ADP Shakes Things Up

The news that ADP Employer Services recently acquired VirtualEdge Corporation is being received well by customers and consultants alike. This deal is being regarded as a good fit for both companies, and is recognized as a move toward a recruiting world with comprehensive talent-management suites.

Current VirtualEdge customer Trudy Knoepke-Campbell, the director of workforce planning at HealthEast Care System in Minnesota, says she and her staff are weeks away from the launch of a non-paper applicant tracking system. The healthcare system employs approximately 7,000 people in four St. Paul-area hospitals, clinics, and other locations.

“I don’t know what VirtualEdge will look like in the future and in terms of personnel, but I have been wondering when some of the bigger people would just purchase one of the niche vendors for the recruitment vendors. Now ADP has done just that,” says Knoepke-Campbell.

“Between ADP and last week’s BrassRing news, it’s really shaking up now. We’ve seen two now in less than a week,” she notes. “We?re looking forward to what comes out of this for us as a customer and to see where this may support us as an organization.”

Recruiting Expertise

“This is arguably one of the top-five products on the market,” says Rick Fletcher, president of HRchitect. “ADP has a great sales team, but what they do not have are domain experts. VirtualEdge brings to them a large group of domain experts who understand recruiting. They bought a great think-tank of an organization that truly understands recruiting. We haven’t seen that in ADP before,” says Fletcher.

Indeed, ADP said this acquisition will enhance product offerings for mid-market, large and global organizations through an expanded lineup of pre-employment services recruiting and vendor management tools. The company recently formed the Pre-Employment Services group to focus on the resource hiring needs of its clients and said this acquisition is part of its commitment to the pre-employment marketplace.

Hourly Bonus

The company said it will integrate VirtualEdge into ADP’s Enterprise HR solution, serving national clients with 1,000 or more employees, and ADP GlobalView products, which serve ADP multinational and international clients.

ADP’s hourly system, Odyssey, which competes with Unicru’s Kronos, counts Sears, Safeway, and Rent-A-Center and a handful of other companies as clients. However, Fletcher says that with fewer than a dozen clients, only a minority of ADP’s 570,000 clients, such as large retail, restaurant and hotel clients, would ever see a fit with Odyssey.

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“VirtualEdge covers everyone else. ADP has not had an exempt recruiting system for the larger, 1,000-plus employee company. This puts them in the game. Odyssey is so invisible to the marketplace, and the acquisition of VirtualEdge will provide the side benefit of helping ADP increase the visibility and sales of their Odyssey hourly product,” he says. “We see a one-plus-one-equals-three impact on sales revenue.”

“ADP needed an exempt recruitment system sibling, and it’s going to get a nice return-on-investment on the Odyssey product. It’s now a comprehensive recruiting solution. Unicru needs an exempt sibling now, too. Kenexa and ADP have one-upped Kronos with these acquisitions. These make more sense than Kronos’ acquisition of Unicru because of the comprehensiveness of the product platforms.”

Further, Fletcher notes that there are too many suppliers for the current marketplace, suggesting that the current buyers’ market has driven the prices down.

“We knew somebody would grab VirtualEdge. I predict everyone is moving toward talent-management suites. One of the gems out there is ICIMS and is another good takeover candidate. ICIMS is primarily an exempt product for the upper mid-market buyer, and it is a solid product. Likewise, Deploy handles hourly and exempt. HR Smart is another possibility. These three companies are the most susceptible because they offer good recurring revenue; I think someone is going to grab them up soon.”

He predicts that in five years, the community will only have a handful of vendors who provide basic HR systems. Though a handful of talent-acquisition vendors will remain, he thinks they will be primarily aimed at the mid-market versus the upper market.

“There are bound to be a couple of independent recruiting vendors left by themselves, but you won’t find them going after that large market. It’s a natural consolidation of the marketplace,” Fletcher adds.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.

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