The Total Economic Impact™

Of ADP Global Payroll

Increase Efficiency, Reduce The Burden Of Compliance,
Improve The Employee Experience and Become More
Agile With ADP Global Payroll
OCTOBER 2020

A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY ADP

Table of Contents Consulting Team: Christian Fischer
Ashleigh Cohen
Executive Summary .............................................. 1
The ADP Global Payroll Customer Journey......... 5
Key Challenges ................................................... 5
Composite Organisation ...................................... 6
Analysis of Benefits .............................................. 7
Compliance Cost Avoidance ................................ 7
Payroll-Process Efficiency Gain (Small Country on
Managed Service) ............................................... 8
Payroll-Process Efficiency Gain (Large Country on
Processing Service)............................................10
Improved Employee Retention ............................11
Direct Cost Avoidance (Legacy Solution) ............12
Payroll Reporting Efficiencies .............................12
Unquantified Benefits..........................................13
Flexibility ............................................................14
Analysis of Costs .................................................15
Implementation Costs (Large Country On
Processing Service)............................................15
Implementation Costs (Small Country On Managed
Service) ..............................................................16
Ongoing Fee (Yearly) .........................................18
Financial Summary ..............................................19
Appendix A: Total Economic Impact...................20
Appendix B: Supplemental Material ....................21
Appendix C: Endnotes .........................................21

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THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL

Executive Summary
Payroll is a key function for all organisations, but for large, international operations, the
process has become increasingly complex, requiring organisations to keep up with
changing regulations and local legislation, manage a variety of HR management
platforms and ensure pay is processed accurately and on time. By implementing ADP
Global Payroll, organisations can become more efficient, maintain regulatory compliance
at a lower cost, improve their employees’ experience and increase agility.

ADP Global Payroll is a scalable, unified platform that

streamlines payroll processes across an KEY STATISTICS

organisation’s international footprint and brings all

data into a single consolidated view. Improved
compliance and error reduction reduce costs and
improve the employee experience.

ADP commissioned Forrester Consulting to conduct Return on investment (ROI) Net present value (NPV)
a Total Economic Impact™ (TEI) study and examine
134% $3.4M
the potential return on investment (ROI) enterprises
may realise by deploying ADP Global Payroll. The
purpose of this study is to provide readers with a
framework to evaluate the potential financial impact employee experience (EX) and high fees related to
of ADP Global Payroll on their organisations. non-compliance.

To better understand the benefits, costs and risks After the investment in ADP Global Payroll, the
associated with this investment, Forrester interviewed customers gained a single unified global payroll
four customers with experience using ADP Global solution, fully integrated with their HR management
Payroll. For the purposes of this study, Forrester platforms. Key results from the investment included
aggregated the experiences of the interviewed increased efficiency, better compliance, improved EX
customers and combined the results into a single and increased agility due to quick access to more
composite organisation. accurate data.

Prior to using ADP Global Payroll, the customers

used different payroll products and services in
different countries. These products were not Total Payroll process
integrated with organisations’ HR management efficiency gain
platforms, resulting in multiple data sets and (large and small countries)
additional complexity in employee information
management. As a result, payroll staff spent a lot of $2.1M
time ensuring data was correct and up to date, in turn
leading to errors, inefficiencies, delays, a poor

