendly interface. Strengths SuccessCloud, a first-of-its-kind technology partner program, allows third-party applications and data from other business systems to connect and integrate with its BizX suite. Business workforce analytics and benchmarking allow for predictive modeling reporting using built-in metrics. Mobile applications support project collaboration and recruiting. Challenges $1 $1M+ Vendor declined to provide product pricing Although it has highly integrated payroll partnerships, it is the only vendor in this evaluation to not offer payroll administration as a native part of its application. SuccessFactors is a high energy offering; though it may be intimidating to more traditional HRIS users. Corporate wide training and cultural adjustments will be required to get employees, managers, and HR professionals collaborating through the system. McLean & Company Recommends: Avant garde, data-driven HR strategists will find SuccessFactors predictive modeling and reporting useful, but more conservative organizations may find the system overwhelming. McLean & Company 14

15 Ultimate is a SaaS leader, with exceptional security and functionality Champion Product: Employees: Headquarters: Website: Founded: Presence: UltiPro Weston, Florida ultimatesoftware.com 1990 NASDAQ: ULTI FY09 Revenue: $196.6 M Overview Ultimate Software has a broad target market, but also provides solutions specific to the mid-market, making it the most widely used solution in North America. It boasts 2,200+ customers in diverse industry verticals and globally. Strengths Ultimate Software was the first SaaS provider to achieve ISO/IEC 7001 Certification. Free, unlimited training with a variety of options. Classroom training and on-demand online courses, partnered with 24x7 access to HR subject-matter experts, provide excellent support. A 96% customer retention rate indicates high customer satisfaction. Challenges $1 $1M+ Vendor declined to provide product pricing Although it has a specific mid-sized offering ( employees), smaller organizations have no options. Cognos reporting for analytics requires staff training in order to fully benefit from its robust functionality. The dated user interface is less appealing and intuitive. Mobile functionality is limited to an iphone application. McLean & Company Recommends: Larger mid-sized organizations and large organizations will find Ultimate s functionality and reporting capabilities to be very robust, scalable, and advanced. McLean & Company 15

16 Workday is an innovative solution with a focus on developing the leadership pipeline globally Innovator Product: Employees: Headquarters: Website: Founded: Presence: Global Human Resource Management 676 Pleasanton, CA workday.com 2007 Private Overview Workday was created by former PeopleSoft leaders, backing its innovative stance with a history of HR system leadership. With 177 customers in 123 countries, Workday has grown considerably since its inception. Strengths Strong international capabilities include support for multi-entity, multi-language, multi-currency, and multi-book needs. Robust mobile capabilities, including real-time business intelligence right to the user s device. Succession planning includes global leadership pipeline planning, which is unique and aligned with future HR challenges. Challenges $1 $1M+ Vendor declined to provide product pricing Payroll functionality has limited reporting and admission levels compared to Champion vendors, which decreases usability by preventing key stakeholders from accessing pay data. High growth has resulted in some support quality issues, which can adversely affect implementation. Workday does not specifically target the mid-market. McLean & Company Recommends: Workday s forward-thinking mobile functionality and future-oriented career and succession planning for employees can serve a user s long-term HR needs starting today. McLean & Company 16

17 SilkRoad presents sleek user interfaces and easy to use talent management modules Market Pillar Product: Employees: Headquarters: Website: Founded: Presence: HeartBeat 375 Chicago, IL silkroad.com 2003 Privately held Overview SilkRoad s HeartBeat and integrated suite is a slick, appealing product with 2,000 customers in 20 locations globally. SilkRoad provides a cross-industry solution for mid-sized to large enterprises. Strengths Powerful, flexible role-based security allows customers to restrict access to sensitive data. Role-based security extends to reports as well. A well developed learning management module is used to train clients to maintain consistency and showcase key features. Reporting does not require an external plug-in, so custom reports can be created throughout the suite. Challenges $1 $1M+ 3 Year TCO: Based on pricing scenario (see Appendix) Mobile device use and support for the solution is still evolving. Reporting dashboards are useful, but not configurable (planned for next year). SilkRoad s integrated talent management suite is led by other modules (i.e. onboarding); the core HR solution is young and more of an ideal fit for the mid market currently. McLean & Company Recommends: Users looking for strong talent modules without the more traditional aspects of HRIS (time and attendance, absence management, etc.) will find SilkRoad very user friendly and accessible. McLean & Company 17

