WHITE PAPER Easing Workforce Management Software Decisions

W H I T E P AP E R

E a s i n g W o r k f o r c e M a n a g e m e n t S o f t w a r e D e c i s i o n s T h r o u g h F l e x i b i l i t y a n d C h o i c e : H i g h l i g h t s f r o m F i v e C u s t o m e r C a s e S t u d i e s Sponsored by: Ultimate Software

Amy Konary Erin Traudt Lisa Rowan July 2006

I N T R O D U C T I O N A N D M A N AG E M E N T S U M M AR Y

In the past couple of years, software customers have flexed their muscles as they have led their trusted providers in the direction of constant innovation in response to demands for choices in software pricing, licensing, and delivery model. As a result, software providers are offering more choices and turning more attention toward ensuring that customers have positive experiences with their software and that customers are successful using their product over time. To help achieve this goal, software vendors such as Ultimate Software are offering a range of services that often include a variety of software delivery options, such as traditional on-premise software and software delivered on demand.

This white paper, commissioned by Ultimate Software, provides an overview of both on-demand and on-premise software trends, challenges, and benefits. It also presents the results of interviews conducted with five customers of Ultimate Software's UltiPro Workforce Management � two customers use the on-premise solution and three use the on-demand Intersourcing solution. These case studies focus on both the tangible and intangible benefits that these companies experienced. This white paper therefore:

! Identifies the reasons that technology investments should be considered in the context of business relevance

! Explains how companies are achieving recognizable cost savings in their businesses via different delivery models

! Describes the business strategies of both in-house and on-demand models

! Features a market leader in the human capital management (HCM) space, Ultimate Software

! Highlights the benefits experienced by customers, regardless of software delivery model

! Profiles five Ultimate Software UltiPro Workforce Management customers that are achieving significant return on investment (ROI), increased value from their IT investments, and improved employee productivity and efficiency

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Table 1 summarizes the ROI data from the case studies.

T A B L E 1

C a s e S t u d i e s : R O I S u m m a r y

Company Number of Employees ROI Payback NPV

IntelliRisk Management Corporation 6,000 778% 1.8 months $3,363,749

National Gypsum Company 2,700 157% 12.1 months $269,814

Waterloo Industries 1,200 214% 6 months $553,566

American Retirement Corporation 10,000 107% 13.2 months $795,240

Quicken Loans 3,500 160% 8.5 months $560,950

Source: IDC, 2006

M E T H O D O L O G Y

The companies studied for this white paper initiative were identified and recruited by Ultimate Software from its customer base. IDC conducted in-depth interviews using an interview guide and ROI tool created by IDC. ROI, payback period, and net present value (NPV) were calculated through an established IDC model. The spreadsheet and methodology used by IDC analysts to determine all calculations were the same for each case study. IDC's ROI and NPV calculations are based on a five-year period. The NPV calculation also used a 15% discount rate. Companies had to meet the following criteria to be interviewed for the case studies:

! The product/service had to have been implemented for at least six months.

! The companies had to have pre- and post-implementation information to aid a cost/benefit analysis.

! The companies had to be willing to reveal confidential cost and benefit information.

S O F T W AR E - O N - D E M AN D T R E N D S AN D C H AL L E N G E S

The software-on-demand delivery model has captured a sizable amount of attention and mindshare in the software industry. According to IDC's 2006 Software-on-Demand Adoption Study, adoption continues for on-demand�delivered HCM software solutions with the following percentage of survey respondents indicating they have purchased or are in the process of reviewing software-on-demand applications in the following individual software categories that compose the HCM software market:

©2006 IDC #202069 3

! Recruiting: 11.4%

! Workforce management: 10%

! Performance management: 7.5%

! Incentive management: 5.5%

Additionally, IDC case study research and demand-side surveys have shown that customers typically will not adopt a new technology until an event or a series of events drives them to change the status quo. IDC refers to these events as trigger events and closely follows the reasons involved in purchase decisions. Specific events triggering the adoption of Ultimate Software's UltiPro Workforce Management solution are also detailed in the case studies provided in this white paper.

As the software industry continues to evaluate the benefits of on-demand software versus traditional software, IDC put adoption of on-demand delivery in perspective in terms of revenue for the U.S. software market in 2004 and 2009. In 2004, total U.S. software revenue reached $96.13 billion, while U.S. software-on-demand spending reached over $1.4 billion. According to IDC, software that was delivered via on-demand in 2004 represented 1.5% of all U.S. total software revenue. In 2009, IDC anticipates that software-on-demand revenue will grow to represent 3.8% of all software revenue in the United States.

However, when comparing on-premise software and software-on-demand delivery in terms of revenue, we note the following caveats:

! The majority of on-premise software license revenue comes from a one-time fee for a perpetual license, while software revenue associated with on-demand delivery is streamed over time; therefore, statistical market penetration is underrepresented in a revenue-based study.

! Adoption tends to spread organically with on-demand offerings, meaning that customers often purchase one solution that can meet a particular pain point and then adoption of that solution spreads incrementally over time.

! Software-on-demand offerings cost much less than traditional software for reasonably comparable purchases, which leads to an underrepresentation in market penetration in a revenue-based view.

O N - P R E M I S E S O F T W AR E T R E N D S AN D C H AL L E N G E S

Despite the increased focus on on-demand delivery models, the majority of software buyers are still investing in on-premise solutions for HCM. According to IDC's Worldwide Human Capital Management and Payroll Processing Applications 2005�2009 Forecast, the HCM software market will reach $6.5 billion by 2009, increasing at a compound annual growth rate of 6.2%.

