In the space of seven months, new childcare industry player Affinity Education Group incorporated, completed an IPO on the Australian Stock Exchange, and acquired 57 childcare centres. Getting the right systems in place was not only a necessity, it also had to happen fast. Freya Purnell reports.
The concept for Affinity Education Group was conceived in late 2012, when chairman Stewart James approached some business associates with the idea. But it wasn’t until May 2013 that the company was officially incorporated.
Affinity’s business strategy is to be a leader provider of high quality education and care for children aged six weeks to 12 years throughout Australia. Through the ownership and management of its centres, Affinity is focused on providing localised education programs and care solutions, while implementing the centralised management support functions and disciplines of a corporate entity.
From the time the company was incorporated, the clock was ticking. A number of childcare centres were identified as acquisition targets, with due diligence underway from May until the company was listed on the Australian Stock Exchange in early December, raising around $80 million.
John Bairstow, Affinity Education Group company secretary and chief financial officer, says it wasn’t until late September that they were sure the IPO was going to go ahead, as market confidence had improved.
At that time, the company was ready to get its IT infrastructure in place. As a completely new company, they were starting from scratch, and had limited capital to spend. Affinity appointed PwC to help it define its IT strategy.
“We have a tightly defined, focused business strategy that doesn’t include being technology experts, or owning technology assets,” Bairstow says. “We had to have a technology partner who could get on board quickly and support us particularly with payroll solutions that could be implemented quickly and cost-effectively.
“It became very clear very quickly that the cloud was the only way to go, in terms of our cost constraints and also our operating model and scalability, and the ability to bring new childcare centres into our system,” he says.
The challenge
The most critical requirement was to have a payroll system up and running once the company listed and acquisitions were completed, so that the company’s new employees could be paid before Christmas. Failure to do so would have been a terrible start for both investors in the company and for its new staff.
This involved consolidating 57 newly acquired childcare centres and more than 1500 staff onto a single cloud-based platform – within nine weeks. Some of the centres being acquired had their own disparate systems, while others had no systems at all.
Affinity chose Presence of IT (PoIT) and its SAP-based EC-Payroll solution ahead of other vendors including TechnologyOne, Microsoft and Oracle, because Affinity felt they could deliver the all-important basic system within the tight timeframe, and build on this framework later.
Implementation
PoIT’s EC-Payroll product is an enterprise-class Human Capital Management (HCM) solution, which combines the best components of SAP Payroll and SuccessFactors’ Employee Central. It also incorporates tools and accelerators developed by PoIT to ensure rapid implementation and streamline processing solutions.
Another challenge for the project was that it was actually the first implementation of the EC-Payroll solution globally, and so there were some “technical teething problems”, says Shaun Flannery, chief technology officer, PoIT.
“We had great support from SAP and SuccessFactors in resolving all those issues, and we managed to work through those in a very short timeframe,” says Flannery, adding that by the time some initial system issues were resolved, there were only six weeks until the project go-live date.
With 57 different centres all coming into the one system, collection of data was one of the business issues they faced during the implementation.
“The collection of accurate payroll data was a big challenge, and we had dedicated resources just to collect and massage that data to be able to put it into the system in the first place,” Flannery says. “They were starting a new company, but they didn’t really have any employees for HR and payroll, so we had to do a lot of training on the fly and the knowledge transfer was somewhat ad hoc.”
For its part, Affinity had to balance the implementation with everything else going on in the brand-new business.
“Not only were we putting in an IT system, we were raising funds on the ASX, and we were doing acquisitions at the same time. So what we needed was a team that could quickly communicate the decisions they needed us to make as management and what the issues were, and have the trust that they would take our instructions and go away and implement them,” Bairstow says, adding that this was where the PoIT team really came into their own. “It was a good partnership, with great communication between the two parties.”
In addition to EC-Payroll, Affinity has also implemented SAP Business ByDesign as its core system, as well as Office 365 and QikKids, which is a childcare industry standard tool for child details, attendance and rostering.
Beyond the deadline
The critical, defining metric for the project was whether Affinity would be ready to begin to pay their staff on 11 December.
As a preconfigured out-of-the-box solution with a good fit for Affinity’s requirements, Flannery was confident that EC-Payroll could deliver the goods in the timeframe.
But looking beyond the immediate deadline, the opportunity to scale the solution in the future to handle several thousand employees and also to enable mobile workforce management were important factors in its selection.
“The scalability of the product really suited Affinity because they are starting off small but they are going to grow and bring on more childcare centres. They needed a tier one product to be able to do that,” Flannery says. “The fact that we integrated with workforce management and rostering systems was also a factor as well.
“As the Affinity business gets more mature in that area, and they get some breathing space, I think they will bring those extra elements on.”
The need for speed
With a sub 10-week implementation perhaps regarded as the impossible dream by some, Flannery says there were a number of contributing factors to their success in delivering on time.
One was that EC-Payroll is designed to be ready to run, and has a fast-track methodology attached to it.
The absolute backing of the Affinity leadership was another.
“They made decisions very quickly, and that allowed us to get on with our job of getting the system in, rather than waiting two or three days or longer for answers,” Flannery says.
“What also helped was having the team that was actually going to do the work at the proposal meeting as well, so they knew exactly how hard they had to hit the ground. But we weren’t constrained by legacy processes, everything was new to us, so it was really easy for us to make those decisions quickly,” Bairstow says.
Keeping the scope tightly controlled was also critical, and with both the project team and business very clear on the timeframes – and the consequences of missing that all-important deadline – there was a shared understanding about getting the system in initially and looking at other benefits that could be achieved in subsequent phases of the project.
Business benefits
Getting all of Affinity’s staff onto one cloud-based payroll system on time and on budget was a critical milestone.
In addition to the 57 centres the company now owns and operates across Queensland, New South Wales, Victoria and the Northern Territory, Affinity also manages a further 11 centres – and it is looking to grow.
Bairstow says the consolidated information provided by the systems will help it keep a close eye on the performance of the centres, and be able to react quickly. The scalability of the system will also allow Affinity to expand its functionality, as well as bring new centres into its cloud infrastructure.
“As long as the centres have an internet connection, it is straightforward,” he says.
Flannery says successfully implementing a full payroll system in such a short timeframe now sets the bar high.
“It becomes a new paradigm for some of the more traditional payroll systems out there, because no longer can businesses afford to have six- to nine-month implementation timeframes. Moving to the cloud, we need to be able to move quickly, and this is the proof that we can do it, if the partnership is right with the business.”
