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Forrester Study
Forrester Study
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ADP commissioned Forrester Consulting to conduct Return on investment (ROI) Net present value (NPV)
a Total Economic Impact™ (TEI) study and examine
134% $3.4M
the potential return on investment (ROI) enterprises
may realise by deploying ADP Global Payroll. The
purpose of this study is to provide readers with a
framework to evaluate the potential financial impact employee experience (EX) and high fees related to
of ADP Global Payroll on their organisations. non-compliance.
To better understand the benefits, costs and risks After the investment in ADP Global Payroll, the
associated with this investment, Forrester interviewed customers gained a single unified global payroll
four customers with experience using ADP Global solution, fully integrated with their HR management
Payroll. For the purposes of this study, Forrester platforms. Key results from the investment included
aggregated the experiences of the interviewed increased efficiency, better compliance, improved EX
customers and combined the results into a single and increased agility due to quick access to more
composite organisation. accurate data.
Benefits (Three-Year)
framework for those organisations considering an analysts to gather data relative to ADP Global
investment in ADP Global Payroll. Payroll.
COMPOSITE ORGANISATION
Designed a composite organisation based on
characteristics of the interviewed organisations.
Interviewed Organisations
COMPOSITE ORGANISATION
Based on the interviews, Forrester constructed a TEI
framework, a composite company and a ROI analysis
that illustrates the areas financially affected. The
composite organisation is representative of the four
companies that Forrester interviewed and is used to
present the aggregate financial analysis in the next
section. The composite organisation has the following
characteristics:
Implementation
Office Regions No. of Employees Payroll Solution Average Salary
Year
Initial US HQ North America 6000 Globalview PS $ 70,000.00
Initial Germany EMEA 3000 Globalview PS $ 60,000.00
Initial Spain EMEA 200 Celergo $ 60,000.00
Initial UK EMEA 210 Celergo $ 60,000.00
Y1 Belgium EMEA 50 Celergo $ 60,000.00
Y1 Hungary EMEA 55 Celergo $ 60,000.00
Y1 Netherlands EMEA 40 Celergo $ 60,000.00
Y2 Mexico LATAM 200 Celergo $ 20,000.00
Y2 Venezuela LATAM 50 Celergo $ 20,000.00
Y2 China APAC 500 Celergo $ 35,000.00
Y2 South Korea APAC 39 Celergo $ 35,000.00
Total Benefits
Ref. Benefit Initial Year 1 Year 2 Year 3 Total Present Value
Payroll-process efficiency
Btr gain (small country on $0 $243,000 $625,725 $880,812 $1,749,537 $1,399,804
managed service)
Payroll-process efficiency
Ctr gain (large country on $0 $280,800 $289,224 $297,901 $867,925 $718,118
processing service)
implementation of the fully managed ADP The three-year, risk-adjusted present value of
service, these decrease by 50%. compliance cost avoidance is more than $1.8M. This
is equivalent to over 30% of the total present value
Risks. Forrester applied a high-risk adjustment of
benefits over the three years.
50% to this benefit because:
PAYROLL-PROCESS EFFICIENCY GAIN (SMALL processing, allowing firms to reallocate payroll staff to
COUNTRY ON MANAGED SERVICE) higher-value tasks.
Evidence and data. Improved payroll efficiency was
One interviewee told us: 'I used to spend around
an important driver for adopting ADP for all the
$1 million on payroll to pay 2000 employees. Now I
decision makers Forrester interviewed. The efficiency
spend the same amount to pay 8000 employees'.
gain is especially significant in the small countries as
these all move to a fully managed (outsourced) Organisations may also gain additional efficiencies
service, meaning that ADP does the payroll from reduced currency conversion costs. One
interviewee told us: 'We’re able to realise savings on
money movement — avoiding the 10% fee charged different organisations. This yielded a three-year,
by our former payroll provider'. Furthermore, risk-adjusted present value of just under $1.4M. This
increased accuracy reduces errors and, in turn, is equivalent to 24% of the total present value
improves efficiency. benefits over the three years.
