NorthgateArinso - An evolving HR solution

Software markets are very fluid. A vendor that had a major competitive differentiator can suddenly find itself needing another. How many payroll service providers have morphed from being a major HR BPO provider to a solutions firm with BPaaS and options for global payroll in 110 countries? Will they need more?

NorthgateArinso (NGA)-Here's a company on track to have over $1 billion in revenues by 2014. NGA has roots in the British payroll service bureau firm Peterborough but has long since established itself as a major HR BPO. I tend to think of them as the only company to have made SAP's HCM product a multi-tenant SaaS solution. That technical feat is impressive but they went further and enhanced the SAP user interface and product functionality.

At an analyst briefing this year, the company introduced a concept called BPaaS: business process as a service. NGA sees the market for HR solutions evolving to a point where customers will need/want to deploy differing collections of HR capabilities and in differing intensities in different markets around the world. To that end, NGA has created euHReka Inclusion Framework, a cloud brokerage service that integrates different NGA (and other technologies) together in a relatively painless manner. NGA also has Moorepayhr, a BPaaS for small/medium enterprises in the United Kingdom, and, Securex, another small/medium enterprise BPaaS solution for companies that want a private, behind the firewall solution.

What would all of this connect to? Well, NGA has a number of solutions that global firms might want. Its SAP HCM solution is available in 58 countries (apparently, SAP's only does 52). They also have country specific solutions in Australia and other markets. And, they have, via agoHRa, a collection of best of breed payroll solutions in 52 other countries. That brings their global payroll support to 110 countries.



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NGA's evolution has gone from payroll service bureau, to HR BPO firm, to software firm and now to global HR services and software company. The BPaaS name, not necessarily the concept, may take some getting used to as every vendor seems to be creating some special "as-a-service" Marketing concept. The market is getting a bit saturated with these.

But, the evolution is an interesting one for a vendor that clearly gets its space/place. Global payroll is tough to do even for the largest software vendors. Whether it's a vendor, BPO provider or global corporation, payroll must be done. Alliances will likely rule in this space for many more years. The only risk to NGA is if the ERP/HR software marketplace consolidates to only a couple of vendors and these firms choose some other solution over NGA.

Product innovation, customer service and process excellence are areas of differentiation for businesses. They need to do at least one of them well to succeed in the market. NGA is interesting as it has had some home-runs with product innovation (e.g., their multi-tenant SAP HCM solution). They get the intricacies of process excellence, too. I don't have any data points re: their customer service but then again, I've not heard any negative feedback either.  I bring this up as the SAP acquisition of SuccessFactors (SFSF) now gives SAP a multi-tenant HR solution to compete with the multi-tenant HCM solution NGA produced.

Now, NGA should explore other areas of potential differentiation.  While BPaaS can give them some runway, I suspect they'll need more in time.  This next stage in their evolution will be one to watch.