Sopra HR Solutions Payroll Services

Transcription

1 PAYROLL SERVICES VENDOR PROFILE OF: Sopra HR Solutions Payroll Services 1. Background Revenue Summary Key Offerings Service Levels Delivery Capability and Partnerships Partnerships Payroll Platforms Used New Developments Target Markets Example Customers Strategy Strengths and Challenges Strengths Challenges Outlook NelsonHall 2014 April 2014

2 NelsonHall April 2014

3 1. Background Sopra HR Solutions is a division of Sopra, a European application services vendor that was founded in 1968, and is headquartered in France. The company is present primarily in France and increasingly in Europe, notably in Spain and the U.K. Since the 2005 acquisition of Unilog by Logica (now CGI), Sopra is the last of the large domestic IT service vendors that focuses solely on applications and BPO service and does not manage hardware. On April Sopra announced an intention to acquire Steria to expand into Europe, and U.K., Germany and Norway especially, and grow its service portfolio to BPO services and IT infrastructure services. The company had 2013 revenues of ~ 1.35bn. Guidance for 2014 is organic growth in the range of 3%-5% and an adjusted operating margin above 8.1%. Headcount, as of Q4 2013, is 16.3K. Sopra has gone through significant changes since The company floated its EAI and B2B exchange ISV subsidiary, Axway, in 2011, and resumed acquisitions mostly around software products, initially core banking applications. Acquisitions are part of a larger strategy to increase its revenues from software products (HR, banking and real estate) to 35% by 2015 (2013: 25%), out of revenues in the 1.5bn- 2.0bn range. Sopra has announced its target for all of its software product businesses to reach an adjusted operating margin of 15% in the mid-term. In April 2013, Sopra completed the acquisition of HR Access, a France-headquartered ISV and BPO services vendor. The acquisition complemented Sopra s own Pléiades business. HR Access was founded in 1973, by an independent HR and payroll software developer in Paris, France. After being was acquired by IBM, in October 2003 it was then bought by Fidelity Investments in October In 2006, HR Access began offering HR and payroll outsourcing services. Sopra HR Solutions combines the Pléiades business and HR Access business and has ~ 100m in 2013 pro-forma revenues. HR Access s revenue contribution was ~70%. Sopra HR, has ~850 HR software and outsourcing clients in 54 countries, serving 12m employees. Other acquisitions have included Delta Informatique (France), Callatay & Wouters (Belgium), Tieto Financial Services in the U.K., and in November 2013, COR&FJA in Germany. Most of those acquisitions have been grouped into the recently created Sopra Banking Software division. Sopra s key service offerings (with NelsonHall estimated share of revenues): Business consulting (5%): including contracting assistance (RFP support) Technical consulting (23%): including software training Systems integration (18%): providing technical migration onto Sopra systems Application management and software testing (30%) Banking software (16%) Real estate software (3%) HR software and services (5%), hereafter referred to as Sopra HR Solutions, which now combines the HR Access and Pléiades HR operations of: NelsonHall April 2014

4 HR and payroll software (~70% share of HR Access business and 60% of the Sopra HR Pléiades business) Cloud based payroll (new service) Payroll services including managed and processing offerings (~30% share of HR Access business and 40% of the Sopra HR Pléiades business). This profile will focus on Sopra HR Solutions payroll services. On-premise payroll software and cloud-based payroll offerings are classified as software provision with application maintenance only, and are therefore excluded from this profile. 2. Revenue Summary Sopra s 2013 revenue was 1.349Bn, with organic growth of 4.5% y/y. Payroll services revenue is estimated at 33m for 2013, with a revenue share of 2.4%. This is based on a full year of HR services for both HR Access (estimated at 21m) and the Sopra HR Solutions payroll business prior to its acquisition (estimated at 12m). NelsonHall estimates growth for the payroll service as 2% y/y for Exhibit 1 provides a distribution of its 2013 payroll service revenues by geography. Exhibit 1 Estimated Sopra HR Solutions: 2013 Payroll Service Revenues Geography Revs ( m) France 28.5 Spain 3.5 Italy >0.1 BeNeLux >0.1 Switzerland >0.1 Morocco 0.5 Germany 1.5 U.K. + others >0.1 NelsonHall April 2014

