{"id":241,"date":"2006-01-04T01:00:35","date_gmt":"2006-01-04T09:00:35","guid":{"rendered":"https:\/\/systematichr.com\/?p=241"},"modified":"2006-07-17T11:07:43","modified_gmt":"2006-07-17T19:07:43","slug":"adp-benefit-tco-study","status":"publish","type":"post","link":"https:\/\/systematichr.com\/?p=241","title":{"rendered":"ADP Benefit TCO study"},"content":{"rendered":"<p><a href=\"http:\/\/biz.yahoo.com\/iw\/051219\/0104415.html\">ADP\u2019s benefit TCO study<\/a> presented some very interesting numbers as well as a few questions:<\/p>\n<p>First, I\u2019m not at all surprised that outsourced benefit administration is less costly from a TCO (total cost of ownership) measure than in-house benefit admin. However, let\u2019s look at some of the unspoken assumptions in the survey:<\/p>\n<ul>\n<li>The average size of the employer surveyed was 5700 employees ((<br \/>\nSourcing Analytics, December 2005. &#8220;Benefits Administration &#8211; The Impact of Outsourcing on the Total Cost of Ownership.&#8221; Page 4.)). I\u2019m guessing that the largest client in the survey may have been around 20-25,000 employees or smaller. I\u2019m also thinking that a company of 25K employees is significantly outside the standard deviation for company size. Most employers surveyed were probably in the 2000 to 10,000 employee range. If you are in this employer size (I\u2019m going to call it mid-market if that\u2019s ok), there really isn\u2019t much sense in having large benefit administration organizations.<\/li>\n<li>Sourcing Analytics found an even greater savings when the benefits call center was outsourced. ((Ibid. Page 5.)) Again, this is not much of a surprise. At the mid market employer, having a call center in-house (or even a person or two dedicated to answer the phones) in not sensible. <!--more-->Outsourcers can scale much better than a mid market employer.<\/li>\n<li>We really need to look closely at what TCO does not tell us: the effectiveness of the benefits staff after outsourcing. Does a mid-market employer really have the benefits expertise to negotiate premium rates, commission fees, etc? Even the largest organizations lean on the major HR consulting firms for these cost reductions. What I\u2019m saying here is that a mid market employer who effectively utilizes a good benefits consulting firm may achieve similar cost reduction in their TCO without moving in-house. However, most mid-market employers have not realized the cost\/benefit of these firms. I am also saying that the mid-market broker\/consultant does not have the expertise to return the type of ROI that Mercer, TP, WW can. <a href=\"http:\/\/www.benefitnews.com\/supplemental\/detail.cfm?id=7418\">Here<\/a>&#8216;s another resource on this.<\/li>\n<\/ul>\n<p>I\u2019m certainly not criticizing the survey or the survey results. The results are intuitive and make sense. However, it\u2019s clear who the target of the survey is \u2013 ADP\u2019s sweet spot mid-market. I\u2019m also advocating a two pronged approach to reducing benefit TCO:<\/p>\n<ul>\n<li>If outsourcing makes sense, outsource.<\/li>\n<li>But don\u2019t forget the value a real benefits consulting firm can bring to the bottom line.<\/li>\n<\/ul>\n<p>I\u2019d also like to point out a few other things that are in the survey:<\/p>\n<ul>\n<li>Service levels are predictable given that you chose the right vendor. ((Ibid. Page 8.))<\/li>\n<li>\u201cWeb based services\u201d (benefit self service) was 18 times more likely for ADP clients than in-house clients. This is only reflective of the size of employers in the survey. ((Ibid. Page 8.))<\/li>\n<li>Cost of SOx compliance is significant. The survey correctly points it out and the fact should not be minimized. If your outsourcer can get you out of an audit or two, this is a huge selling point. ((Ibid. Page 9.))<\/li>\n<\/ul>\n<p>http:\/\/biz.yahoo.com\/iw\/051219\/0104415.html<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ADP\u2019s benefit TCO study presented some very interesting numbers as well as a few questions: First, I\u2019m not at all surprised that outsourced benefit administration is less costly from a TCO (total cost of ownership) measure than in-house benefit admin&#8230;.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[5,24,33,31,35],"tags":[],"class_list":["post-241","post","type-post","status-publish","format-standard","hentry","category-adp","category-benefits-management","category-finance","category-outsourcing","category-tco"],"_links":{"self":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts\/241","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=241"}],"version-history":[{"count":0,"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts\/241\/revisions"}],"wp:attachment":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=241"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=241"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=241"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}