{"id":482,"date":"2006-06-27T01:00:21","date_gmt":"2006-06-27T09:00:21","guid":{"rendered":"https:\/\/systematichr.com\/?p=482"},"modified":"2006-06-26T22:33:50","modified_gmt":"2006-06-27T06:33:50","slug":"shake-up-at-hewitt","status":"publish","type":"post","link":"https:\/\/systematichr.com\/?p=482","title":{"rendered":"Shake up at Hewitt"},"content":{"rendered":"

The rumors have been around in the market for some time now, but this past week it showed up in print:<\/a>\u00a0<\/p>\n

What does surprise Pramuk and other experts, however, is that Hewitt doesn’t have a successor in place for Salvino. “That certainly could be hinting at a sale of its HRO business,” he says.<\/em><\/p>\n

Marc Pramuk, v.p. of research at Everest Group, was referring to the announced departure of Michael Salvino, co-leader of Hewitt Associates’ HR outsourcing sales and accounts group.\u00a0 The quote appears in an article on workforce.com<\/a> by Jessica Marquez.\u00a0 The announcement comes on the heels of the announced resignations of Hewitt\u2019s CEO Dale Gifford and Bryan Doyle<\/a>, president of the HR outsourcing business.<\/p>\n

By any standards, the three departures signal a major shakeup at the recognized leader in total benefits administration and major player in the HRO market only two years after the merger of Hewitt and Exult was announced.\u00a0 At the time of the announcement, the merger was regarded as nothing short of a defining moment in the history of HRO.\u00a0 HRO Today magazine<\/a> had this to say at the time:<\/p>\n

\u201cFor prospective HRO buyers, Hewitt\u2019s acquisition of Exult makes convincing management to endorse HRO a much easier task with a combined Hewitt\/Exult HRO business, than it was to select either separately. And as a combined entity, the new company represents a much more formidable competitor than they previously did.\u201d<\/p>\n

And only one year ago<\/a>, Brian Doyle had this to say:\u00a0<\/p>\n

\u201cI don’t think HRO really took off until Hewitt and Exult merged. \u00a0I think before then, we were only seeing some early adopters and a steady but lumpy increase of HR BPO deals, that was certainly the case in 2004. In 2005, we’ve seen a significant uptake in the number of deals.\u201d<\/p>\n

And now, while the marriage is still intact, the honeymoon is clearly over.\u00a0 While the union may yet last longer than a typical Hollywood wedding, if the paparazzi could stalk companies, they\u2019d be all over this relationship.\u00a0 I haven\u2019t seen the Las Vegas line, but put the over\/under at 18 months and take the under.\u00a0<\/p>\n

When the merger first took place it appeared to be the perfect marriage.\u00a0 Hewitt was regarded as the gold standard in benefits outsourcing; setting the paradigm in how total benefits administration was delivered.\u00a0 Over time, they were offering more and more outsourcing of HR programs such as service award administration and employee discount programs.<\/p>\n

Exult on the other hand had the most mature of the practices and model of BPO for HR.\u00a0 Hewitt would be able to expand its brand into broad HR outsourcing and gain significant market share.\u00a0<\/p>\n

The orders started pouring in!\u00a0 It would appear, however that the orders came in too fast as the linked articles on workforce.com suggest.\u00a0 Reportedly (and allegedly) implementation became more and more difficult, and now, perhaps Hewitt isn\u2019t competing effectively for the current HRO opportunities.<\/p>\n

The rumors had been that Hewitt might be looking to jettison the HRO business, and that Accenture would be the taker.\u00a0 This last article brings ADP and Fidelity into the mix.\u00a0 The thinking is that another major market player will have better luck in turning the Exult HRO model to profitability.\u00a0 If Hewitt couldn\u2019t turn a profit with it, however, I don\u2019t think ADP or Fidelity could either.<\/p>\n

Hewitt was the best at turning administration into profitability.\u00a0 Fidelity and ADP are the best at turning high volume transaction processing into profit.\u00a0 The real problem, in my opinion, is that HRO, or BPO for HR is neither solely administration nor high volume transaction processing.\u00a0 When Hewitt offered services outside of its core model, the troubles began.\u00a0 Now, it is hard to tell what the model is.\u00a0 Is it HRO based on Cyborg?\u00a0 Is it a lift and shift of your PeopleSoft or SAP platform?\u00a0 Is it a one to many or a one off model?\u00a0<\/p>\n

Mike Hager<\/a>, of Hager Strategic, defines HRO<\/a> as. \u201cTransformational outsourcing where the client\u2019s existing systems and processes are completely replaced by the vendor who migrates all HR processes currently being supported by HR internally, to the vendor\u2019s proprietary technology and service platform.\u201d\u00a0 The market seems to be defining it differently these days, but that was always Hewitt\u2019 strength.\u00a0 It\u2019s what it got away from with the Exult model.<\/p>\n

Defining its model for the future is the question that will need to be answered by the new leadership as Hewitt tries to respond to shareholder demands.\u00a0 In the meantime, the market needs to answer the question of how BPO applies in the HR space.\u00a0 Can it be a profitable service offering for the providers thereby providing clients with a stable, efficient, quality, and risk mitigated alternative or will it evolve into something totally different in the years to come?\u00a0<\/p>\n

In the final analysis, we may very well see that the Hewitt-Exult merger did indeed change the way the market views HRO, but not in the way in which people may have thought only one year ago.<\/p>\n

About the author \u2013 Donald Glade is President and Founder of Sourcing Analytics, Inc.<\/a>, an independent consulting firm specializing in helping companies optimize their <\/em>HR<\/em> \/ benefits \/ payroll service partnerships through relationship management, financial analysis, and process improvement.<\/em>
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The rumors have been around in the market for some time now, but this past week it showed up in print:\u00a0 What does surprise Pramuk and other experts, however, is that Hewitt doesn’t have a successor in place for Salvino….<\/p>\n","protected":false},"author":5,"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":[6,17,22,31,3],"tags":[],"class_list":["post-482","post","type-post","status-publish","format-standard","hentry","category-hewitt","category-hro","category-industry-news","category-outsourcing","category-vendors"],"_links":{"self":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts\/482","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\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=482"}],"version-history":[{"count":0,"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts\/482\/revisions"}],"wp:attachment":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}