5 The breakdown by service type is shown in Exhibit 2: Exhibit 2 Sopra HR Solutions: Payroll Service Revenues by Service Type 2013 Payroll Service Revs ( m) Processing 26.4 Managed Services (including data entry) Key Offerings Sopra HR Solutions payroll service offerings (with revenue share) include: Processing services (80%) including: Supply of HRIS Payroll processing and reconciliations Payroll outputs including reports, interfaces, lodgments, bank file, financial posting and payslips Regulatory compliance Applications maintenance and hosting Managed payroll services (20%), including: Managed processes Managing operations Data entry including Tier 1 and 2 helpdesk in local language and using in-country resources. The services can support a time interface to clocking systems and can include time management. 100% of employees are paid by direct deposit and checks are not used. Funding and treasury is managed by the client. Sopra HR Solutions has two platforms to deliver payroll services, both which also offer wider HCM functionality. These are HRa Suite 9 (developed by HR Access) and Pléiades (developed by Sopra). Around 10% of clients are using HR modules such as learning, recruitment, compensation, occupational health and safety, training and competency management. Sopra HR Solutions also has a version of HRa Suite for the public sector. The HRa Suite 9 supports multi-country services. Its international HR module offers a set of 120 prebuilt operational reports, these are localized to support countries. Analytics for KPI s such as headcount, leave, absence and salary, were launched at the end of 2012 and support the multi-country reporting. NelsonHall April 2014

6 In 2013 Sopra HR Solutions introduced an analytics offering and has ~15 customers using it; this offering provides ~70 standard reporting KPIs. Ad-hoc reporting capability is offered to all clients already. Sopra HR Solutions prints and mails payslips (through a partnership) for client employees in all the countries in which it operates. In France it is a sometimes a legal requirement to have a paper payslip, so the proportion of employees with electronic only payslips is ~25% in France but ~90% in the other countries. Sopra HR Solutions also offers tablet functionality. This was launched in 2013 and today has 3 customers, with another 15 customers showing interest. It works on Nomad and Android tablets as well as the Apple ipad products and offers features such as personal information, leave and absence. The company s wider employee self-service functionality is used by ~80% of customers. This service includes an ability to view and update absences, planning, training, appraisal, assessment, T&A, personnel administration, and internal mobility. Employees are offered an electronic document box where they can drop documents into a cloud storage area. It is the employee s own space where they can store payslips or other personal documents. If an employee changes employer, the box can still be accessed. It is designed to encourage employees not to print. It is a service launched by the French post and Sopra HR Solutions have integrated it into it their overall offering. For manager self-service there is a greater uptake, with nearly all customers (95%+) using manager self-service offerings. Sopra HR Solutions includes HR workflows, reporting and self-service access. This is particularly suited to heavily unionized environments. The service also includes: Online frequently asked questions for employees Online frequently asked questions for the payroll service team Manual procedures online for customers. The objective is that when a new HR partner is hired by the customer, the customer will not need to give the HR administrator any specific training regarding the payroll processes other than the on-line training. Case management software is provided through a portal. Managers can raise tickets and also see the KPI s of the service through the portal. A dedicated client manager can also see a weekly or monthly view of the service provided. Pricing is per employee per month, and depends on the number of services provided. In EMEA for payroll only, average prices are ~ per employee per year (PEPY) for service bureau and ~ 120 PEPY for fully managed payroll BPO. Sopra HR Solutions payroll outsourcing contract lengths average three years. Transitions range from ~six months for single country payroll to nine months for multi-country clients, depending on size of the organization. Transition time encompasses the transition of technology and data collection from customer through to entering data into the new platform and running parallel testing. NelsonHall April 2014

7 3.1 Service Levels Exhibit 3 shows Sopra HR Solutions target service levels for payroll services. Exhibit 3 Sopra HR Solutions: Payroll Service Levels Supplementary services Target System availability 99% Availability of critical components (bank transfer, accounting interface, statements) Availability of monthly calculated results Resolution of critical anomalies, depending on the time of the month Activation of DRP (RTO) 8 h 00 the next day 8 h 00 the next day 1 hour or 1 day depending on the nature 48 h Sending pay statements 100% Performance of the application: time to respond Data backup Provision of changes Respond within 48h 1 second for simple input 24 h Compliance documentation 100% Resolution of minor case Small changes in 1 to 2 days large changes to be planned Resolution within 3 months NelsonHall April 2014

8 4. Delivery Capability and Partnerships Sopra has ~850 customers in 54 countries, including ~110 payroll outsourcing customers in 10 European countries. It processes 12m payslips per annum, of which 400,000 are in an outsourced mode. There are ~350 employees dedicated to payroll services and based in the countries they serve. Sopra HR Solutions serves a total of 10 countries: France, Spain, Belgium, Germany, Luxembourg, U.K. Switzerland, Italy, Morocco and Tunisia; the main countries serviced (with over 80% of payslips) are France and Spain. Managed payroll services represents around 10% of all customers, most of which are in Spain. Services are provided by in-country resources based in the acquired HR Access offices and supported by a back office center in Tunisia. This center supports local languages of the countries which it is servicing, including French, English, Spanish, Italian, German, Dutch, Portuguese and Arabic. Exhibit 4 lists Sopra HR Solutions payroll service delivery headcount by country. Exhibit 4 Region Sopra HR Solutions: Payroll Service Headcount by Country Approximate Payroll Headcount France 160 Spain 50 Italy 5 Belgium 10 Switzerland 5 Morocco 2 U.K. 2 Luxembourg 5 Germany - Wilhelmshaven 10 Tunisia 100 The primary service delivery centers for payroll services are in: Paris, France Madrid, Spain Wilhelmshaven, Germany Tunis, Tunisia. NelsonHall April 2014