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 1

 EXECUTIVE SUMMARY

KEY FINDINGS • Improved decision making from better data

Quantified benefits. Risk-adjusted present value access. While Forrester has included the value
(PV) quantified benefits include: of reduced reporting effort in the financial
analysis, it was not possible to quantify the
• Avoidance of compliance costs of $1.8M. The
additional benefits of having access to global
ADP platform enables organisations to better
payroll information. Leaders can access global
comply with rapidly changing local regulations
payroll information quickly and easily, enabling
and legislation, in turn helping them to reduce
them to make better informed decisions faster.
costly regulatory fees.
Essentially, this makes an organisation more
• Significant payroll efficiency gains. In small agile and able to adjust to changing industry
countries, ADP’s fully managed service reduces trends and market circumstances.
payroll effort by 75%. In large markets, ADP’s
• Improved EX. While Forrester quantified the
processing service reduces payroll effort by 30%.
value of improved employee retention, improved
Organisations avoid significant low-value manual
EX carries additional benefits, such as improved
effort and data input, freeing resources to focus
customer service, reduced absenteeism and
on higher-value tasks. Firms also avoid the cost
increased discretionary effort, which Forrester
of paying for the legacy payroll solution they had
could not quantify.
in place prior to their ADP investment.
• Increased flexibility to integrate future
markets. Another potential future benefit of the
'The ability to get globally consistent ADP Global Payroll solution is that organisations
and improved employee experience, can more easily integrate additional markets,
efficiency, cost savings and then a whether gained through acquisition or organic
data set to inform the business is
growth.
huge.'
Costs. Risk-adjusted PV costs include:
Senior Director, Global Payroll, Tax And
Mobility Services, Aerospace & Defence • Implementation fees and costs. These
comprise a fixed up-front fee, based on the local
footprint (by number of employees), as well as
• An improved employee experience, including
the internal resource effort required, typically
reduced payroll-related errors, resulting in
spanning payroll, HR, IT and project
improved staff retention. Even a very modest
management.
employee-retention impact has significant
benefits in terms of reducing recruitment and • Ongoing fees. Ongoing fees payable to ADP are
staff-onboarding costs. based on the number of employees and the
service level. The customer interviews and
• Reduced reporting effort due to unified global
financial analysis found that a composite
payroll data. Payroll reporting time significantly
organisation experiences benefits of $5.9M over
decreases, further freeing payroll employees’
three years versus costs of $2.5M, adding up to a
time for higher-value tasks and projects.
net present value (NPV) of $3.4M and an ROI of
Unquantified benefits. Benefits that are not 134%.
quantified for this study include:

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 2

 EXECUTIVE SUMMARY

ROI BENEFITS PV NPV PAYBACK

134% $5.9M $3.4M 12 months

Benefits (Three-Year)

Compliance cost avoidance $1.8M

Payroll-process efficiency gain (small country

$1.4M
on managed service)

Payroll-process efficiency gain (large country

$718.1K
on processing service)

Improved employee retention $951.0K

Direct cost avoidance (legacy solution) $822.5K

Payroll reporting efficiencies $147.3K

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 3

 EXECUTIVE SUMMARY

TEI FRAMEWORK AND METHODOLOGY

From the information provided in the interviews, DUE DILIGENCE
Forrester constructed a Total Economic Impact™ Interviewed ADP stakeholders and Forrester

framework for those organisations considering an analysts to gather data relative to ADP Global
investment in ADP Global Payroll. Payroll.

The objective of the framework is to identify the cost,

CUSTOMER INTERVIEWS
benefit, flexibility and risk factors that affect the Interviewed four decision makers at
investment decision. Forrester took a multi-step
organisations using ADP Global Payroll to
approach to evaluate the impact that ADP Global
obtain data with respect to costs, benefits and
Payroll can have on an organisation.
risks.

COMPOSITE ORGANISATION
Designed a composite organisation based on
characteristics of the interviewed organisations.

FINANCIAL MODEL FRAMEWORK

Constructed a financial model representative of
the interviews using the TEI methodology and
DISCLOSURES risk-adjusted the financial model based on
Readers should be aware of the following: issues and concerns of the interviewed
This study is commissioned by ADP and delivered by organisations.
Forrester Consulting. It is not meant to be used as a
competitive analysis. CASE STUDY
Forrester makes no assumptions as to the potential ROI
Employed four fundamental elements of TEI in
that other organisations will receive. Forrester strongly modelling the investment impact: benefits, costs,
advises that readers use their own estimates within the
flexibility and risks. Given the increasing
framework provided in the report to determine the
appropriateness of an investment in Global Payroll. sophistication of ROI analyses related to IT
investments, Forrester’s TEI methodology
ADP reviewed and provided feedback to Forrester, but
Forrester maintains editorial control over the study and its provides a complete picture of the total
findings and does not accept changes to the study that
economic impact of purchase decisions. Please
contradict Forrester’s findings or obscure the meaning of
the study. see Appendix A for additional information on the
TEI methodology.
ADP provided the customer names for the interviews but
did not participate in the interviews.

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 4

The ADP Global Payroll Customer Journey
Drivers leading to the Global Payroll investment

Interviewed Organisations

Industry Region Interviewee Number of Employees

Senior Director, Global payroll,
Aerospace and defence North America, APAC 160,000
tax and mobility services
Vice president, Global payroll
Technology and manufacturing EMEA, APAC, Americas 113,000
operations
Director, Global payroll
Banking and finance EMEA, APAC, Americas 90,000
governance
Executive Director, Global
Semiconductor manufacturing North America, APAC 7,100
payroll services

KEY CHALLENGES pressures posed the risk of fines and penalties if

The interviewed organisations struggled with not adhered to.
common challenges, including:

• High complexity of the payroll-solution

landscape. All the decision makers interviewed 'When we moved to ADP, we were able to
had multiple, disconnected payroll systems and standardise key processes such as
vendors in different locations. They wanted to bonus and attendance payments, as well
as address software performance
optimise their payroll processes via a
challenges and reduce our dependency
standardised single solution that could be on internal IT resources. We saw an
integrated with their human capital management immediate improvement in in-country
(HCM) systems to reduce system silos and payment compliance, which reduced
improve process efficiency. under- and overpayments. These
improvements not only made life in
• Workforce visibility and data unification. A payroll a little easier; it also improved
disjointed payroll model creates challenges in employee satisfaction.'
leveraging accurate and reliable data to drive
business analytics. Organisations needed the Executive Director, Global Payroll Services,
Semiconductor Manufacturing
transparency offered by a single source that
provided access to meaningful global payroll
reports that could drive strategic decision making
and add value throughout the business.

• Consistent compliance and mitigation of risk.

As global organisations, all companies exerted
high levels of effort to effectively track and
analyse the nuances within regulatory change to
remain compliant. The challenge to keep up with
legislative changes and handle regulatory

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 5

 THE CUSTOMER JOURNEY

COMPOSITE ORGANISATION
Based on the interviews, Forrester constructed a TEI
framework, a composite company and a ROI analysis
that illustrates the areas financially affected. The
composite organisation is representative of the four
companies that Forrester interviewed and is used to
present the aggregate financial analysis in the next
section. The composite organisation has the following
characteristics:

Description of composite. The global multibillion-

dollar organisation has just over 10,000 employees
and a market presence in 11 countries, as detailed
below. Formerly, the company had a non-integrated
payroll model, with a mixture of in-house legacy
systems and payroll run by different vendors in
various countries. Annually, payroll-related
compliance fees came to $6.5M; global average
voluntary staff turnover was 15%.

Deployment characteristics. The organisation has

global operations as shown in the table below, which
also details the timing of the implementation, the
number of employees and regional average salary
assumptions. Globally, the composite organisation
uses an HCM platform that has pre-integrations with
ADP’s solution.

Implementation
Office Regions No. of Employees Payroll Solution Average Salary
Year
Initial US HQ North America 6000 Globalview PS $ 70,000.00
Initial Germany EMEA 3000 Globalview PS $ 60,000.00
Initial Spain EMEA 200 Celergo $ 60,000.00
Initial UK EMEA 210 Celergo $ 60,000.00
Y1 Belgium EMEA 50 Celergo $ 60,000.00
Y1 Hungary EMEA 55 Celergo $ 60,000.00
Y1 Netherlands EMEA 40 Celergo $ 60,000.00
Y2 Mexico LATAM 200 Celergo $ 20,000.00
Y2 Venezuela LATAM 50 Celergo $ 20,000.00
Y2 China APAC 500 Celergo $ 35,000.00
Y2 South Korea APAC 39 Celergo $ 35,000.00

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 6

Analysis of Benefits
Quantified benefit data as applied to the composite

Total Benefits
Ref. Benefit Initial Year 1 Year 2 Year 3 Total Present Value

Atr Compliance cost avoidance $0 $350,000 $725,000 $1,225,000 $2,300,000 $1,837,716

Payroll-process efficiency
Btr gain (small country on $0 $243,000 $625,725 $880,812 $1,749,537 $1,399,804
managed service)
Payroll-process efficiency
Ctr gain (large country on $0 $280,800 $289,224 $297,901 $867,925 $718,118
processing service)

Dtr Improved employee retention $0 $374,760 $379,980 $394,299 $1,149,039 $950,967

Direct cost avoidance (legacy

Etr $0 $298,647 $312,741 $389,432 $1,000,820 $822,547
solution)

Ftr Payroll reporting efficiencies $0 $45,120 $55,718 $80,231 $181,069 $147,345

Total benefits (risk-adjusted) $0 $1,592,327 $2,388,388 $3,267,674 $7,248,390 $5,876,497

COMPLIANCE COST AVOIDANCE Modelling and assumptions. Forrester assumed

Evidence and data. The biggest benefit is the that:
reduction in compliance costs. Ensuring that an
• The average compliance fees in large countries
organisation’s payroll avoids regulatory fees is
totalled $1 million annually. Following the
becoming more difficult as the frequency of
implementation of the processing service, these
regulatory changes increases. Every country has its
decrease by 10%.
own tax, insurance and pension requirements and
processes and banking procedures. Ensuring records • The average compliance fees in small countries
are kept up to date and systems comply with local totalled $500,000 annually. Following the
legislation requires significant effort and ongoing
vigilance. According to one estimate, large global
organisations typically pay tens of millions of dollars
in payroll compliance fees every year.1
'The difference between being non-
• Compliance and risk reduction were key drivers compliant to getting ADP payroll and
for adopting ADP for all the decision makers achieving compliance made a
Forrester interviewed. material financial difference. … As
we implemented these solutions, we
• The cost of maintaining compliance is increasing, found a significant number of areas
in part because of changing privacy laws. where we were not in compliance.'
• Addressing compliance issues includes risk
management — reputational risk in particular — Executive Director, Global Payroll Services
as well as error reduction and data privacy. Semiconductor Industry