B4 EMEA average salary $60,000, 3% increase YoY $60,000 $60,000 $61,800 $63,654
B5 APAC average salary $35,000, 3% increase YoY $35,000 $35,000 $36,050 $37,132
B6 LATAM average salary $20,000, 3% increase YoY $20,000 $20,000 $20,600 $21,218
$70,000, 3% increase
C3 North American average salary $70,000 $70,000 $72,100 $74,263
YoY
$60,000, 3% increase
C4 EMEA average salary $60,000 $60,000 $61,800 $63,654
YoY
Average no. of payroll employees per country before
C5 8 8 8 8
ADP
Percentage of
D6 Average recruitment and onboarding cost 50% 50% 50%
salary
DIRECT COST AVOIDANCE (LEGACY SOLUTION) • For the small countries, which moved to ADP
Evidence and data. Each of the interviewed decision Celergo managed service, the legacy solution
maker’s organisations had a legacy payroll system in cost 50% less.
place. Moving to an alternative means a firm can
Risks. The difference in the costs of the legacy
avoid the cost of such a legacy system.
versus the ADP solution could be more. To account
Modelling and assumptions. Interviewees validated for this risk, Forrester adjusted this benefit downward
the following assumptions about the legacy solution: by 10%, yielding a three-year, risk-adjusted total PV
of just over $820K.
• For the large countries, which move to ADP
GlobalView Payroll processing service, the
legacy solution cost 25% less.
E1 Number of employees applicable (large countries) Employees per country 0 9,000 9,000 9,000
E2 Legacy licence fee per employee (large countries) 0.75*$3.55*12 $31.95 $31.95 $31.95
E3 Number of employees applicable (small countries) Employees per country 0 410 555 1,344
E4 Legacy licence fee per employee (small countries) $18*0.5*12 $108 $108 $108
Etr Direct cost avoidance (legacy solution) (risk-adjusted) $0 $298,647 $312,741 $389,432
PAYROLL REPORTING EFFICIENCIES such data available in real time. Leaders can make
Evidence and data. Finally, ADP Global Payroll better decisions faster with up-to-date and higher-
enables efficiencies in terms of reporting. All the quality data.
interviewees expressed that this was an important
Modelling and assumptions. First, Forrester
driver, though difficult to quantify.
assumed that reporting is required in each country on
As firms implement ADP across more countries, and a monthly basis. Second, Forrester assumed that the
eventually across the whole workforce, it becomes ADP implementation reduces reporting effort as
easier to have access to all the data: It is in the same follows:
format in the same system and available through the
• In North America, reporting initially required nine
same portal.
days, which decreases to five following the local
While Forrester has quantified this benefit by implementation of ADP; it further decreases to
estimating the reporting time saved, there are just two days once all the countries are on ADP.
additional benefits, notably increased agility in having
• In EMEA, the reporting effort was three days Risks. Forrester applied a moderate 10% risk
every month per country, which reduces to zero adjustment to adjust for differences in reporting
following the ADP implementation. systems and requirements for different organisations
in different regions and verticals. As a result, the
• In Latin America and APAC, the reporting effort
three-year risk adjusted present value of this benefit
was two days every month per country, which
comes out at just under $150K.
reduces to zero following the ADP
implementation.
F6 Resource cost of reporting (using local salaries) $97,067 $46,933 $35,157 $7921
• Increased business agility. Once firms unify all Improved EX. While Forrester included better
employee payroll data into the same system, not employee retention in the quantified analysis, it is
only does reporting become much easier, as worth pointing out that improved EX can have
described in the final benefit, but such data is many other benefits such as reduced
much more readily available. Business leaders absenteeism, improved customer experience,
can quickly access payroll data to gain insights increased discretionary effort and even higher
and make better decisions faster. Interviewees revenue.2
FLEXIBILITY
The value of flexibility is unique to each customer.