9 All front office and voice services are provided in-country. Tunisia is an offshore center with ~350 personnel, of which ~100 provide back-office support for payroll. The remaining personnel in Tunisia are deployed on applications development, IT, back-office corporate functions and production support. Tunisia also provides voice support for HR Access client in Morocco. Service delivery is supported by a customer survey every run 18 month to the full customer base. From the feedback, customer specific action plans are developed. The customers are then resurveyed to measure improvements. 4.1 Partnerships COLT as software hosting partner. Uses Colt data centers in Paris and London Holy-Dis and Kaba for time clocking hardware in France and Belgium. 4.2 Payroll Platforms Used Sopra HR Solutions uses two platforms: Pléiades, which is a French only payroll system, and the HR Access software which supports multi-country. Both platforms have a significant number of customers and have been maintained since 1970; both platforms are offered in on-premise and cloud versions. Exhibit 5 shows the total numbers of on-premise and payroll services clients using Sopra HR Solutions payroll platforms. Exhibit 5 Sopra HR Solutions: Product Adoption Technology used No. of Clients using Approximate # Payslips Experience since Pleiades million 1970 HR Access million 1970 Exhibit 6 shows Sopra HR Solutions delivery availability by country. Exhibit 6 Sopra HR Solutions: Technical and Service Availability by Country Region On Premise Cloud Processing Managed France X X X X Spain X X X Italy X Belgium X X Morocco X X NelsonHall April 2014

10 Germany X X 4.3 New Developments In 2014, Sopra HR Solutions is planning: To add payroll outsourcing services for Italy To develop a multi-tenant platform for Spain Automation of the DSN and other major legislative reporting needs To develop a sick day discrete process outsourcing offering to support sick day management and reporting. The offering will be available from Q To bring in a service portal across all outsourcing customers. This is a conversion product. 5. Target Markets Sopra HR Solutions has ~850 payroll customers, including around ~110 in a payroll outsourced mode, with: 80% in France 13% in Spain 7% in Morocco, Germany and Belgium. Sopra HR Solutions primarily targets the upper part of the mid-market, with clients that have 3k 11k employees. The average client size is 4,700 employees. The company is also servicing a small number of larger enterprises for payroll services, for example one retail client in Spain has ~15,000 employees and one utility client has ~20,000 employees. The government sector is a newer target for Sopra HR Solutions. In November 2009, HR Access was awarded a 9-year payroll system contract to provide payroll to 2.6m employees of the French central government. In partnership with Accenture and Logica (now CGI), HR Access designed, built and implemented a payroll system for the French national payroll agency, Operateur National de Paye (ONP). Accenture and CGI are responsible for overall program management and systems integration, respectively; HR access is responsible for providing the payroll application, based on its HR Access software. It is also responsible for the delivery, maintenance and development of the application. Exhibit 7 shows the breakdown of Sopra HR s payroll software and service clients by country. Exhibit 7 Sopra HR Solutions: Software and Service Payroll Customers by Country NelsonHall April 2014

11 Country / Region Approximate No. Customers France 490 Spain 50 Italy 10 BeNeLux 160 Switzerland 10 Morocco 100 Germany 20 U.K. + others 10 Exhibit 8 shows the breakdown of Sopra HR Solutions payroll services client base by industry. Exhibit 8 Sopra HR Solutions: Payroll Service by Industry Industry Proportion of Revenue (%) Manufacturing & construction 35 Services 30 Logistics and retail 20 Banking & insurance 15 Exhibit 9 shows the breakdown of Sopra HR Solutions payroll services client base by size of organization. Exhibit 9 Sopra HR Solutions: Payroll Service by Market Size Market Size Proportion of Revenue (%) Large market (with >15,000 employees) 80 Mid-market (with ,000 employees) 20 Small market (with <500 employees) 0 NelsonHall estimate Exhibit 10 shows the breakdown of Sopra HR Solutions payroll services client base by geographic scope of contract. NelsonHall April 2014