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 7

 ANALYSIS OF BENEFITS

implementation of the fully managed ADP The three-year, risk-adjusted present value of
service, these decrease by 50%. compliance cost avoidance is more than $1.8M. This
is equivalent to over 30% of the total present value
Risks. Forrester applied a high-risk adjustment of
benefits over the three years.
50% to this benefit because:

• There is a wide scope for differences in the

legacy environment in terms of the degree of
regulatory compliance, depending on the
geographic spread, legacy systems in place and
quality of the data.

• There was some uncertainty as to the

quantitative impact of the reduction in compliance
risk.

Compliance Cost Avoidance

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

A1 Number of large countries covered by ADP 0 2 2 2

A2 Number of small countries covered by ADP 0 2 5 9

A3 Average compliance penalty fee (large country) $1,000,000 $1,000,000 $1,000,000

A4 Average compliance penalty fee (small country) $500,000 $500,000 $500,000

A5 Compliance fee reduction (large country) 10% 10% 10%

A6 Compliance fee reduction (small country) 50% 50% 50%

At Compliance cost avoidance (A1*A3*A5)+(A2*A4*A6) $0 $700,000 $1,450,000 $2,450,000

Risk adjustment ↓50%

Atr Compliance cost avoidance (risk-adjusted) $0 $350,000 $725,000 $1,225,000

Three-year total: $2,300,000 Three-year present value: $1,837,716

PAYROLL-PROCESS EFFICIENCY GAIN (SMALL processing, allowing firms to reallocate payroll staff to
COUNTRY ON MANAGED SERVICE) higher-value tasks.
Evidence and data. Improved payroll efficiency was
One interviewee told us: 'I used to spend around
an important driver for adopting ADP for all the
$1 million on payroll to pay 2000 employees. Now I
decision makers Forrester interviewed. The efficiency
spend the same amount to pay 8000 employees'.
gain is especially significant in the small countries as
these all move to a fully managed (outsourced) Organisations may also gain additional efficiencies
service, meaning that ADP does the payroll from reduced currency conversion costs. One
interviewee told us: 'We’re able to realise savings on

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 8

 ANALYSIS OF BENEFITS

money movement — avoiding the 10% fee charged different organisations. This yielded a three-year,
by our former payroll provider'. Furthermore, risk-adjusted present value of just under $1.4M. This
increased accuracy reduces errors and, in turn, is equivalent to 24% of the total present value
improves efficiency. benefits over the three years.

Modelling and assumptions. Forrester assumed

that in the smaller countries:

• A team of three FTEs managed the payroll effort

on the legacy platform.

• Following the implementation of ADP, this

decreases by 75% on average.

Forrester calculated the efficiency impact using

average local salary assumptions.

Risks. Forrester applied a moderate risk adjustment

of 10% to adjust for differences in the legacy setup in

Payroll-Process Efficiency Gain (Small Country on Managed Service)

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

B1 No. of small EMEA countries implemented 0 2 5 5

B2 No. of small APAC countries implemented 0 0 0 2

B3 No. of small LATAM countries implemented 0 0 2

B4 EMEA average salary $60,000, 3% increase YoY $60,000 $60,000 $61,800 $63,654

B5 APAC average salary $35,000, 3% increase YoY $35,000 $35,000 $36,050 $37,132

B6 LATAM average salary $20,000, 3% increase YoY $20,000 $20,000 $20,600 $21,218

Average no. of payroll employees per country

B7 3 3 3 3
before ADP managed service

B8 Reduction in process effort 75% 75% 75% 75% 75%

Payroll process efficiency gain (small country

B9 ((B1*B4)+(B2*B5)+(B3+B6))*B7*B8 $0 $270,000 $695,250 $978,680
on managed service)

Risk adjustment ↓10%

Payroll-process efficiency gain (Small country

Btr $0 $243,000 $625,725 $880,812
on managed service) (risk-adjusted)

Three-year total: $1,749,537 Three-year present value: $1,399,804

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 9

 ANALYSIS OF BENEFITS

PAYROLL-PROCESS EFFICIENCY GAIN (LARGE Modelling and assumptions. Forrester assumed