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When examining the case studies in this paper, the reader can see that the buyers who chose an on-premise solution were motivated by several common reasons. These reasons are often cited elsewhere in the market and represent the key trends that affect the decision to manage HR and payroll on-premise:

! Two firms were using service bureaus for payroll processing prior to adoption of UltiPro, and these services were significantly more expensive than on-premise solutions.

! The service bureaus in use were not offering the level of detailed reporting needed to address the firms' workforce management needs.

! The service bureaus provided substandard service levels, and thus both companies realized that bringing payroll and HR under their own management would heighten the level of service and also provide a level of control that would be predictable and manageable.

! The lack of integration between HR and payroll caused a labor-intensive data exchange and a lack of visibility across the broader HR function.

A B O U T U L T I M A T E S O F T W AR E

Founded in 1990, Ultimate Software (www.ultimatesoftware.com) offers HCM solutions to help companies address needs that range from employee recruitment to termination management. The company focuses on human resource management systems (HRMS), payroll, and workforce management solutions targeting customers with 500 employees or more. UltiPro's Workforce Management is an end-to-end solution with strategic HR, benefits, and recruitment management functionality that is integrated with its payroll engine, its reporting and analytical decision-making tools, and a central Web portal that can serve as the customer's gateway for its workforce to access company and personal work-related information. Managers and executives can access reports and analyze workforce statistics and trends on demand. Employees using the self-service feature can view their paychecks and pay histories online, update their benefits information, and request training and vacation time from managers.

According to Ultimate Software, the decision to offer more than one type of software delivery was driven by two factors. One, Ultimate Software wanted to offer customers a selection of software delivery and licensing options as a response to customer demand. Two, the company recognized that having two delivery models provided a complementary set of options from which customers could choose according to their needs and requirements.

Today, Ultimate Software is one of the leading providers of Web-based payroll and workforce management solutions and markets UltiPro as licensed software, as a hosted application through Intersourcing, and as a cobranded offering to business service providers (BSPs) under the "Powered by UltiPro" brand.

©2006 IDC #202069 5

Ultimate Software customers represent diverse industries and include such organizations as The Container Store, Elizabeth Arden, the Florida Marlins baseball team, the New York Yankees baseball team, Nintendo of America, Ruth's Chris Steak House, and SkyWest Airlines.

Figure 1 introduces the elements that compose Ultimate Software's Workforce Management solution.

F I G U R E 1

U l t i P r o W o r k f o r c e M a n a g e m e n t : A r e a s a n d P e o p l e A d d r e s s e d

Source: Ultimate Software, 2006

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C AS E S T U D I E S : I N T E R S O U R C I N G

I n t e l l i R i s k M a n a g e m e n t C o r p o r a t i o n S i g n i f i c a n t l y R e d u c e s C o s t s W h i l e R e c o g n i z i n g F u n c t i o n a l i t y B e n e f i t s a n d E m p l o y e e E m p o w e r m e n t

Background

IntelliRisk Management Corporation is a credit and collection company headquartered in New York City with 15 additional field offices located across the United States. The company operates offices around the world and has approximately 6,000 employees. Two-thirds of IntelliRisk's revenue comes from its collection practice, operated under the brand name Allied Interstate, in which the company places outbound calls for credit providers to assist with bill collection. The remaining one-third of revenue is attributed to the company's customer service business, whereby IntelliRisk answers inbound calls on behalf of clients.

All 3,500 employees in the United States are currently using UltiPro, and the company plans to expand adoption and usage to employees in the United Kingdom, Philippines, Caribbean, Canada, Ireland, Scotland, and India. All U.S. employees access UltiPro to view benefits and paycheck information, while 42 human resource representatives are actively managing the company's human resources and payroll processing functions. In addition, IntelliRisk leverages UltiPro's built-in workflows to automate standard processes for new hires, terminations, and other workforce changes.

VITAL STATISTICS

! Company name: IntelliRisk Management Corporation

! Industry: Financial

! Number of employees: 6,000 worldwide; 3,500 United States

! Number of users: 3,500 HR and payroll users, 42 back-office users

! Application: UltiPro Workforce Management (through Intersourcing)

! ROI: 778%

! Payback: 1.8 months

! NPV: $3,363,749

©2006 IDC #202069 7

Business Challenges

The biggest challenge continually faced by IntelliRisk is heavy turnover. According to the company, IntelliRisk's turnover rate is approximately 120% annually, which places challenges on the payroll department because of the need to quickly add and eliminate employees from the HR/payroll system.

Before UltiPro Workforce Management

Prior to implementing UltiPro, IntelliRisk experienced varying levels of frustration with the company's former full-service human resources (HR) outsourcing firm that was employed to manage a range of tasks, including payroll, benefits, human resources information systems (HRIS), and front-office administration. All of IntelliRisk's new hire and employee termination paperwork had to be faxed to the outsourcing firm. In an industry with such high turnover rates, the collection company found faxing to be burdensome and time consuming due to the frequency of adding and removing employees from the system. It was difficult to verify that the outsourcer had received the necessary new hire paperwork and ensure that fax machines were working properly. There were some situations in which employees did not receive paychecks due to missing paperwork.

