At Everest Group, we’ve been assessing why some service providers are so successful. Using a framework we created that focuses on six characteristics, it’s easy to understand why ADP is so successful. At the heart of their success is the fact that they live up to their promise of being the most trusted firm in payroll services.
As the figure below illustrates, branding, go-to-market approach, and portfolio are three key characteristics in successful companies.
I think what’s remarkable about ADP is that they align their brand of trusted payroll services with all their operational aspects. They go to market in a way that aligns with their brand choices and allows them to dominate or at least serve every geography, both large and small. They design their portfolio of products to be payroll itself and surround the payroll system to reinforce or deliver their complete promise.
They have the most comprehensive ecosystem around the payroll process, connecting with tax jurisdictions and integrating into a wide range of HRIS, financial, and ERP systems. As such, ADP may not at any one point be the leading provider of technology, but they are the most trusted provider. They achieve this through the breadth of their ecosystem, the breadth of their global offerings; there is no jurisdiction in the world in which they don’t keep up with the regulations of tax and payroll.
This allows them to service something very rare – both very large and very small companies. And they are the safest pair of hands in payroll.
Assessing the other characteristics necessary for success, it’s clear that ADP is always relevant in terms of technology. They continue to invest in technology, never allowing their technology to become out of date or antiquated. Staying relevant with technology doesn’t necessitate that they be leading edge; in fact, the leading-edge role would take away from their “most trusted” status.
They largely grow their own talent and don’t rely on large recruitment from outside. Therefore, they are able to deliver a high degree of quality and consistency in their talent. They ensure that ADP is a rewarding place to work and grow a career, which allows them to nurture talent.
ADP’s business model is completely aligned with where the services industry is headed. For example, any way you look at it, ADP was one of the first users of SaaS – before most of us knew what SaaS and BPaaS were.
All of these characteristics make ADP incredibly formidable in all things payroll and able to serve an incredibly wide variety of customers in almost every industry and geography. Bottom line: ADP delivers a nice, steady return to shareholders and trusted services to clients.
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