COUNTRY ON PROCESSING SERVICE) that in the larger countries:
Evidence and data. The efficiency gain for the large
• The payroll effort on the legacy platform required
countries is less significant because it is not a fully
eight FTEs per country.
managed service: Payroll employees are responsible
for processing payroll. However, there are still • Following the implementation of ADP, this
important efficiency gains, primarily because the HR decreases by 30% on average.
and payroll systems are fully integrated, so teams Forrester calculated the efficiency impact using
only need to update the data once. This also reduces
average salary assumptions per region.
the incidence of errors, reducing the time for payroll
staff to check for and correct such errors. Risks. Forrester applied a moderate risk adjustment
of 10% to adjust for differences in the legacy setup in
Not only is payroll more efficient, but the processing different organisations. This yielded a three-year,
time greatly decreases. One interviewee told us: 'In risk-adjusted present value of just under $720K. This
the US, the processing time takes us roughly 24
is equivalent to 12% of the total present value
hours. We pay biweekly, and it used to take us 48 benefits over the three years.
hours to do that.'

Like the previous benefit, firms can also gain

efficiencies by reducing the need to change currency;
improved data accuracy reduces the amount of time
spent correcting errors.

Payroll-Process Efficiency Gain (Large Country on Processing Service)

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

C1 North American countries implemented 0 1 1 1

C2 EMEA countries implemented 0 1 1 1

$70,000, 3% increase
C3 North American average salary $70,000 $70,000 $72,100 $74,263
YoY
$60,000, 3% increase
C4 EMEA average salary $60,000 $60,000 $61,800 $63,654
YoY
Average no. of payroll employees per country before
C5 8 8 8 8
ADP

C6 Reduction in process effort 30% 30% 30% 30% 30%

Payroll process efficiency gain (large country on ((C1*C3)+(C2*C4))*C5*C

C7 $0 $312,000 $321,360 $331,001
processing service) 6

Risk adjustment ↓10%

Payroll-process efficiency gain (large country on

Ctr $0 $280,800 $289,224 $297,901
processing service) (risk-adjusted)

Three-year total: $867,925 Three-year present value: $718,118

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 10

 ANALYSIS OF BENEFITS

IMPROVED EMPLOYEE RETENTION Modelling and assumptions. Although interviewees

Evidence and data. Interviewees told us that the told us the effect on EX was important, they could not
ADP solution has a positive impact on EX. To some quantify the impact specifically. Therefore, Forrester
degree, this is because employees can access made some conservative assumptions to quantify this
payroll information through a portal — a self-service benefit:
capability that also provides more detail.
• The global average voluntary employee turnover
However, the most important impact is the reduction rate is 15%.
in errors, such as instances of underpayment and/or
• The impact of the improved payroll solution
late payment. One interviewee told us: 'Our accuracy
reduces staff turnover by 1.0%.
level is above 99.5%. It was worse when I first came
on board eight years ago.' Either of such occurrences • For an organisation with 10,000 employees, the
(underpayment or late payment) has a significant size of the composite, the number of employees
impact on EX, potentially impacting employees’ ability churning reduces by around 15 every year.
to pay bills on time and therefore, in turn, their
• The cost of employee churn, in terms of
likelihood to look for alternative employment. recruitment and onboarding, is 50% of an
employee’s salary.

Risks. Given that employee turnover differs greatly

between regions and industries, Forrester applied a
medium-size risk adjustment of 20%. This resulted in
a three-year, risk-adjusted present value of just over
$950K.

Improved Employee Retention

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

D1 Employees covered by ADP payroll 0 9,410 9,555 10,344

D2 Voluntary turnover before ADP 15% 15% 15%

D3 Percentage reduction in voluntary turnover 1% 1% 1%

D4 Number of employees retained D1*D2*D3 14.1150 14.3325 15.5160

D5 Average salary $66,376 $66,279 $63,531

Percentage of
D6 Average recruitment and onboarding cost 50% 50% 50%
salary

Dt Improved employee retention D4*D5*D6 $0 $468,450 $474,975 $492,874

Risk adjustment ↓20%

Dtr Improved employee retention (risk-adjusted) $0 $374,760 $379,980 $394,299

Three-year total: $1,149,039 Three-year present value: $950,967

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 11

 ANALYSIS OF BENEFITS

DIRECT COST AVOIDANCE (LEGACY SOLUTION) • For the small countries, which moved to ADP
Evidence and data. Each of the interviewed decision Celergo managed service, the legacy solution
maker’s organisations had a legacy payroll system in cost 50% less.
place. Moving to an alternative means a firm can
Risks. The difference in the costs of the legacy
avoid the cost of such a legacy system.
versus the ADP solution could be more. To account
Modelling and assumptions. Interviewees validated for this risk, Forrester adjusted this benefit downward
the following assumptions about the legacy solution: by 10%, yielding a three-year, risk-adjusted total PV
of just over $820K.
• For the large countries, which move to ADP
GlobalView Payroll processing service, the
legacy solution cost 25% less.