The UltiPro Workforce Management Decision

IntelliRisk began exploring Ultimate Software and UltiPro in July 2003 for three reasons:

! Recommendations from outside the company

! Increasing disenchantment with its outsourcing firm

! Stipulations from upper management to reduce costs

Since IntelliRisk was spending so much money on outsourcing HR-related services, the company knew that this would be one of the chief areas to target for saving money.

IntelliRisk evaluated two other providers including a business process outsourcing (BPO) firm as well as an on-premise enterprise HR software solution, although the company knew they really did not want to manage the applications in-house. Key factors during the evaluation period for IntelliRisk included ease of use, price, and a smooth transition to a new system.

According to Donna Chapman, senior vice president of human resources, "�we were just looking at who can provide what we need at a price that was going to be effective, and we couldn't have any hiccups along the way."

IntelliRisk, however, waited to move ahead with its decision due to an agreement with its HR/payroll outsourcer. In January 2004, IntelliRisk was notified that its outsource provider was being acquired by another firm and therefore the collection company would have to move over to the new outsourcer's environment, which would have resulted in additional expenses. Consequently, IntelliRisk began to seriously evaluate new solutions from January until March of that same year. The decision to switch to UltiPro was made in April 2004 with the implementation beginning on May 15. The company went live on July 7.

The biggest challenge continually faced by IntelliRisk is heavy turnover.

Key factors during the evaluation period for IntelliRisk included ease of use, price, and a smooth transition to a new system.

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After UltiPro Workforce Management

IntelliRisk is currently using UltiPro for workforce management and payroll processing and is contracting with an external consulting organization for the company's benefits administration. UltiPro integrates with the consulting company's benefits system so employees can log onto Ultimate Software's Web site and view paychecks, vacation time, W-2 forms, as well as benefit information provided by the consulting firm. Employee 401(k) plans are also accessible via UltiPro as the solution is integrated with an outside financial provider's system. Ultimate Software arranged all the integration between vendors' solutions so that it would be completed during the implementation timeline.

When IntelliRisk transitioned to UltiPro, the company took control of workforce management processes that were previously handled by an outside company. The move to UltiPro put HR in charge of inputting new hires into the system and made the department responsible for data accuracy and timeliness. The role of IntelliRisk's HR representatives switched from the faxing of employee information to actual payroll processing. UltiPro also allowed HR to run payroll reports, a procedure that was never possible before, and now all employee information is readily available at their fingertips. Furthermore, frustration levels are lower. "All in all it was extremely positive for my users," Chapman said. "It really put them in a place where they were the ones in charge and responsible for what was going on."

Benefits of UltiPro Workforce Management

In addition to the cost savings and employee empowerment, IntelliRisk has seen functionality benefits as a result of using UltiPro for both employees and upper management. Employees enjoy the ability to view paychecks before actual payday as many have commission-based salaries. They also appreciate the ability to immediately print out W-2 forms at the end of the year so tax returns are submitted and received more quickly. Furthermore, management sees the business benefits of UltiPro's custom reporting capabilities. Prior to UltiPro, IntelliRisk was limited to a set of predefined reports. Another benefit experienced by IntelliRisk was in the form of customer support provided by Ultimate Software. IntelliRisk was given multiple contacts and resources at Ultimate Software for the company to call should anything happen at anytime, day or night. And, IntelliRisk, like all Ultimate Software customers, has an assigned customer service representative who is familiar with its account to help resolve problems or direct inquiries to available resources.

Lessons Learned

IntelliRisk believes that it should have put more effort into educating its employees on the payroll process and taken more time for the implementation, although Ultimate Software met IntelliRisk's requirement for a quick implementation.

IntelliRisk also encourages other companies to attend UltiPro training classes before going "live," rather than after the implementation. As when entering any transition, patience and knowledge are key traits.

"All in all it was extremely positive for my users," Donna Chapman, senior vice president of human resources said. "It really put them in a place where they were the ones in charge and responsible for what was going on."

©2006 IDC #202069 9

N a t i o n a l G y p s u m C o m p a n y R e d u c e s C o s t s W h i l e I m p r o v i n g P a y r o l l P r o c e s s i n g T i m e a n d R e p o r t i n g F l e x i b i l i t y

Background

National Gypsum Company is a manufacturer and supplier of wall board and backer board, which are the company's primary product lines. National Gypsum has a total of 34 plants throughout the United States and a separate research facility in Charlotte, North Carolina, where the company is headquartered. Current business challenges plaguing the manufacturing industry and National Gypsum are the cost of energy and utilities. However, the company continues to grow and has opened several new plants over the past six years, adding new employees.

The company has 15 UltiPro users located in the human resources department at headquarters and 3 of the 15 users are super users. These super users are the personnel who input all salary employees' information into the system and manage the full employee life cycle from hire to retire. Each plant location has an individual that handles hourly payroll responsibilities, including hiring, setting up payroll, and terminating. National Gypsum has approximately 1,800 to 1,850 hourly employees, which is more than half of the company's workforce. Both hourly and salary payroll processing are conducted at headquarters in Charlotte. The system is maintained and configured by those in Charlotte as well.

VITAL STATISTICS

! Company name: National Gypsum Company

! Industry: Manufacturing

! Number of employees: 2,700

! Number of users: 3 super users , 40�50 standard users


! ROI: 157%


! NPV: $269,814

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Business Challenges

The biggest challenge National Gypsum faced that led to the need to investigate Ultimate Software's UltiPro Workforce Management Intersourcing solution was the cost of maintaining the company's old enterprise application. According to National Gypsum, the previous system was very expensive, and upgrades were burdensome; it took over one year to upgrade to a newer version of the product. The prior system was also being hosted and managed by an application service provider (ASP), and although National Gypsum was pleased with the service, it found that the ASP lacked the expertise in this particular enterprise application. During the last upgrade, National Gypsum incurred additional costs for outside (third-party) consultants to come in and assist with the upgrade.