18 NuView Systems is a strong emerging player, especially in the international arena Product: Employees: Headquarters: Website: Founded: Presence: Emerging Player NuViewHR 92 employees (2009) Andover, MA nuviewinc.com 1994 Private, $11.3 M in revenue (2009) Overview NuView Systems released its most recent Global and Payroll Software in May of 2011, which incorporated client feedback through focus groups. Strengths The modular system allows addition of other modules after initial implementation without extra integration costs. International configurability includes foreign currency management, localization of forms in different languages, and filtering for international data regulators (i.e. only data that is relevant and allowed to be collected appears in fields). Challenges $1 $1M+ Vendor declined to provide product pricing Despite longevity in the marketplace, NuView is a boutique offering without major market share. This may limit user community support. The user interface is boxy and appears dated compared to the fresh aesthetic of many competitors. Mobile capabilities are limited to basic administrative tasks and to phones with IE and Windows Mobile 5.0 or higher. McLean & Company Recommends: Forward-thinking international companies can leverage NuView s commitment to global organizations and the ability to add modules as the HR function grows without the hassle of integration. McLean & Company 18

19 Ascentis is a more traditional HRIS provider, with solid payroll functionality and market longevity Emerging Player Product: Employees: Headquarters: Website: Founded: Presence: Ascentis HR 79 Bellevue, Washington ascentis.com 1980 Private, $3.6 M revenue Overview Strongly focused on the mid-market (75-2,500 employees), Ascentis is the product of a 2007 merger between EBS Online, a payroll services company, and Ascentis. Ascentis serves over 1,400 clients. Strengths Ascentis provides strong payroll functionality as well as integration with other providers. Its partner network of benefits providers is robust, particularly for US-based clients. Over 300 standard reports provide new SaaS clients with a lot of out-of-the-box options prior to customization. Challenges $1 $1M+ Vendor declined to provide product pricing US-based support limits global scalability, and a low number of international clients despite the vendor s longevity is indicative of a limited geographic focus. While Ascentis plans to add advanced modules (recruiting was just released in May 2011), it has not mastered the integrated talent management suite like its competitors. McLean & Company Recommends: Deep payroll expertise allows for a variety of options to integrate and manage payroll according to individual client needs, especially in North America. McLean & Company 19

20 Identify leading candidates with the SaaS HRIS/HRMS Vendor Shortlist Tool The McLean & Company SaaS HRIS/HRMSVendor Shortlist Tool is designed to generate a customized shortlist of vendors based on your key priorities. This tool offers the ability to modify: Overall Vendor vs. Product Weightings Top-level weighting of product vs. vendor criteria Individual product criteria weightings: Features Usability Affordability Architecture Individual vendor criteria weightings: Viability Strategy Reach Channel McLean & Company 20

21 Global organizations require scalability, international experience, language and compliance capabilities Exemplary performers offer multiple languages, international reporting, and have a strong global client portfolio. 1 Global Scalability Exemplary Performers 2 Features and Usability Viable Performers 3 Mobile Functionality Poor Performers 4 McLean & Company 21

22 Integrated talent management requires a variety of features and slick usability to encourage use Exemplary performers have strong scores in both functionality and usability, with viable performers excelling more at one or the other. 1 Global Scalability Exemplary Performers 2 Features and Usability Viable Performers 3 Mobile Functionality Adequate Performers 4 McLean & Company 22

23 Mobile functionality is an emerging trend with high demand from busy HR professionals and managers Robust mobile functionality on various mobile devices rather than just selected devices gets top points. Exemplary Performers 1 Global Scalability 2 Features and Usability Viable Performers 3 Mobile Functionality Poor Performers 4 McLean & Company 23

24 Appendix 1. Vendor Evaluation Methodology 2. Value Index Ranking Methodology 3. Product Pricing Scenario & Methodology McLean & Company 24