Direct Cost Avoidance (Legacy Solution)

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

E1 Number of employees applicable (large countries) Employees per country 0 9,000 9,000 9,000

E2 Legacy licence fee per employee (large countries) 0.75*$3.55*12 $31.95 $31.95 $31.95

E3 Number of employees applicable (small countries) Employees per country 0 410 555 1,344

E4 Legacy licence fee per employee (small countries) $18*0.5*12 $108 $108 $108

Et Direct cost avoidance (legacy solution) E1*E2+E3*E4 $0 $331,830 $347,490 $432,702

Risk adjustment ↓10%

Etr Direct cost avoidance (legacy solution) (risk-adjusted) $0 $298,647 $312,741 $389,432

Three-year total: $1,000,820 Three-year present value: $822,547

PAYROLL REPORTING EFFICIENCIES such data available in real time. Leaders can make
Evidence and data. Finally, ADP Global Payroll better decisions faster with up-to-date and higher-
enables efficiencies in terms of reporting. All the quality data.
interviewees expressed that this was an important
Modelling and assumptions. First, Forrester
driver, though difficult to quantify.
assumed that reporting is required in each country on
As firms implement ADP across more countries, and a monthly basis. Second, Forrester assumed that the
eventually across the whole workforce, it becomes ADP implementation reduces reporting effort as
easier to have access to all the data: It is in the same follows:
format in the same system and available through the
• In North America, reporting initially required nine
same portal.
days, which decreases to five following the local
While Forrester has quantified this benefit by implementation of ADP; it further decreases to
estimating the reporting time saved, there are just two days once all the countries are on ADP.
additional benefits, notably increased agility in having

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 12

 ANALYSIS OF BENEFITS

• In EMEA, the reporting effort was three days Risks. Forrester applied a moderate 10% risk
every month per country, which reduces to zero adjustment to adjust for differences in reporting
following the ADP implementation. systems and requirements for different organisations
in different regions and verticals. As a result, the
• In Latin America and APAC, the reporting effort
three-year risk adjusted present value of this benefit
was two days every month per country, which
comes out at just under $150K.
reduces to zero following the ADP
implementation.

Forrester used the local salary assumptions to

calculate the financial impact of this reduction in
effort.

Payroll Reporting Efficiencies

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

F1 Frequency of reporting updates 12 12 12 12

F2 Total reporting effort — N. America (days central + 4) 108 60 60 24

F3 Total reporting effort — EMEA 180 48 0 0

F4 Total reporting effort — APAC 72 72 72 0

F5 Total reporting effort — LATAM 48 48 48 0

F6 Resource cost of reporting (using local salaries) $97,067 $46,933 $35,157 $7921

Ft Payroll reporting efficiencies $0 $50,133 $61,909 $89,145

Risk adjustment ↓10%

Ftr Payroll reporting efficiencies (risk-adjusted) $0 $45,120 $55,718 $80,231

Three-year total: $181,069 Three-year present value: $147,345

UNQUANTIFIED BENEFITS highlighted recent experiences from the global

Additional benefits that customers experienced but pandemic, which required organisations to act
were not able to quantify include: fast, such as adjusting salaries.

• Increased business agility. Once firms unify all Improved EX. While Forrester included better
employee payroll data into the same system, not employee retention in the quantified analysis, it is
only does reporting become much easier, as worth pointing out that improved EX can have
described in the final benefit, but such data is many other benefits such as reduced
much more readily available. Business leaders absenteeism, improved customer experience,
can quickly access payroll data to gain insights increased discretionary effort and even higher
and make better decisions faster. Interviewees revenue.2

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 13

 ANALYSIS OF BENEFITS

FLEXIBILITY
The value of flexibility is unique to each customer.
There are multiple scenarios in which a customer
might implement Global Payroll and later realise The ADP solution
additional uses and business opportunities, including: improved the
employee experience,
• Faster integration of additional markets.
employee retention
Whether through organic growth or acquisition,
and employee
organisations can more easily add additional enablement.
markets, accruing more benefits for that country.
— Senior Director, Global
Flexibility would also be quantified when evaluated as Payroll, Tax and Mobility
part of a specific project (described in more detail in Services, Aerospace &
Appendix A). Defence industry