National Gypsum sought a solution that complemented the processes that had already been established by its management and found that solution with UltiPro. The company wanted to be able to enter all employee data into the system, process payroll easily, streamline its human resources processes, and also have employee self-service as a feature and possibly manager self-service. Prior to UltiPro, National Gypsum had to purchase employee and manager self-service modules separately, and to update the system, the company would have to run a special program that consolidated and applied the changes.

Ultimately, Gypsum needed a solution that was both cost effective and easy to upgrade, which ignited the effort to investigate a new system. The push for a new system came from the IT staff originally involved in the upgrade experience of the old system.

National Gypsum started evaluating other solutions � ranging from on-premise solutions to hosted and outsourced � around November 2003.


The decision to implement UltiPro Workforce Management came down to functionality and cost model of the solution. The company felt that the UltiPro Workforce Management offering provided everything that National Gypsum needed and perhaps a little bit more.

During the evaluation period, Gypsum found UltiPro to be more intuitive and logical in terms of navigation than the other solutions the team evaluated, and they considered outsourcing to be extremely expensive and it would have required time-intensive negotiations to drive down the cost.

Another feature of UltiPro that the company wanted was the robust report writing. Multiple preformatted workforce analytics "cubes," which customers can use "as is" or customize, are included in the UltiPro package. Gypsum enjoys the ability to easily pick and choose fields, and the human resource team attended a one-day Cognos training course so they can run reports without IT involvement.

The manufacturer signed a contract with Ultimate Software for UltiPro Workforce Management in May 2004.

The previous system was very expensive, and upgrades were burdensome; it took over one year to upgrade to a newer version of the product.

©2006 IDC #202069 11


The implementation began in early August 2004, and the company went live in January 2005. National Gypsum took a phased approach to the implementation rolling out payroll functionality to the entire organization initially. Training for all plant personnel who maintained hourly payroll occurred in December 2004, and the system went live on January 1, 2005.

The employee self-service capability was launched for salary employees in April 2005. National Gypsum completed the process of rolling out employee self-service to hourly workers in February 2006, and is considering manager self-service as well. While the company is still determining how to implement manager self-service, they anticipate this functionality will be rolled out in the second quarter of 2006. Before UltiPro, manager and employee self-service were not available to the company's workforce.

Since the implementation, National Gypsum was able to eliminate a full-time IT consultant. No human resource staff was eliminated or reassigned and the workflow previously conducted by the company did not need to change � UltiPro fit nicely into the company's existing business processes. National Gypsum also experienced significant cost savings during the implementation and expects to save more over the course of its 5-year contract with Ultimate.


As a result of the UltiPro Workforce Management implementation, National Gypsum was able to reduce payroll time by two hours each time it is processed. Hourly and salaried employees have different payroll requirements, with hourly employees getting paid on a weekly basis and salaried employees having a semi-monthly pay schedule. Approximately 12 hours a month are saved in payroll processing time due to Ultimate's UltiPro solution.

Additionally, prior to UltiPro, National Gypsum printed from 9,000 to 10,000 employee pay statements on average per month. Now, as a result of employee self-service and the ability to view these statements online, the company has eliminated printing 1,000 forms. This equates to approximately $2,000 a year in costs associated with mailing pay statements.

Reporting flexibility has also been a great benefit to National Gypsum. With the previous solution, HR and payroll managers would have to go to a particular Web site provided by the previous vendor to get the necessary predetermined reports after each payroll had been processed. Now with UltiPro, HR and payroll managers can run delivered reports with the parameters they want, when they want them. The company finds this beneficial because of the flexibility with UltiPro. Previously, only one report could be run and that was by pay period. Now, managers can run reports for a specific employee, department, date and range, job code, etc., which provides a lot of options and a better view into the company's payroll practices.

National Gypsum also experienced significant cost savings during the implementation and expects to save more over the course of its 5-year contract with Ultimate.

The company has eliminated printing 1,000 forms as a result of employee self-service and the ability to view these statements online.

National Gypsum was able to reduce payroll time by two hours each time it was processed.

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Lessons Learned

! Consider the current workflow processes that are implemented and functionality being used to conduct business in the organization. Then create a check list of the pros and cons of the functionality needed and absolutely required before evaluating a new system. Prioritize that list and select a solution that fits what your organization can live with and without.

! Ensure that there are enough adequate internal resources dedicated to a new implementation, to avoid affecting the implementation timeline or experiencing difficulty in the deployment.

W a t e r l o o I n d u s t r i e s I n c . R e d u c e s C o s t s W h i l e E x p e r i e n c i n g L e s s R e l i a n c e o n L e g a c y D a t a b a s e s a n d M a n u a l P r o c e s s i n g

Background

Waterloo Industries Inc. is a manufacturer of tool, utility storage, and organization products with its international headquarters in Waterloo, Iowa. The company has facilities located across North America and operates three plants in Missouri, Arkansas, and Mexico.

Business Challenges

The business challenge that caused Waterloo Industries to investigate UltiPro was the fact that the company's prior benefits software was becoming obsolete and the vendor supplying that software was no longer going to support the platform that Waterloo Industries was using. In turn, Waterloo Industries did not want to go through an upgrade because that would have been costly and would have required the purchase of additional hardware and caused significant changes to the operations systems.