There are multiple scenarios in which a customer
might implement Global Payroll and later realise The ADP solution
additional uses and business opportunities, including: improved the
employee experience,
• Faster integration of additional markets.
employee retention
Whether through organic growth or acquisition,
and employee
organisations can more easily add additional enablement.
markets, accruing more benefits for that country.
— Senior Director, Global
Flexibility would also be quantified when evaluated as Payroll, Tax and Mobility
part of a specific project (described in more detail in Services, Aerospace &
Appendix A). Defence industry
Total Costs
Ref. Cost Initial Year 1 Year 2 Year 3 Total Present Value
Implementation costs
Gtr (large country on $886,417 $0 $0 $0 $886,417 $886,417
processing service)
Implementation costs
Htr (small country on $48,000 $72,000 $57,063 $0 $177,063 $160,614
managed service)
G4 Payroll effort (FTE) (G1+G2)*2 FTE for 2 months (rounded value shown) 0.667 0.00 0.00 0.00
G5 HR and IT effort (FTE) (G1+G2)*1 FTE for 1 month (rounded value shown) 0.167 0.00 0.00 0.00
G6 North American average salary $70,000, 3% increase YoY $70,000 $70,000 $72,100 $74,263
G7 EMEA average salary $60,000, 3% increase YoY $60,000 $60,000 $61,800 $63,654
For each of these countries, there are two elements • $15,000 per country in EMEA.
to the implementation costs:
The composite incurs these costs once the country is Risks. Given that different organisations will have
live on the Global Payroll solution (after roll-out). different legacy platforms, structures and setups,
Forrester applied a moderate 10% risk adjustment.
The internal resource effort requires 50 hours of effort
The three-year, risk-adjusted present value of this
from one project manager, one payroll employee, one
category of costs comes to $160,614.
IT specialist and one HR employee. Forrester
calculated the costs of the implementation effort
using local average salary rates:
ONGOING FEE (YEARLY) monthly cost of $495 per country plus an $18
Evidence and data. Across the ADP Global Payroll cost per employee per month.
solution, the largest portion of costs is the annual Modelling and assumptions. The costs above apply
ongoing fees, accounting for 58% of the total in the following the implementation of the solution in the
case of the composite organisation. The ongoing fees corresponding markets. Forrester did not apply a risk
differ depending on the size of the country, as adjustment as these are ADP’s rates.
follows:
The three-year, present value of the ongoing fees
• For the large countries using the ADP applied to the composite organisation totals nearly
GlobalView Payroll service on a processing $1.5M.
basis, the fee is $3.55 per employee per month.
I4 Employees covered (small countries), EMEA No. of employees per region on payroll 0 410 555 555
I5 Employees covered (small countries), APAC No. of employees per region on payroll 0 0 0 539
I6 Employees covered (small countries), LATAM No. of employees per region on payroll 0 0 0 250
I7 Licence fee per month (large countries) (I1+I2)*I3 $0 $31,950 $31,950 $31,950
I8 Fixed licence fee per month (small countries) $495*(H1cumulative+H2cumulative+H3cumulative) $0 $2,475 $4,455 $4,455
Risk adjustment 0%
$3.0 M
$2.0 M
These risk-adjusted ROI,
NPV and payback period
$1.0 M values are determined by
applying risk-adjustment
factors to the unadjusted
results in each Benefit and
Cost section.
-$1.0 M
-$2.0 M
Initial
Initial Year
Year 11 Year 2 Year
Year 33
ROI 134%
Payback period
12.0
(months)
PAYBACK PERIOD
'The Forrester Wave™: Cloud Human Capital Management Suites, Q2 2020,' Forrester Research, Inc.,
May 14, 2020
Appendix C: Endnotes
1
Source: 'Making payroll pay,' PwC, 2015 (https://www.pwc.co.uk/assets/pdf/makingpayrollpay.pdf).
2
Source: Sue Jones, 'Engaged Employees Lead to More Profitable Business Outcomes', VRM intel, January 5,
2017 (https://vrmintel.com/engaged-employees-lead-profitable-business-outcomes/).