ADP buys Employease: on-demand completes the circle

For more than half a century, ADP has been delivering automated payroll processing as a service. For over a decade, Employease has been one of the leading pioneers of automated business applications as a service, specializing in employee administration. So yesterday's acquisition of Employease by ADP completes a circle, fusing payroll bureau style of service provision with today's on-demand SaaS style of service provision.

I suspect ADP has never really seen much of a difference between the two forms of service provision. Certainly the company has been offering some of its payroll processing solutions as an on-demand SaaS service to the small business sector since about 1999, so it's not exactly a new entrant to the SaaS world. It's had a sales and marketing alliance with travel and expense management vendor Concur for several years, and struck a co-branding partnership with Employease in March 2004 (Employease co-founder and VP of marketing Mike Seckler told me in an interview in February this year that the ADP partnership was "A big deal for our organization." No kidding).

What's different now is that ADP has made this move having established that there's a growing market demand among its larger customers. The partnership was with the Major Accounts division of ADP and that's the unit that the SaaS provider will be folded into. So here's another indication that SaaS and on-demand applications are moving mainstream.

But there's another factor too: the blurring of business services with application services. ADP is not a software vendor, even though it uses a lot of software and computer power to run its service offerings. No one ought to start calling ADP a software-as-a-service vendor as a result of this acquisition. It hasn't become a software vendor, it's merely extending into new areas of automated business services — and that's what the on-demand revolution is really about — using software to do a better job of operating automated business services.