VITAL STATISTICS

! Company name: Waterloo Industries Inc.

! Industry: Manufacturing


! Number of users: 1,200


! ROI: 214%

! Payback: 6 months

! NPV: $553,566

©2006 IDC #202069 13


Waterloo Industries had used an internal payroll and benefits system run on legacy systems. Waterloo's payroll process was relatively decentralized and highly manual. As a result of manual entry, mistakes would occur in employee paychecks that would have to be corrected either in the next payroll cycle or in the current cycle whereby the associate would receive another check for the difference.

Payroll and benefit enrollment processes were also time-intensive. According to Janelle Phillips, benefits coordinator, "What used to happen is that payroll [at the plants] would sort all the checks and distribute them to the various supervisors. The supervisors would then go to each and every associate and give them a check or their check stub, whichever they would prefer." Additionally, many hours were spent on assembling and distributing hard-copy benefit enrollment packages to associates.

Waterloo Industries began evaluating providers over the course of a couple of years, even before the issue with the previous vendor arose. The company, specifically the HR team, had wanted to upgrade its system to something with more functionality, but once Waterloo learned that its benefits software was no longer going to be supported, the need became more immediate. This triggered Waterloo to become serious about finding another solution and the decision process from then took approximately six months.


After Waterloo learned in fall 2003 that their previous benefits software was becoming obsolete and would not be supported by the vendor beyond 2004, the decision to switch to UltiPro was made in spring 2004.

Waterloo Industries chose UltiPro Workforce Management for a variety of reasons, including the fact that the solution was Web-based, offered more value and functionality for the HR and payroll departments, and was lower cost. Additionally, Waterloo Industries did not want to have to rely on IT for change requests or enhancements to the system, which became a factor in the decision. According to Jim Engler, senior benefits manager, not having to depend on the IT department "�was something we wanted. Because you have to stand in line with IT if you have a problem, they have their own set of priorities. If you want to make an enhancement with a legacy system, you've got to submit your request and wait in queue. It was a big hassle. So from the HR standpoint, it would be nice not to have to rely on IT." With UltiPro, software updates are made periodically and all state and federal tax updates are included.

Implementation Timeline

The implementation began in June 2004 and was completed 90 days later and included a SAS 70 audit report on controls from Ultimate Software as required annually by Waterloo. Part of the reason for such a rapid implementation was because the company's outside auditor would not provide an unqualified opinion if Waterloo Industries implemented a new payroll/benefits system in the fourth quarter because it would not have had time to adequately assess the system prior to rendering an opinion. Waterloo Industries did not want to wait until the beginning of 2005, and therefore Ultimate Software guaranteed the 90-day implementation with adequate resource support from Waterloo.

The company, specifically the HR team, had wanted to upgrade its system to something with more functionality, but once Waterloo learned that its benefits software was no longer going to be supported, the need became more immediate.

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Waterloo Industries had set a goal of conducting benefits open enrollment online in the fall of 2004, so the first three months of the implementation was spent transferring data and setting up tables to prepare for both a live September payroll and fall benefits enrollment. Waterloo Industries achieved that goal, and by October 2004 the company was ready for a completely paperless open enrollment. All associates were responsible for using the Web for benefits enrollment for 2005. The first payroll period that was processed using UltiPro occurred one month prior in September.


As a result of the UltiPro implementation, Waterloo Industries went to Web-based paperless check deposits and online annual benefits open enrollment. Waterloo was able to eliminate all printed materials as well as extra costs associated with open enrollment, training, and tax-rate updating (which can occur multiple times a year and from various states) with very little system customization. With the UltiPro Intersourcing solution, tax updates are included, and Waterloo did not need extensive customization "...because we basically took it off the shelf�From the start, the product was very good in HR, benefits, and payroll," said Engler.

Because of the efficiency gained in payroll processing with the UltiPro implementation, Waterloo Industries eliminated three salaried positions in the finance department, which included payroll and accounts payable tasks. Two of these positions were held at plant locations and one was held at international headquarters. Now, all payroll is being processed centrally from the company's center of operations in Iowa. The company was able to redeploy two IT associates who supported the payroll and HR benefits functions of the in-house system and will likely reassign a third IT associate to another position. Finally, an HR-salaried position was eliminated as a result of UltiPro. The total cost savings in terms of associate salaries was approximately $270,000.


In addition to the lower cost, improved functionality, and quick implementation time, Waterloo Industries experienced many other benefits as a result of UltiPro. One associate � who no longer had to manually enter open enrollment forms and subsequent individual benefit information into the previous system as well as spend time checking reports � saves roughly 200 hours annually. Furthermore, 40 hours per week were saved at the plant level by supervisors who no longer had to physically distribute paperwork and check stubs to associates � now everything is online and accessible via the Web. Janelle Phillips, benefits coordinator, elaborated, "Now there's not one check stub distributed to anybody. If they want to know what they received in their check stub after payroll gets run up here, they go online [and] pull up the check stub. If they want to print it, they can print it. If not, they've got their pay history there. So that saves payroll numerous hours of work and the costs involved in printing that material."

Waterloo was able to eliminate all printed materials as well as extra costs associatedwith open enrollment, training, and tax-rate updating (which can occur multiple times a year and from various states) with very little system customization.

The total cost savings in terms of associate salaries was approximately $270,000.

