Automation as the Next Big Disruptor?

SHPS Finds a Buyer – What’s In It for ADP?

Benefits administration outsourcer SHPS finally has found a suitor in the heritage payroll behemoth ADP. This combination is not as eye-popping as others in ADP’s two-year string of acquisitions, which have included talent and recruiting capabilities from Cornerstone, Virtual Edge and The Right Thing, decision-support tool Asperity and diverse HR-compensation-benefits outsourcing from Workscape. SHPS’s benefits business does not seem to fill any obvious void in ADP’s growing repertoire of HR administration suite, so what gives?

Benefits outsourcing, for starters. Purchasing SHPS has reinforced the message that benefits administration is a going concern for ADP. But ADP has long had a strength and commitment to the benefits administration business, including two health and welfare (H&W) systems assets likely to remain the preferred technologies over the SHPS platform. ADP’s H&W Service Engine, with real-time integration to the U.S. Enterprise platform, will continue to be the platform of choice for clients seeking a simple, consumer-friendly system, while Workscape’s OBA platform will be integrated further into ADP’s Enterprise, Vantage and GlobalView suites for complex client needs. The SHPS client base for H&W likely will be transitioned over time to the ADP systems, as SHPS’s modest portfolio of clients is absorbed along with added COBRA capabilities.

ADP bought only key areas of the HR services business that were a good fit. The assets of greatest interest in the SHPS acquisition include:

1) Print and communication facilities
2) Broader spending account capabilities
3) Absence management technology

The first asset is a simple matter of scale and adds another facility in Louisville, where ADP already has a presence. The SHPS print and communications center will double ADP’s capabilities, which include key locations in Des Moines, Salt Lake City and Boise (Workscape). Besides being the spending account administrator for more than a million federal employees, ADP now has acquired a broad client footprint and a spending account technology that is mobile-enabled and will allow ADP to put spending account clients into a single platform that includes expense reimbursement for flexible spending accounts as well as commuter benefits and tuition reimbursement accounts.

The hidden gem in the SHPS acquisition is the total absence management (TAM) system, part of SHPS internal assets. Originally built for insurance providers, it can be distributed or leveraged directly with any implemented client services. As ADP solidifies its benefits solutions, absence management services may be an offering that goes beyond the technology-only modules that have been part of eTime and NextTrack time and labor software. ADP does have some pockets of business where clinical management and other absence support have been provided, but the vast majority of its clients in this space have chosen to self-administer using software modules. With SHPS’s TAM technology, ADP can make a conscious move to grow its fully managed absence offering.

ADP’s acquisition of SHPS HR services business harbors excitement. With so many moving pieces and a heritage of silo sales and product teams, ADP may tap into the power of SHPS assets combined with its other acquisitions.

About the author

With more than 25 years of industry and consulting experience, Julie is an invaluable advisor for enterprises needing to evaluate and assess alternatives for multi-process HR service delivery, including workforce administration, payroll, benefits, compensation, recruiting, technology, learning, and talent management. Julie leads complex global HR assessments and transactions around the world. Prior to joining ISG, Julie worked for nearly a decade as an independent consultant, providing market research, vendor assessments, systems testing and implementation consulting to a broad community of benefits administration vendors and human resources departments. Julie started her career in human resources outsourcing, establishing shared service centers for a national benefits consulting and administration firm. She is a well-published thought leader in her field.