Smaller businesses are usually preoccupied with what it takes to grow the business and keep the lights on—getting customers in the door, generating more revenue and maintaining profitability (Figure 1). Business growth and profitability are still extremely important priorities as companies grow, but other challenges arise. Workforce-related issues, such as improving employee productivity, meeting compliance regulations, and making it easier for employees to collaborate start to become more important. However, as business gets more complicated, spreadsheets, point solutions and workarounds that got the job done when the business was smaller are no longer up to the tasks of recruiting, hiring, managing and retaining the people the business needs to grow.
Figure 1: Top Business Challenges for Small and Medium Businesses
In 2012, Kronos, a long-time leader in enterprise workforce and human capital management with its Workforce Central solution, acquired SaaShr, which it rebranded as Workforce Ready. Workforce Ready provides a cloud-based, integrated workforce management solution designed specifically for SMBs (Figure 2), enabling Kronos to broaden its market reach. At KronosWorks 2016, held in Orlando in November, Kronos provided us with an update on how Workforce Ready has evolved and where it’s headed.
Figure 2: Kronos Workforce Ready Platform
Integrated Workforce and Human Capital Management for SMBs
Kronos has continued to add new functionality to Workforce Ready since the SaaShr acquisition. In its most recent refresh, Kronos has taken a page from the consumer apps world, streamlining Workforce Ready navigation with simplicity and visual navigation to make it easier to use. The latest version includes “hot action bars,” to ensure workflow paths are consistent across Workforce Ready modules, and more intuitive for users. And, the vendor has upgraded dashboards and personalization features so users can do things more quickly through action buttons and icons instead of via pop-up menus.
Kronos has also enhanced employee self-service in areas inclduding employee on boarding, benefits management and performance management; and added the capability to mass populate Affordable Care Act (ACA) and 1095-C forms.
Supporting Workforce Ready’s commitment to help companies manage hourly wage earners, Kronos has also updated timekeeping and scheduling features, such as alerts that notify managers of employees’ scheduling preference changes.
Pricing starts at $23 per employee per month for all Workforce Ready modules, and at $5 per employee per month for Human Resources as a standalone module. Kronos also charges a fixed implementation fee, based on the number of employees and the number of modules the customer purchases.
Workforce Ready Customer Growth
At KronosWorks, Kronos reported that about 1 million users now use the Workforce Ready platform, and that it wins against the competition in more than 50% of the deals in which it is considered. In addition, Workforce Ready has:
- Grown it’s customer base 45% over the past twelve months.
- Enjoyed a 48% increase in customers selecting full-suite adoption (including recruiting and on boarding, performance and compensation management, benefits administration, time and attendance, and payroll).
- Increased international customer adoption 110% in the last year (Kronos currently sells Workforce Ready in Australia, Canada, parts of continental Europe, Mexico, the U.K., and New Zealand, in addition to the U.S.
- Achieved a 93% customer retention rate.
Drivers for Integrated Workforce Management
SMBs are turning to Workforce Ready when they reach a point where trying to consolidate and reconcile data from spreadsheets, point solutions and manual systems doesn’t work anymore. The manual effort required with this approach becomes too tedious and time-consuming, and redundant data entry results in too many errors. As important, siloed employee information makes it difficult for decision-makers to see what’s going on in the workforce, and take proactive measures to improve key performance metrics, such as reducing labor costs, improving employee productivity, increasing compliance, or reducing IT overhead.
For example, SMB Group research shows that SMBs using Workforce Ready were able to reduce the time it took to compile management reports 50%-80%; decrease time to perform HR administrative tasks 25%-35%; and improve employee engagement 30%-50% (Figure 3).
Figure 3: Improving Employee Productivity
Kronos sells Workforce Ready through two different channel models. For businesses with fewer than 100 employees, Kronos continues to sell Workforce Ready through the reseller model that SaaShr had established prior to the acquisition. These partners, typically local payroll service bureaus, buy the solution from Kronos at wholesale pricing, add their own services and branding, and then sell it to their customers. Since the acquisition, Kronos has roughly doubled the number of partners for this market.
Meanwhile, Kronos’ direct inside sales team sells to larger organizations with more than 100 employees.
Summary and Perspective
Workforce Ready is now a $100 million a year business for Kronos, and the vendor believes that it has plenty of headroom to grow. SMB Group agrees. Fast growth start-ups will opt for an integrated approach out of the gate, and established SMBs will need to take a more integrated approach to HR to attract, retain and efficiently manage the talent they will need to compete and grow.
To that end, Kronos is investing both to improve the solution and expand sales channels. The vendor recently conducted a survey, which revealed that 75% of firms with 100-2500 employee firms only look at two or fewer vendors when considering workforce management and/or payroll solutions. Kronos will, of course, need to increase market awareness for Workforce Ready to get into consideration in more deals. Once it’s in those deals, Kronos believes that it has the right value proposition—e.g. an integrated workforce management and HCM solution—to continue to win a majority of those deals and grow.
In addition, Kronos has focused heavily on the value that Workforce Ready provides for managing hourly workers. These workers comprise the majority of the U.S. labor market (Figure 4), and Kronos has been able to differentiate in the HCM space with this focus, as most companies rely on a mix of hourly, salaried and 1099 independent contractors. However, Kronos will need to broaden its positioning to highlight how it can help SMBs to more effectively manage workers of all stripes in order to compete more effectively against HCM vendors, especially for business among fast-growth, start-up companies that tend to have a higher percentage of salaried workers.
Figure 4: U.S. Hourly vs. Salaried Workers
Kronos’ pricing is competitive, and less expensive than vendors such as Ceridian and Workday, which should also help its cause. But, as Kronos readily acknowledges, building market awareness for Workforce Ready, and educating SMBs on the benefits of an integrated approach are probably the biggest hurdles it faces to achieving its goal.
And, although Kronos has done a good job in growing its private label reseller program for the sub-100 employee business market, the HR software vendor list is growing quickly. Many startups, such as Namely, Cezanne, Justworks and others have entered the fray in the last couple of years. Kronos will need to double down on usability to stay ahead of startups moving in on the low-end.
Note: Kronos is an SMB Group client, and paid my travel expenses to KronosWorks.