©2006 IDC #202069 15

One major improvement for Waterloo Industries was the elimination of the old databases the company had previously used to store associate information. In addition to mainframe payroll and associate master files, the plants maintained various associate informational databases to house additional employee information. All of these disparate sources have been eliminated and associate records from contact information through training courses taken are now part of the centralized UltiPro database. Reports have been standardized using UltiPro's library of 600+ reports or created in Cognos, which is included in the purchase of UltiPro. Ultimate ships preformatted workforce analytics "cubes" for Cognos that customers can use "as is" or customize. Waterloo's various administrators, managers, and executives can run these reports without IT involvement. One data source is used for all information.

According to Waterloo Industries, payroll mistakes have also decreased to almost zero due to UltiPro. Associates can now log into the system 24 x 7 from anywhere in the world and verify their checks immediately. Salaried nonexempt associates enter electronic timesheets, and hourly associates swipe a card when they enter and leave work (instead of submitting time sheets) in which the system automatically collects the hours worked. The hourly time and attendance file is then uploaded into UltiPro for payroll processing. Other key efficiencies gained include the elimination of putting together benefit enrollment packages, streamlined W-2 processing, time savings of 5 hours a month for tax reporting, and a reduction of 34 hours per month spent by the IT department for programming, report writing, and check printing.

Lessons Learned

! The Ultimate Software customer service representative is empowered to manage the voice of the customer. They are responsible for maintaining oversight of any technical inquiry that emerges on behalf of customers. As a best practice, this customer service representative should gather resources across different functions of UltiPro once a week and lead resolution efforts on all outstanding technical issues that need to be resolved for customers.

! Centralizing payroll services and embedding HR and payroll business rules inside UltiPro provided Waterloo the vehicle for eliminating inconsistencies in pay practices among the company's locations.

! The foundation for understanding UltiPro was formed during implementation while building informational tables and embedding business rules into the software.

! UltiPro is a useful tool to maintain HR and payroll compliance with state and federal tax laws.

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C AS E S T U D I E S : L I C E N S E D

A m e r i c a n R e t i r e m e n t C o r p o r a t i o n R e d u c e s C o s t s W h i l e I n c r e a s i n g V i s i b i l i t y i n t o t h e B u s i n e s s T h r o u g h E n h a n c e d R e p o r t i n g

Background

Since 1978, American Retirement Corporation (ARC) has been involved in the development, management, or ownership of more than 350 senior living communities. The company has implemented lifestyle and care models that meet the needs of an increasingly aging population, along with a full continuum of care and living arrangements. To serve its mission, ARC employs approximately 10,000 associates with responsibilities ranging from meal preparation to social event planning and medical care. ARC has four brands covering the areas of assisted living, independent living, Alzheimer's care, and skilled nursing care.

Currently, the company is developing senior living networks in 10 major metropolitan regions. Utilizing its portfolio of large continuing care retirement communities as "hubs," the company is developing the networks by adding "spokes" of freestanding assisted living residences located in the same markets. These networks offer a continuum of living arrangements for residents and significant marketing and operational synergies for the bottom line.

Business Challenges

ARC faced several challenges that led the company to review its HR and payroll solution. Labor-related costs are extensive for service-focused businesses such as ARC, representing as much as half of the total costs. Understanding labor costs becomes mission-critical when such a large portion of the cost of doing business relates to the workforce. Prior to UltiPro, ARC found that it was unable to easily build the types of reports needed by management (e.g., reports that would highlight such

VITAL STATISTICS

! Company name: American Retirement Corporation (ARC)

! Industry: Healthcare


! Number of users: 250 HR and payroll users, 125 back-office users

! Application: UltiPro Workforce Management (licensed software)

! ROI: 107%


! NPV: $795,240

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key metrics as turnover and trends in compensation). Additionally, skilled nurses are in high demand and shortages are common. Reporting that can help isolate where shortages exist is key to the success of an organization like ARC.

The service bureau in place at ARC prior to UltiPro offered payroll services and an HR system that were not integrated. As a result, data was not synchronized between the two systems. Having data in two places presented ARC with the challenges of consolidation, maintaining current data, and generating meaningful reporting. ARC found itself purchasing costly add-on services from its service bureau in order to support needed reporting.


ARC reviewed a total of six solutions from five different vendors � three service bureaus and three in-house solutions � as part of its selection process. Cross-departmental factors that drove the decision-making process included support for SQL, provision for tipped employees, and a smooth data feed to its general ledger system.

The team issued a questionnaire to participating vendors that focused on overall company challenges as well as the needs and challenges of each of its departments. User friendliness and control over data were key factors that led the team to choose Ultimate Software's in-house UltiPro solution.


Prior to implementing UltiPro, ARC did not have direct control over the payroll process. Furthermore, the payroll department was not able to preview the payroll calculations (gross-to-net) prior to the payroll run. As a result, ARC was unable to ensure data integrity before check production. Having the ability to verify payroll in advance of production has saved time due to a more accurate payroll. An accurate payroll, in turn, has enabled ARC to reduce costs by decreasing the number of manual checks by half each month. In addition to reducing manual checks, ARC has been able to reduce any errors caused by errant deductions and has reduced the number of zero net checks. With UltiPro, ARC realizes annual savings on manual checks alone of $63,000. ARC began its search process in the fourth quarter of 2001. The team consisted of representatives from all departments, including payroll, human resources, benefits, IT, general ledger, and treasury. The selection team chose UltiPro Workforce Management from Ultimate Software in October 2002. ARC went live on UltiPro with its first payroll in July 2003.


