How Did They Get Here - ExcellerateHRO

In March of 2006, a study by Forrester Research was released which ranked ExcellerateHRO as a “Leader” among HR BPO providers. Excuse me? I mean who were these guys? Anyone not paying close attention might have missed that ExcellerateHRO had only been in business for 1 year at that point. If you were busy with your head down at your desk maybe you didn’t know that ExcellerateHRO is the joint venture created in March 2005 by Towers Perrin and EDS. It is also the subject of this week’s How Did They Get Here series on the inimitable SystematicHR.

To understand where ExcellerateHRO came from, one must first understand the history of the two founding firms. Luckily for us, each company has a very complete corporate timeline which highlights major events and acquisitions. You can find Towers here, and EDS here. EDS brought to the equation significant BPO experience. Known as a systems integrator, they are also one of the leaders in IT outsourcing. A closer look at the timeline reveals that EDS has been a major player in the financial services industry as well. They have decades of experience in data management, communications and even ATM management dating back to 1978.

Also interesting is that EDS was scooping up management consulting experience at the same time as expanding IT capabilities. The 1995 acquisition of A. T. Kearney really put EDS on the management consulting map. (A.T. Kearney became independent again just this past year)
Perhaps most notable is that EDS, in case you have forgotten, was the company that brought us the “Cat Herders” commercial in the 2000 Super Bowl. “Herding cats” has since become part of the American business lexicon. At least I’d never heard it used before then. All in all, EDS has a very impressive history and track record.

In the meantime Towers Perrin was following the path that many HR consultancies were following. With its roots in actuarial services, Towers expanded into broad based HR consulting over time. In 1991, Towers officially recognized the administrative services area as a national practice with the formation of Towers Perrin Administrative Services (TPAS) division. It became, not surprisingly, the fastest growing Towers business: they caught the wave.

During the following 15 years, Towers entered into some very interesting alliances/partnerships. In September 2002, Towers was actually selected as the preferred provider of benefits administration by Exult. This meant that Exult would be “subcontracting” the benefits administration work for its clients to Towers. I guess that didn’t work out quite as planned after the Hewitt acquisition of Exult. Interesting “what if;” what if Towers had bought Exult instead, and had rolled it into ExcellerateHRO. Would the BPO experience of EDS made the Exult model profitable? We’ll never know.

Towers also entered into a partnership with American Century to provide pension administration services, while American Century p rovided 401(k) services. This agreement has survived through American Centuries evolution into JPMorgan Retirement Services which now has an agreement with ExcellerateHRO.

By the way, in my opinion, the moving force behind the JPMorgan business, Tom Kmak, provided the vision of the future while in Kansas City with American Century. It’s an interesting progression in and of itself. I met Tom about 13 years ago. It was clear to me back then that he would move on to the type of position he is in now.

So where does that leave us? ExcellerateHRO, in business now for 21 months, recognized as a leader in HR BPO, which doesn’t yet have a consistently agreed to definition. It’s CEO, Steve Bohannon, left in August of 2006: only 18 months after inception, but that is a topic for a future posting.

With recent wins at 7-11 and Bank of America, and with the financial heft of EDS supporting it, ExcellerateHRO is no doubt here to stay. The interesting journey, while rich in EDS and Towers history, is still just beginning for ExcellerateHRO.

About the author – Donald Glade is President and Founder of Sourcing Analytics, Inc., an independent consulting firm specializing in helping companies optimize their HR / benefits / payroll service partnerships through relationship management, financial analysis, and process improvement.

How did they get here – ADP

Next in our “How did they get here” series, I take a look at ADP, perhaps the most acquisitive organization in the payroll / HR / benefits space. As such, I certainly cannot begin to recount all of the activity that got ADP where it is in this space. I will however try to hit the highlights.

First, however, to give an idea of how ADP seems to buy up everything in sight, look at these acquisition figures. These are the totals spent each year on acquisitions:

1998 - $351 million

1999 - $107 million

2000 - $200 million

2001 - $ 75 million

2002 - $232 million

2003 - $270 million

2004 - $270 million

2005 - $422 million

Now granted, some of these acquisitions fall outside of the HR space (they have a line of service called Dealer Services, for example), but you get the idea. In fact, the 2002 Annual Report had this to say:

“You can expect us to increase our acquisition activity even further, as we look to supplement our internal growth with strategic acquisitions that extend our markets and add applications to our product sets.”

And look at this quote from the 2005 report:

“We will increase our emphasis on acquisitions, including a focus on transactions larger than our historical experience and entry into adjacent markets where we bring some important synergies.”

Did I read that right? Even LARGER acquisitions to come? Hmmmmmm.

Anway, here is a chronological listing of some of the acquisition highlights with a brief description of the importance as I see it. Taken together, we can definitely see that this is how ADP got to where it is today. (Note there is a gap between announce dates and close dates, so there can be some discrepancy in the years of each of the activities below)

• 1992 Acquires PeopleSoft 3.0 source code. This agreement provides ADP with a perpetual license to use internally, to modify and to sublicense to its clients and prospects Release 3.0 of PeopleSoft HRMS and PeopleTools on the Centura SQLBase (OS/2) and Oracle environments. Believe it or not, the purchase price for the rights was only $22 million. This became the base of what is now the Enterprise system, ADP’s platform for all things HRMS.


• 1994 ADP acquires the Application Group which provides ADP with an implementation arm with a deep understanding of PeopleSoft.


• 1995 ADP acquires Williams, Thatcher, Rand, a New York based boutique actuarial and benefits consulting and administration firm. This begins ADP’s dive into the benefits administration arena.


• 1996 ADP Acquires Health Benefits America (HBA), a Salt Lake City based benefits administration firm specializing in large company custom services.


• 1997 Acquires the payroll business of Royal Bank of Canada and Scotia Bank – an important step in becoming a global provider. Acquired Staff Management Services of Florida and renamed it TotalSource, establishing ADP as a player in the PEO space.


• 1998 Acquired Mercers administrative business in 401(k) and Benefits administration, expanding on the base created by WTR and HBA.


• 1999 Acquired Vincam, a Miami based PEO, vaulting ADP to the second largest PEO in the country. Acquired the administrative business of J&K/KVI, securing some very large benefits administration clients in the process.


• 2000 Acquired NetBoa, an Atlanta based COBRA administration company, expanding its benefits capabilities significantly.


• 2002 Acquired Avert, a pre-employment background verification firm. ADP is continuing its expansion of end to end services from hire to off boarding.


• 2003 Acquired ProBusiness which some say removed its only competition in the large employer payroll market. Ceridian would, of course, disagree with that statement. Acquires Scudder’s 401(k) business.


• 2006 Acquired Virtual Edge, further expanding its pre-employment services. Already, it has replaced the previous recruitment services its salespeople have in their sales bag. Acquired Employease, expanding web based capabilities in the middle market space.

The journey for ADP has been interesting to say the least. What you see here is just a portion of the activity. Feel free to add to the list. One thing is clear: it’s been a very different path from the one we saw last week when looking at Hewitt. It has certainly presented its own set of challenges as ADP has had to integrate substantially different cultures, services and systems platforms over the years. It hasn’t always been pretty, but ADP is in the estimation of many the true leader in the field right now.

About the author – Donald Glade is President and Founder of Sourcing Analytics, Inc., an independent consulting firm specializing in helping companies optimize their HR / benefits / payroll service partnerships through relationship management, financial analysis, and process improvement.