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 14

Analysis of Costs
Quantified cost data as applied to the composite

Total Costs
Ref. Cost Initial Year 1 Year 2 Year 3 Total Present Value
Implementation costs
Gtr (large country on $886,417 $0 $0 $0 $886,417 $886,417
processing service)
Implementation costs
Htr (small country on $48,000 $72,000 $57,063 $0 $177,063 $160,614
managed service)

Itr Ongoing fee (yearly) $0 $501,660 $556,740 $727,164 $1,785,564 $1,462,499

Total costs (risk-

$934,417 $573,660 $613,803 $727,164 $2,849,043 $2,509,530
adjusted)

IMPLEMENTATION COSTS (LARGE COUNTRY Modelling and assumptions. Typically, companies

ON PROCESSING SERVICE) requiring payroll for countries with more than 1000
Evidence and data. Organisations with a large employees use ADP GlobalView Payroll on a
employee base, exceeding 1,000 employees, use processing service — a cloud-based service whereby
ADP GlobalView Payroll. The composite organisation ADP manages the compliance requirements, but
has operations in two large markets: the US with payroll staff in the organisation process the payroll.
6,000 employees and Germany with 3,000. In both This is as opposed to a fully managed (outsourced)
cases, the composite completes implementation service.
before Year 1, at the beginning of which the solution
The total fixed implementation fees come to
becomes live.
$600,000 for the US and Germany.
There are two components to the implementation
Forrester assumed the internal resource
costs in these large markets:
requirements for each implementation to be:
• There is a fixed implementation fee — an up-front
• Half of an FTE for project management over the
cost payable to ADP at the time of
nine-month period of the implementation.
implementation. The amount depends on the size
and complexity of the business presence per • Two payroll FTEs for two months over the nine-
country, averaging $300,000 per country in the month period.
case of the composite organisation. • The equivalent of one FTE’s time for one month
• There are internal resource requirements for the spread across HR and IT, also over the nine-
implementation of the platform. Interviewees said month period.
that it took around nine months to implement Forrester calculated the total cost of the
ADP GlobalView Payroll; implementation typically implementation effort assuming average salary rates
required project management, payroll, HR and IT
of $70,000 in the US and $60,000 in Germany.
resources.

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 15

 ANALYISIS OF COSTS

Risks. Given that different organisations will have

different legacy platforms, structures and setups,
Forrester applied a moderate 10% risk adjustment.
This yields a three-year, risk-adjusted present value
of $886,417 for this cost category.

Implementation Costs (Large Country on Processing Service)

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

G1 No. of countries, North America 1 0 0 0

G2 No. of countries, EMEA 1 0 0 0

Project management effort

G3 (G1+G2)*0.5 FTE for 9 months 0.750 0.00 0.00 0.00
(FTE)

G4 Payroll effort (FTE) (G1+G2)*2 FTE for 2 months (rounded value shown) 0.667 0.00 0.00 0.00

G5 HR and IT effort (FTE) (G1+G2)*1 FTE for 1 month (rounded value shown) 0.167 0.00 0.00 0.00

G6 North American average salary $70,000, 3% increase YoY $70,000 $70,000 $72,100 $74,263

G7 EMEA average salary $60,000, 3% increase YoY $60,000 $60,000 $61,800 $63,654

Average fixed implementation

G8 $300,000/country $600,000 0 0 0
fees
Total implementation costs
Gt (large country on processing ((G3+G4+G5)*G6)+((G3+G4+G5)*G7))+G8 $805,833 $0 $0 $0
service)

Risk adjustment ↑10%

Total implementation costs

Gtr (large country on processing $886,417 $0 $0 $0
service) (risk-adjusted)

Three-year total: $886,417 Three-year present value: $886,417

IMPLEMENTATION COSTS (SMALL COUNTRY • A fixed implementation fee, which varies by

ON MANAGED SERVICE) number of employees, region and legacy
Evidence and data. Organisations with a smaller environment.
employee base, below 1000 employees, use ADP
• The internal resource requirements for the
Celergo for payroll. The composite organisation
implementation of the platform. Interviewees said
implements ADP Celergo in three countries in EMEA
that it took around two months to implement ADP
initially (i.e. becoming live at the beginning of Year 1);
Celergo; implementation typically required project
an additional three countries in EMEA go live at the
management, payroll, HR and IT resources.
end of Year 1, and finally, at the end of Year 2, two
markets become live in Asia Pacific and another two Modelling and assumptions. The fixed
in Latin America. implementation fees are:

For each of these countries, there are two elements • $15,000 per country in EMEA.
to the implementation costs:

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 16

 ANALYISIS OF COSTS

• $13,000 per country in APAC. • $35,000 for APAC.