12 Exhibit 10 Sopra HR Solutions: Payroll Service by Geographic Scope Geographical Scope Proportion of Clients (%) Multi-country (with scope of 2 or more countries) 20 Single country scope 80 NelsonHall estimate 5.1 Example Customers Pléiades based payroll services customers include: Galeries Lafayette: retail, payroll service, HR administration and time and attendance for employees OGF Services: payroll service, HR administration for 5500 employees Conforama: retail, payroll service, HR administration for 3000 employees Continental: retail, payroll services, HR administration. HRa based payroll software and services customers include: Chronopost: payroll services, HR administration and time and attendance for 3600 employees GlaxoSmithkline, France: HR administration and payroll services for 6,500 employees Air Liquide: HRIS, HR administration, training management and payroll services (including print and mailing payslips) for 6,500 employees Bankinter, Spain: payroll administration, software services and technology maintenance for 4,600 employees Bull Services in Spain: payroll BPO and HR administration for 1200 employees French apparel and home décor retailer Redcats: payroll, time and attendance and administrative management for 5,300 employees Derichebourg, France: payroll, time and attendance and learning for 20,000 employees AG2R La Mondiale, France, an insurance company: payroll services for 7,000 employees AkzoNobel France: payroll, HR administration, and time and attendance for 2,500 employees Alcampo Spain, a retail company: payroll BPO and HR administration for 15,500 employees (with 61 payroll departments) NelsonHall April 2014

13 Feu Vert, Spain: payroll processing and HR administration for 1400 employees. 6. Strategy Sopra HR Solutions is undergoing consolidation and integration of recent acquisitions during The focus in 2014 is: Launching cloud technology is the greatest focus of the payroll practice in With a market momentum to move towards cloud technologies, Sopra HR Solutions wants to stay ahead in terms of technical offering. A client base in cloud brings opportunities to up-sell services at a later date, so keeping pace with competitor offerings in cloud is an important part of the company s payroll service strategy Expanding its managed service offerings to additional countries. The company s managed payroll outsourcing services, including data input and call center support, are principally provided to Spanish clients. Sopra HR Solutions will roll out managed services to other countries, beginning with Italy Developing a multi-tenant platform for Spain Sopra HR Solutions continues to invest and rollout its HR Access software offering for multi-country services; expanding modules in talent management applications.. For example in the compensation management module a simulation tool is being developed to enable compensation scenarios to be created. This is expected to be delivered later in The international core HR module has been rolled out to a major bank in Africa in 6 countries payroll across ~3,500 employees. The HR software has also been selected by a European construction company with ~50 countries and ~60K employees; the project is in transition and payroll services will be utilized where Sopra HR Solutions has the country capability. Promoting its analytics offering 7. Strengths and Challenges 7.1 Strengths Total company reach of ~850 mainly software only clients, in 54 countries, many of which can be targeted to grow its payroll outsourcing business Established payroll platforms Smart phone and tablet functionality through HRa mobile Delivery capability in ten European countries Approximately 20% of HR Access payroll outsourcing clients are multi-country In-country support and local language provided NelsonHall April 2014

14 Back-office payroll services provided from low-cost center in Tunisia 7.2 Challenges Limited payroll services presence outside France and Spain Lack of partnerships to support organizations seeking payroll services outside the eight European countries covered directly No experience in building payroll interfaces with other HR products, such as Workday. 8. Outlook Sopra HR Solutions has a large HR software client base in France and Spain from which to up-sell services. With its continued emphasis on technology developments its ability to attract and retain customers is likely to strengthen. Consolidation activities for the HR business were undertaken in 2013 and 2014 is likely to be a year of improved growth. Expect Sopra HR Solutions to grow revenue in the newer geographies as it extends services in Italy, Switzerland, Belgium and Germany, leveraging the Sopra presence. Sopra, brings a wider delivery capability (beyond payroll) as well as group-wide programs to support testing and development of the HR software. Its planned investment in BPO through the proposed acquisition of Steria will also support increased payroll capability in the U.K. Sales Enquiries NelsonHall will be pleased to discuss how we can bring benefit to your organization. You can contact us via the following relationship manager: Guy Saunders at [email protected] Important Notice Copyright 2014 by NelsonHall. All rights reserved. Printed in the United Kingdom. No part of the publication may be reproduced or distributed in any form, or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. The information provided in this report shall be used only by the employees of and within the current corporate structure of NelsonHall s clients, and will not be disclosed to any other organization or person including parent, subsidiary, or affiliated organization without prior written consent of NelsonHall. NelsonHall exercises its best efforts in preparation of the information provided in this report and believes the information contained herein to be accurate. However, NelsonHall shall have no liability for any loss or expense that may result from incompleteness or inaccuracy of the information provided. NelsonHall April 2014