Workforce management and human capital management technology and services provider Ultimate Kronos Group (UKG) recently held its annual UKG Connections client conference in Las Vegas, Nevada, marking the return to an in-person event after a hiatus since 2019. The hybrid event was well attended with more than 1,600 in-person attendees and 1,200 virtual attendees.
The conference kicked off with UKG President Chris Todd confirming a ransomware incident the weekend prior that affected a small subset of the company’s workforce management clients. The incident impacted clients using its legacy applications hosted on the Kronos Private Cloud, including Workforce Central SaaS, TeleStaff, Healthcare Extensions and UKG Scheduling/Workforce Management for Banks (formerly called FMSI/Kronos for Banking Solutions). Its flagship products, including UKG Pro, UKG Workforce Ready and UKG Dimensions, were unaffected. He confirmed that UKG is actively communicating and working closely with its clients and deploying all available options to support them during the outage. (UKG is publishing regular updates at www.ukg.com/KPCupdates to keep clients informed.)
The conference and its recent ransomware challenges followed its first anniversary as a newly branded company on October 1, 2021, which marked its continued upward trajectory with double-digit growth year over year in fiscal year 2021 and a client revenue retention rate in the mid-ninety percentile across its more than 50,000 clients around the world.
UKG estimates it has completed around 40% of the process of integrating the two formerly separate technology firms Ultimate Software and Kronos Incorporated, confirming that it is fully staffed from a leadership perspective and is now focused on the task of executing operationally. With the recent acquisition of Great Places to Work (GPTW) added to the fold, UKG is also underway synergizing and harmonizing the valuable culture insights, benchmarks, and leadership experience GPTW brings into the capabilities of its human capital management (HCM) and workforce management (WFM) products.
Although the UKG Connections conference did not include a major product launch, the company’s November 2021 release featured a new digital payment and financial wellness solution, UKG Wallet, and TouchFree ID added to the DX Timeclock, for touchless time punching with facial-scan capability. UKG also introduced expanded analytic insights for both the UKG Pro and UKG Ready HCM platforms. Examples include UKG Pro Workforce Continuity for employee well-being and operational insights and decision-making, and sentiment analysis for UKG Ready recruiting to surface key characteristics of high performers and extract feedback trends during the interview process.
HCM and WFM Platforms Converging to Support the Workplace of the Future
To advance its innovation and Life-work Technology™ vision, UKG has dedicated approximately $600 million toward product development for fiscal year 2022. This investment will fuel a roadmap of solutions for the coming year and beyond, which will bring its WFM and HCM solutions closer together and enable further solutions designed to enhance adaptability, flexibility and enable deep personalization throughout the employee journey.
UKG is also committed to helping its clients become “great places to work.” Consequently, it is pairing its knowledge and best practices for building an award-winning, inclusive culture with the data, insights, and benchmarks from GPTW. By leveraging these rich insights in concert with AI, its HCM and WFM products will enable deep predictors and insights, nudging employees and leaders along their life-work journeys. Its roadmap will continue to feature expanded analytic tools that enable employers to build fair and inclusive cultures by removing bias, identifying inequities, and gathering employee feedback across the HR spectrum to drive continuous, data-driven improvements.
Its roadmap includes plans to deepen its talent management capability, including a new recruiting campaign tool for candidate management and engagement, a new position automation capability that aligns a position, person and job for complete organizational views and insights, and a new career designer, which empowers employees to track and achieve personal career goals.
On the tactical side, UKG is working on a new marketplace for shift work, which will provide employees with a community-style approach to swapping and covering work shifts, at scale, in contrast to existing employee-to-employee direct requests. The company is also working to improve its proactive payroll error identification, leveraging AI to identify errors before they occur through "smart pay analytics" that include notifications on potential issues ― a capability it plans to scale to other processes and modules in the long term.
Accelerating its innovation and product adoption are both key focus areas that could be fueled in 2022 by further acquisitions. UKG is in a sound financial position and has a track record for executing well on acquired firms that bring a swath of new clients, typically those operating on legacy technology, which it has had success in converting to its flagship HCM and WFM platforms.
Furthermore, UKG is accelerating investments in its partner ecosystem to grow and expand its reach geographically, particularly in Europe, Australia and New Zealand. It is also scaling its headcount in these regions to target local clients and support its growth and presence. With work from anywhere becoming the new normal, firms of all sizes are seeking support for multi-country payroll. UKG is actively working on its global payroll offerings and options, where global partners look to play a key role, although an acquisition is not ruled out as a possibility.
The Outlook for UKG
UKG is focused strategically on realizing a growth target of $4 billion in total revenues and $1 billion in operating earnings by fiscal year 2024. It aims to achieve this by advancing toward a fully integrated, highly mature, globally enabled WFM and HCM solution, which continues to evolve and is resonating well with buyers across sectors, particularly as the platforms and their data inch closer together across modules.
As UKG heads into 2022, it is experiencing a strong growth momentum that is proving the value of its combined WFM and HCM offering as a differentiated capability among its peers. Its offering is already delivering impactful results and ROI for several large enterprise adopters, particularly those leveraging its combined payroll and WFM solutions.
UKG is well-positioned to gain further traction upmarket with larger buyers, particularly as it achieves the full infusion of GPTW insights into and across its technology and modules. As firms increasingly seek solutions that can enhance and promote diversity, inclusion, equity and belonging in their organizations, UKG stands out among its peers in its ability to bring deep insights and tried and proven practices, enabled by a single modern technology platform. As an example, the company recently announced a multi-million-dollar initiative called the “UKG Close the Gap Initiative.” Through the program, UKG aims to increase awareness and action to address the current gender pay gap within the workforce. The initiative will fund multiple programs, research, education and non-profits all centered on addressing pay equity challenges.
At the same time, the recent ransomware challenge is likely to create a bumpy road ahead for UKG (at least in the near-term quarters), where it will certainly see a tougher competitive environment as it works to restore client and market confidence in the security of its applications. Given its long-standing credibility as an innovative technology provider with strong financial health and a steady commitment to its client base, UKG is expected to weather the storm and return to its pre-incident growth trajectory. Clients I spoke to at the conference attested to the confidence they have in UKG and their appreciation for its “partner for life” approach to client relationships and experience.
ISG Provider Lens HR Research
ISG helps companies navigate the rapidly evolving human capital management technology and services marketplace through research-driven advisory and insights. Further details of the ISG Provider Lens annual research plan can be found here which features an expanded HR research set in 2022 including dedicated studies for payroll solutions and services, HR outsourcing and transformation services, and HCM platform technology.