Due to the in-house adoption of UltiPro, ARC was able to reduce its payroll department by one full-time equivalent (FTE). When an employee who previously provided dedicated payroll tax support to the organization decided to pursue other career interests and left the organization, ARC was able to reallocate the duties across the remaining staff so the department absorbed the work. Since the UltiPro deployment, ARC has increased associate count by 1,000 in the past several months without the need for additional payroll staff. ARC expects to hire another 1,000 staff members in the near future. Due to these intended increases, ARC is planning to add a payroll coordinator. However, this position is at a lower level than the position

Having the ability to verify payroll in advance of production has saved time due to a more accurate payroll.

ARC found itself purchasing costly add-on services from its service bureau in order to support needed reporting.

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eliminated and will therefore be less expensive. At the same time, ARC has added two positions to its IT department to support the UltiPro system, but the overall annual savings of $438,000 through the elimination of the service bureau more than adequately covers any additional expenses incurred.

The service bureau payroll application was not synchronized with the HR system from the same vendor. Data issues were the norm, and ARC found itself paying the vendor for costly additional data feeds in order to build reports that were critical to management decision making.


By implementing and standardizing on UltiPro Workforce Management, ARC has realized a variety of benefits in addition to cost savings. Highlights include:

! ARC was able to bring on new senior living communities encompassing 1,000 associates without any additional payroll staff.

! ARC can now add departments, titles, earnings/hour codes, general ledger codes, and banking information all at the corporate office. This is now a standardized practice for all of ARC's communities.

! Employee and manager self-service are of particular importance to helping ARC keep current with its geographically dispersed communities.

! Previously, once the annual enrollment period ended around December 1, ARC would still have several weeks of inputting and verifying manual enrollment forms. Now with UltiPro, not only was the entire process streamlined, but ARC is able to review, input, and verify data to send to benefits providers within just a few days.

! New tools for HR not available to them previously include:

# Training and education

# Career planning

# Applicant tracking

# Integration with venue for receiving applications

# Benefits administration

! Internet-based training done prior to rolling out eBenefits Enrollment has saved ARC time and money in not having to travel to every community.

! Of particular importance to ARC is extensive standardized and ad hoc reporting. Specific benefits realized by ARC from improved reporting include:

# Ultimate Software Reporting tools allow ARC to create reports that can be utilized by different levels of management.

# Users can easily modify the 600+ standard reports delivered with UltiPro.

ARC has achieved overall annual savingsof $438,000 through the elimination of the service bureau.

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# The business intelligence tool, Cognos, enables ARC to create its own ad hoc reports that can be used by managers for their individual community or all communities, depending on their security access.

# The delivered analytical tool provides reports that can be used to drill down into specific defined criteria.

Lessons Learned

ARC recommends that other organizations engage with Ultimate Software to have an UltiPro specialist work through the implementation process. ARC did so and found the implementation "the best that they'd ever experienced."

ARC also recommends that organizations looking to implement UltiPro conduct train-the-trainer sessions, even if delivered via the Web. With remote locations throughout its enterprise, ARC finds having employees knowledgeable in UltiPro at each location of value in ensuring effective use of the system.

Q u i c k e n L o a n s D r a m a t i c a l l y L o w e r s C o s t s a n d R e d u c e s C o m p l e x i t y

Background

Quicken Loans is a residential mortgage lender headquartered in Livonia, Michigan. Quicken Loans is America's largest online retail mortgage lender and one of the largest home loan lenders nationwide, closing $16 billion in home loans in 2005. The company has 3,500 employees, most of whom are located in Michigan. Quicken Loans has been ranked among the Top 15 on Fortune magazine's "100 Best Companies to Work For" in America list for three consecutive years and has been ranked number 1 on Computerworld magazine's list of the "100 Best Places to Work

VITAL STATISTICS

! Company name: Quicken Loans

! Industry: Financial

! Number of employees: 3,500 in the United States, up from 900 in 2002

! Number of users: 3,500 employee users, 20 back-office users

! Application: UltiPro Workforce Management (licensed software)

! Return on investment: 160%


! Net present value: $560,950

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in Information Technology" two years in a row. The company also was identified by the Michigan Business & Professional Association as one of its "Top Ten Companies to Work For" in Metro Detroit. Being responsive to employees is one way in which Quicken Loans has achieved its status as an employer of choice.

Quicken Loans, previously Rock Financial Corporation, was founded in 1985 by Daniel Gilbert and soon became one of the largest independent mortgage banks in the country. In May 1998, Gilbert took Rock Financial public, launching a successful initial public offering underwritten by Bear Stearns and Prudential Securities. Begun as a brick-and-mortar lender, the company launched Rockloans.com in January 1999 and quickly positioned itself as one of the fastest-growing online direct mortgage lenders on the Internet. In December 1999, Intuit Inc. (maker of Quicken TurboTax and Quicken) purchased Rock Financial. The company's online operations were renamed Quicken Loans, which soon became a leading provider of direct-to-consumer home loans on the Internet (www.quickenloans.com), offering mortgages in all 50 states. In June 2002, Gilbert announced he would lead a small group of private investors in reacquiring the Quicken Loans subsidiary from Intuit. The purchase was completed in July 2002. Quicken Loans is now 100% privately held, although the company retained all of Quicken Loans' branding and marketing initiatives.