25 Vendor Evaluation Methodology McLean & Company s Vendor Landscape market evaluations are a part of a larger program of vendor evaluations which includes Solution Sets that provide both Vendor Landscapes and broader Selection Advice. From the domain experience of our analysts as well as through consultation with our clients, a vendor/product shortlist is established. Product briefings are requested from each of these vendors, asking for information on the company, products, technology, customers, partners, sales models, and pricing. Our analysts then score each vendor and product across a variety of categories, on a scale of 0-10 points. The raw scores for each vendor are then normalized to the other vendors scores to provide a sufficient degree of separation for a meaningful comparison. These scores are then weighted according to weighting factors that our analysts believe represent the weight that an average client should apply to each criteria. The weighted scores are then averaged for each of two high level categories: vendor score and product score. A plot of these two resulting scores is generated to place vendors in one of four categories: Champion, Innovator, Market Pillar, and Emerging Player. For a more granular category by category comparison, analysts convert the individual scores (absolute, non-normalized) for each vendor/product in each evaluated category to a scale of zero to four whereby exceptional performance receives a score of four and poor performance receives a score of zero. These scores are represented with Harvey Balls, ranging from an open circle for a score of zero to a filled in circle for a score of four. Harvey Ball scores are indicative of absolute performance by category but are not an exact correlation to overall performance. Individual scorecards are then sent to the vendors for factual review, and to ensure no information is under embargo. We will make corrections where factual errors exist (e.g. pricing, features, technical specifications). We will consider suggestions concerning benefits, functional quality, value, etc; however, these suggestions must be validated by feedback from our customers. We do not accept changes that are not corroborated by actual client experience or wording changes that are purely part of a vendor s market messaging or positioning. Any resulting changes to final scores are then made as needed, before publishing the results to McLean & Company clients. Vendor Landscapes are refreshed every 12 to 24 months, depending upon the dynamics of each individual market. McLean & Company 25

26 Value Index Ranking Methodology McLean & Company s Value Index is part of a larger program of vendor evaluations which includes Solution Sets that provide both Vendor Landscapes and broader Selection Advice. The Value Index is an indexed ranking of value per dollar as determined by the raw scores given to each vendor by analysts. To perform the calculation, Affordability is removed from the Product score and the entire Product category is reweighted to represent the same proportions. The Product and Vendor scores are then summed, and multiplied by the Affordability raw score to come up with Value Score. Vendors are then indexed to the highest performing vendor by dividing their score into that of the highest scorer, resulting in an indexed ranking with a top score of 100 assigned to the leading vendor. The Value Index calculation is then repeated on the raw score of each category against Affordability, creating a series of indexes for Features, Usability, Viability, Strategy, and Support, with each being indexed against the highest score in that category. The results for each vendor are displayed in tandem with the average score in each category to provide an idea of over and under performance. The Value Index, where applicable, is refreshed every 12 to 24 months, depending upon the dynamics of each individual market. McLean & Company 26

27 Product Pricing Scenario & Methodology McLean & Company provided each vendor with a common pricing scenario to enable normalized scoring of Affordability, calculation of Value Index rankings, and identification of the appropriate solution pricing tier as displayed on each vendor scorecard. Vendors were asked to provide list costs for SaaS HRIS/HRMS solutions to address the needs of a reference organization described in the pricing scenario. Additional consulting, deployment, and training services were explicitly out of scope of the pricing request, as was the cost of enhanced support options, though vendors were encouraged to highlight any such items included with the base product acquisition. The annual software maintenance rate was also requested, along with clarity on whether or not the first year of maintenance was included in the quoted software costs, allowing a three-year total acquisition cost to be calculated for each vendor s SaaS HRIS/HRMS solution. This three-year total acquisition cost is the basis of the solution pricing tier indicated for each vendor. The vendors three-year total acquisition costs were not normalized to produce the Affordability raw scores and calculate Value Index ratings for each solution due to the lack of pricing information available for the majority of vendors. Key elements of the common pricing scenario provided to SaaS HRIS/HRMS vendors included: A mid-level clothing manufacturer/retailer with corporate offices on the US West Coast, East Coast, and in the UK, and with 2,200 global employees is looking for an HRIS SaaS solution. The firm is interested in a complete and comprehensive solution that will effectively plan, control, and manage HR costs; achieve improved efficiency and quality in HR decision making; and improve employee and managerial productivity and effectiveness. US East Coast (Satellite) Employing 200 people (10% of total staff), the East Coast office solely holds a Marketing department. England (Satellite) Employing 400 people (20% of total staff), the UK office has buyers and manufacturing (200 employees), and 5 additional IT staff. The company s remaining 2 HR staff are located here to manage regionally specific functions, including local administration, learning and development, recruitment, and generalist HR responsibilities. The organization wishes to enter into an agreement that provides for three full years of service, including licensing, support, and maintenance. Pricing should reflect this term. Because the organization operates on a 7/24 hour day (due to a self-hosted website, webstore, shift work, and different time zones) it requires support availability over extended hours; any quoted support must be sufficient and appropriate to reflect those operational hours. McLean & Company 27

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