Does ‘All in One’ HR Live Up to the Hype?
Trinet. Zenefits. Namely. Gusto. The HR tech space keeps heating up, with a seemingly insatiable appetite for platforms that take care of everything HR — from on-boarding and payroll to benefits administration.
So when does “All in One” (AIO) make sense as a company, and who ultimately benefits? The last few years have seen a huge spike in AIO SaaS companies entering the HR space. Some, like Zenefits, flew too close to the sun and got out of their comfort zone. They retrenched — targeting companies below 100.
Under 100 employees: The AIO Sweet Spot
At this size, HR teams are at the bottom of their hierarchy of HR needs, companies are really just trying to get off the ground. Administrative functions are handled by founder, co-founders and office managers/recruiters. It’s not typical to have an HR generalist until a company crosses 50 full-time employees.
In the old days, pre-Zenefits, companies called Professional Employer Organizations (or PEOs) pooled small companies together to offer better rates on health plans, eventually bolting on other HR services, including payroll. Today, this ecosystem is thriving and highly competitive.
Sweet turns Sour over 100
Where does this model break down? Arguably, the market for <100 employee companies is massive. According to the Huffington Post, over 99 percent of employing organizations are small businesses and more than 95 percent of these businesses have fewer than 10 employees.
But as companies get larger, priorities change. No longer is it ‘just scrape by and survive’. The next focus is to evolve both the administrative workflows and processes as well as the benefits program.
For HR and Payroll — the main questions come down to the following:
- What use cases does my payroll need to be able to support to get my organization to the next level? (multi-state, international, handling eligibility, etc)
- How do our processes efficiently scale?
- Finally, in an era of rising costs, the question inevitably comes down to this: “What are the best benefits I can get for each corporate dollar spent?”
ADP, Workday, Oracle — they all exist in this larger ecosystem where company policies are more sophisticated and processes are more intertwined.
Why can’t All-in-One scale beyond this size?
- It’s no longer about just unifying a simple workflow.
- Some vendors in this space start feature-creeping, building on system architectures that were designed for more simple use cases.
- Tech doesn’t solve HR. Period. At some point, it’s not just automation — it’s about advisory, compliance, strategy — aspects of systems building that are anathema to pure SaaS plays looking at managing overhead.
- The definition of ‘customer success’ in tech usually falls into software utilization, not core benefits competency.
With the retrenchment of Zenefits away from companies larger than 100, other AIO companies have stepped in to fill the gap. While these companies offers great software features, the same issue remains — their entire business model is predicated on feature selling, and their feature list is long — and growing.
What gets left by the wayside? Better Benefits.
The future of Better Benefits is human, data and technology
Better Benefits require careful analysis, an understanding of company culture, and most importantly, a commitment to helping the customer achieve their benefits goals as they scale. It’s what many traditional brokers have traditionally done well. But they lacked the technology to truly solve the workflow problems that kept HR in the untenable position of having to sit between benefits and technology.
Better benefits necessarily needs to evolve to ensure the solution sits at the intersection of technology, a data-driven benefits program, HR and a benefits adviser that can truly partner to bring this together. Human expertise, insights and technology together can achieve the ultimate goal of freeing HR to focus on forward-looking strategy.
Welcome to Lumity. We look forward to helping you achieve better benefits.