Automation as the Next Big Disruptor?

A Big Move for HR Software as a Service: Aon Hewitt Doubles Down on Workday

Aon Hewitt continues to bet big on Workday, the cloud-based HR software provider.

In the latest industry consolidation move, Aon Hewitt announced this week that it completed its acquisition of Kloud, Europe’s largest dedicated Workday consultancy. The acquisition significantly improves Aon Hewitt’s position compared to other niche Workday consultancies, including DayNine and Appirio, and the other top human resource (HR) consultancies, including Towers Watson and Mercer, in terms of total Workday resources and regional coverage. It also enables Aon Hewitt to go head-to-head with multinational system integrators Accenture, Deloitte and IBM.

Aon Hewitt’s acquisition of Kloud builds upon its purchase of OmniPoint’s Workday Services company in 2012 and comes on the heels of Mercer’s acquisition of Jeitosa in 2014, when the third major HR consultancy placed its bet on Workday. With the move, Aon Hewitt adds to its own stable of Workday resources in Europe: Kloud’s 55 employees give the firm significant on-the-ground strength in the U.K., Germany, France and the Nordics, arguably the hottest growth areas for Workday, and enables it to better serve its multinational clients.

Additionally, the acquisition enhances Aon Hewitt’s expansion to include deployment and configuration management services, a space it did not play in until the OmniPoint acquisition. Pulling through application maintenance services (AMS) and other design, build and operate services is a stated objective of Aon Hewitt in this business model.

Aon Hewitt’s Workday clients we spoke with are thrilled with this global expansion and looking forward to the infusion of global Workday talent for new deployments and ongoing AMS. One client who wished to remain anonymous said about Aon Hewitt, “Dollar for dollar, apple for apple, nobody has a stronger value or better resources.”

Aon Hewitt’s traditional ERP-based clients may not be as enthused, however, wondering if they will be left in the dust as all the investment goes towards Workday. As recently as late December, Aon Hewitt announced the sale of its Asia Pacific payroll business to Everstone Capital, freeing up $60 million in capital to invest in other areas, such as Kloud, and further moving the company toward providing HR and payroll services on Workday. The timing of the Kloud acquisition also fits nicely with the anticipated release of Workday payroll modules for the U.K. in 2015 and France in 2016.

At the same time, Aon Hewitt’s current HR business process outsourcing (BPO) business includes a number of PeopleSoft and SAP on-premise clients. We asked Aon Hewitt what these clients should expect with respect to ongoing improvement and investment into these solutions. Colin Brennan, Senior Vice President for Product Strategy and Solution said, “While expanding our software-as-a-service capabilities, we also continue to invest in our current on-premise business, which represents a significant portion of our revenue and marquee brands that we highly value. We will continue to support and invest in these clients in their current state and will build capabilities to serve them if and when they decide to move to the cloud.”

Clearly, Aon Hewitt is focusing its efforts for on-premise clients on leveraging its investments in user interfaces, such as back office user interfaces and new employee/manager portal, UPoint, as well as adding scale and repeatability into these operations, which continues to be more challenging in the customized world of on-premise versus the HR SaaS environment.

We see ERP platform providers (Oracle, SAP, ADP, etc.) and BPO service providers putting the majority of their investment behind their cloud-based solutions to encourage clients in the direction of HR SaaS.

Aon Hewitt’s double-down on Workday through its acquisition of Kloud is just another example of how human capital management (HCM) consultancies, HCM platform providers and systems integrators alike are rushing to fill the high demand for HR SaaS.

For more insights on how to build your own roadmap for HR technology and transformation, contact Debora Card.

About the author

Deb leads ISG’s Human Resources Technology practice, drawing upon extensive in shared services, outsourcing and HR management to help clients define and implement their HR technology and service delivery strategies. Deb helps enterprises assess the business case for Human Capital Management software-as-a-service (SaaS) solutions, understand the capabilities and experience of leading HR SaaS providers and integrators, and formulate and execute effective negotiation strategies for HR SaaS software and implementation. She has authored ISG’s annual survey on HR Technology and Service Delivery Trends since 2014. Deb has 29 years of experience and has been involved in more than 150 HR engagements across HR administration, payroll, benefits, talent acquisition and HR technologies.