HR/payroll technology specialist and SAP partner Presence of IT has been quietly building a solid customer base over the last 14 years. Now, the potential offered by cloud models and a new, world-first cloud solution is accelerating the company’s growth. Freya Purnell reports.

As a consultancy, Presence of IT was always ahead of its time – establishing a specialisation in the HR/payroll arena, at a time when most companies were trying to be all things to all clients.

CEO David Brookes says they initially set out to be productagnostic, instead focusing on helping clients to get the best from their processes and their business. Another unique aspect of the company’s approach was that in its own internal structure and culture, there was a focus on sharing information that could then be used with clients in an open, collaborative way.

“Part of our model was to attract the best people in the marketplace to become specialists. People naturally were attracted to us because we had a very dynamic organisation,” Brookes says.

Faced with a need to significantly change business processes around HR and payroll, clients were also attracted by this openness, driving strong growth for Presence of IT. Now generating just over $70 million in revenue each year, 85 per
cent of that comes from the existing install base, year on year.

“Obviously a significant component of our business is to make sure we know what the clients want and therefore deliver it for them. But with cloud coming along, the dynamic is changing quite significantly,” Brookes says. “We still want to retain the trusted adviser space, but the reality of cloud-based computing is that clients no longer buy software and do implementations in the traditional way. What they now do is buy a platform, and that platform has to be implemented with the same rigour to ensure they get the value out of it.”

The company recognised this shift around four years ago, and when SAP acquired SuccessFactors, they realised that the time had come for change. Since then they have become a SuccessFactors premier partner, and have invested heavily in resourcing this area.

Developing a new platform

The next step, according to Brookes, was to talk to SuccessFactors about how they could move their 200 SAP HR and payroll clients into the cloud.

“There is an inevitability about that – SAP is investing in the cloud and is not going to necessarily invest as much in on-premise any more, so somewhere along the line, these guys have to migrate across. But the fundamental question was going to be around compliance with their payroll,” he says.

In a project spearheaded by CTO Shaun Flannery, Presence of IT then worked in collaboration with SuccessFactors, with its teams in Walldorf and San Francisco, to develop a proof of concept and then a new solution offering, called SuccessFactors Employee Central Payroll (or EC-Payroll).

It is the first-to-market integrated cloud-based solution that delivers SuccessFactors human capital management applications as a single payroll cloud platform from SAP.

It will allow existing customers to move their systems into the cloud without reimplementing.

“The EC-Payroll allows existing customers that have spent all that money and innovation in the past to take that configuration and their systems to migrate across into the cloud. They will get the new functionality from SAP, and they will get all the efficiencies of cloud,” Brookes says.

Presence of IT has also drawn on its long track record of successful implementations to create its Fast Track methodology, which will enable new clients to get up and running on EC-Payroll very quickly.

“We estimate somewhere in the range of 40 to 60 per cent savings on traditional implementations,” Brookes says.

Positioning for the next phase of growth

The move into this space also represents a shift for the company, as it adjusts to the new enterprise technology world and positions for the next phase of growth.

“The relationship sell is fantastic for building a large client base and a company and a reputation,” Brookes says. “But there is a fundamental piece that we missed – the fact that SAP had changed, our market had changed, and the reality is we need a sales capability that supports our delivery capability in order to be relevant to those clients.”

Fortunately, he says, Presence of IT has always had the capability for innovation.

“In order to be a specialist, you have to add value. You can’t just repeat what’s already out there, and we have always had it in our DNA to build products and solutions. We have taken all that innovation and all those process efficiencies and reports and other aspects, and we have bundled them together in the EC-Payroll solution,” Brookes says.

The company has also made a key hire to assist in their next phase, snapping up former SAP ANZ COO Shane Grobler, who joined as director of business transformation and strategy.

Having come on board at the beginning of the year, Grobler says he was attracted to Presence of IT because of its specialisation.

“Presence of IT had got to that model before anybody else. It was so ahead of its time, just in terms of being focused,” Grobler says. “The time was right for them to change, to actually get more aligned from a sales point of view and a business process point of view. We’re not going to be an SAP lookalike, though we are going to be very aligned as far as possible, but we are going to be doing it our way.”

Roadmap to the cloud

Despite some early concerns about data security, customers are beginning to embrace the concept of the cloud because of the efficiencies and access to innovation it could offer.

One of the problems many face is that to ensure continuing compliance with payroll, customers must upgrade their entire systems every few years.

“What they want to do is simplify that, as they don’t necessarily want the business being driven by payroll compliance. They are not in the payroll business, they are in the people business,” Brookes says.

With vendors like SuccessFactors bringing more sophistication to areas such as HR performance management and recruitment, companies want an easier way to access this innovation.

“The reality is that organisations buying an HR system want an HR outcome, not necessarily a payroll outcome. That’s why clients are looking to SuccessFactors. Having payroll and HR separated was always going to be the issue, so bringing them together makes logical sense, and it also means customers are aligned to a product,” Brookes says.

In addition to the technology developments, employee expectations around how they relate to their employer around HR is also a strong driver towards the cloud.

“The reality is good people in organisations matter, and they want to make sure that those good people are well serviced.

Employees expect to be able to have access to data, and to do things online,” Brookes says. “There is a structural change in the channel in the HR community.”

Part of Presence of IT’s work with their clients over the last few years has been to initiate those cloud discussions, and work out a roadmap based on what they hope to achieve from a move to the cloud. Increasingly though, clients are actually taking the lead.

“We actively encourage our people to have that conversation, but we actually haven’t needed to,” Grobler says. “I doubt that there is any CIO or IT manager in Australia today who hasn’t thought about [the cloud], who hasn’t had a conversation about it, and isn’t considering how they do it and what the implications are.”

Indeed, Brookes predicts that within five years, most organisations will want to have their payroll in the cloud, operating on a subscription-based model.

“Large organisations with more than 500 employees will look to those efficiencies, where you need robust tier one solutions, while smaller organisations tend to be able to get away with minimal HR and payroll, and they might use tier two products. But large companies really need to get to grips with it and take advantage of their workforce.”

Setting the standard

Presence of IT has always placed high importance on its people, and has taken some perhaps unconventional steps to ensure it is truly focused on its clients – and a great place to work.

In addition to employee share plans and bonus structures tied to client success, the company has a flat structure.

“From day one, we have had an absolutely open structure.

Internally, we don’t have titles – we sometimes have external titles – but it adds to a very happy workplace. From the perspective of our culture, the least important person is probably me, and the most important people are my colleagues working with clients,” Brooke says.

The company is also very committed to encouraging collaboration.

“What we try to do is have our colleagues share information openly with each other, so that information becomes valuable to the marketplace – they don’t use the information in a hierarchical way to get promotion within the organisation. So people feel like they are growing. And when someone is on a project, they have 300 people behind them.”

Though Presence of IT is already 14 years old, Brookes feels that it is just coming of age, but he doesn’t cite any lofty headcount or revenue goals for the company’s next phase.

Instead, he looks forward to maintaining their momentum and reaping the rewards of helping their clients to transform with the help of new technology.

“If we can move those clients to a new space, and they become successful, that’s the objective. There will be a natural size and a natural reward out of working through that process.”

This article was originally published in Inside SAP Winter 2013.