Business Challenges

Quicken Loans' greatest HR challenge was brought about by its tremendous business success. Quicken Loans grew its closed loan volume from $7 billion in 2002 to $16 billion in 2005. To support this growth, Quicken Loans has increased its number of employees from just 900 in 2002 to 3,500 today. Business expansion presented the human resources (HR) department with the challenge of keeping up with the resulting growth in its workforce. After gaining its independence from Intuit, the lending company needed to quickly make an HR system and services decision.


During the two years that the company was part of Intuit, Intuit's HR solution was delivered through a combination of licensed third-party HR applications and separate service bureaus for both healthcare benefits administration and payroll administration. When Quicken Loans once again became independent in 2002, it had no HR system and needed to put one in place quickly. At that time, Quicken Loans opted to purchase an UltiPro Workforce Management license from Ultimate Software to manage HR functions, but it decided to retain the same service bureaus for benefits and payroll that had been in place with Intuit.


In 2005, Quicken Loans decided to consolidate all of its HR functions onto the UltiPro system because its existing license with Ultimate Software allowed the lending company to take further advantage of UltiPro's benefits and payroll capabilities. A number of factors drove Quicken Loans' decision to terminate its outsourcing engagements with the payroll and benefits administration service bureaus:

Quicken Loans wanted to lower costs by eliminating high service bureau fees and the multiple interfaces among its HR system and its disconnected services for payroll and benefits administration.

Business expansion presented the human resources department with the challenge of keeping up with the resulting growth in its workforce.

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! Quicken Loans wanted to lower costs by eliminating high service bureau fees and the multiple interfaces among its HR system and its disconnected services for payroll and benefits administration.

! The payroll service bureau did not provide the level of service Quicken Loans needed or desired. Quicken Loans also had a number of nonstandard report requirements that were costly and time-consuming to produce through the provider.

! Quicken Loans was a small fish in a large pond for the healthcare benefits administration provider, and as a result, changes were expensive and the provider was not overly responsive to Quicken Loans' needs.


The UltiPro system was chosen in 2002 for HR administration and expanded on in 2005 because the solution could give Quicken Loans the necessary functionality while being easy to use and much less expensive than the other systems the company used previously. In addition, UltiPro was simple and quick to implement. Quicken Loans went live on UltiPro for payroll in January 2005 and for benefits in June of that same year.

Quicken Loans has tripled in size since 2002 and has not had to make any additional investments in HR personnel to support expansion. Even more importantly, Quicken Loans is enjoying substantial cost savings as a result of consolidating HR, payroll, and benefits administration onto the UltiPro platform. For payroll, Quicken Loans saves $96,000 per year by running the solution in-house compared with the price the lender paid for service fees charged by the former payroll provider. Furthermore, Quicken Loans is saving $300,000 per year on benefits administration compared with previous benefits outsourcing fees.


In addition to the cost savings that a consolidated HR system provides, Quicken Loans experiences a number of other benefits with its UltiPro solution:

! Quicken Loans feels it has more flexibility with its HR environment in responding to business changes and can run its payroll processes faster than the service bureaus could.

! Quicken Loans is far more confident in the integrity of its data since it eliminated the information exchanges that had been necessary previously with the lending company's multiple systems and services.

! Benefits data is "live" immediately, which enables faster and better employee communication.

Overall, Quicken Loans says that the cost savings factor is key. Todd Zarotney, director of compensation and benefits, summed up the benefits as follows: "flexibility, one system, confidence."

Quicken Loans is enjoying substantial cost savings as a result of consolidating HR, payroll, and benefits administration onto the UltiPro platform.

Todd Zarotney, director of compensation and benefits, summed up the benefits as follows: "flexibility, one system, confidence."

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Lessons Learned

Quicken Loans has established a close working relationship with its Ultimate Software customer service representative and recommends that others purchasing UltiPro do so as well. Any vendor-client engagement is like a partnership, and open lines of communication lead to a more productive and rewarding relationship.

C O N C L U S I O N Gaining new customers continues to be an imperative in the increasingly dynamic and spirited business world; however, retaining existing customers and creating positive customer experiences should also be part of a good management policy for all companies.

As the analysis and case studies presented in this White Paper show, key themes that have emerged for customers of Ultimate Software's UltiPro Workforce Management (on-premise and on-demand) include the following:

! Integrating HR and payroll systems helped to avoid redundancy and the need for labor-intensive reporting.

! Increasing payroll accuracy and data integrity allowed for a reduction in manual check processing and, hence, cost savings in both time and materials.

! Utilizing UltiPro helped eliminate the need to pay third-party suppliers for add-on services, such as special data runs and ad hoc reports.

! Managing payroll on-premise or via on-demand could be less costly than through a service bureau, depending on customer needs.

! Moving from multiple services to one consolidated solution for human capital/workforce management helped improve accurate and timely reporting.

! Whereas service bureaus charge for each additional employee added to payroll due to per-check fee structures, the companies using UltiPro were able to increase the workforce with no additional administrative headcount and therefore no increase in cost.

! Decreased HR costs and improved overall communication were recognized benefits of UltiPro clients that used employee and manager self-service.

! Reporting through UltiPro helped improve the timeliness and accuracy of the firms' decision-making processes.

! Firms that changed from service bureaus to UltiPro achieved greater control over their data, which lowered costs and empowered HR to put more information at managers' fingertips.

C o p y r i g h t N o t i c e External Publication of IDC Information and Data � Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason.

Copyright 2006 IDC. Reproduction without written permission is completely forbidden.

WHITE PAPER Easing Workforce Management Software Decisions

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