• $6500 per country in Latin America. • $20,000 for Latin America.

The composite incurs these costs once the country is Risks. Given that different organisations will have
live on the Global Payroll solution (after roll-out). different legacy platforms, structures and setups,
Forrester applied a moderate 10% risk adjustment.
The internal resource effort requires 50 hours of effort
The three-year, risk-adjusted present value of this
from one project manager, one payroll employee, one
category of costs comes to $160,614.
IT specialist and one HR employee. Forrester
calculated the costs of the implementation effort
using local average salary rates:

• $60,000 for EMEA.

Implementation Costs (Small Country on Managed Service)

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

H1 No. of countries, EMEA 2 3 0 0

H2 No. of countries, APAC 0 0 2 0

H3 No. of countries, LATAM 0 0 2 0

Fixed implementation fees,

H4 $15,000*H1 $30,000 $45,000 $0 $0
EMEA
Fixed implementation fees,
H5 $13,000*H2 $0 $0 $26,000 $0
APAC
Fixed implementation fees,
H6 $6500*H3 $0 $0 $13,000 $0
LATAM
Project management effort
H7 1 FTE for 50 hours 50 50 50 0
(hours)

H8 HR and IT effort (hours) 2 FTEs for 50 hours 100 100 100 0

H9 Payroll effort (hours) 1 FTE for 50 hours 50 50 50 0

Average salary, EMEA hourly $60,000, 3% increase

H10 $34.09 $34.09 $35.11 $36.17
rate YoY
Average salary, APAC hourly $35,000, 3% increase
H11 $19.89 $19.89 $20.49 $21.10
rate YoY
Average salary, LATAM $20,000, 3% increase
H12 $11.36 $11.36 $11.70 $12.05
hourly rate YoY
(H1*(H7+H8+H9)*H10) +
Implementation costs (small (H2*((H7+H8+H9)*H11)) +
Ht $43,636 $65,455 $51,875 $0
country on managed service) (H3*((H7+H8+H9)*H12)) +
(H4+H5+H6)

Risk adjustment ↑10%

Implementation costs (small

Htr country on managed service) $48,000 $72,000 $57,063 $0
(risk-adjusted)

Three-year total: $177,063 Three-year present value: $160,614

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 17

 ANALYISIS OF COSTS

ONGOING FEE (YEARLY) monthly cost of $495 per country plus an $18
Evidence and data. Across the ADP Global Payroll cost per employee per month.
solution, the largest portion of costs is the annual Modelling and assumptions. The costs above apply
ongoing fees, accounting for 58% of the total in the following the implementation of the solution in the
case of the composite organisation. The ongoing fees corresponding markets. Forrester did not apply a risk
differ depending on the size of the country, as adjustment as these are ADP’s rates.
follows:
The three-year, present value of the ongoing fees
• For the large countries using the ADP applied to the composite organisation totals nearly
GlobalView Payroll service on a processing $1.5M.
basis, the fee is $3.55 per employee per month.

• For the small countries using ADP Celergo fully

managed service, the fee includes both a fixed

Ongoing Fee (Yearly)

Ref. Metric Calculation Initial Year 1 Year 2 Year 3
Employees covered (large countries), North No. of employees per country on
I1 0 6000 6000 6000
America payroll
No. of employees per country on
I2 Employees covered (large countries), EMEA 0 3000 3000 3000
payroll
Licence fee per employee per month (large
I3 $3.55 $3.55 $3.55 $3.55 $3.55
countries)

I4 Employees covered (small countries), EMEA No. of employees per region on payroll 0 410 555 555

I5 Employees covered (small countries), APAC No. of employees per region on payroll 0 0 0 539

I6 Employees covered (small countries), LATAM No. of employees per region on payroll 0 0 0 250

I7 Licence fee per month (large countries) (I1+I2)*I3 $0 $31,950 $31,950 $31,950

I8 Fixed licence fee per month (small countries) $495*(H1cumulative+H2cumulative+H3cumulative) $0 $2,475 $4,455 $4,455

Licence fee per employee per month (small

I9 $18*(I4+I5+I6) $0 $7,380 $9,990 $24,192
countries)

It Ongoing fee (yearly) (I7+I8+I9)*12 $0 $501,660 $556,740 $727,164

Risk adjustment 0% 

Itr Ongoing fee (yearly) (risk-adjusted) $0 $501,660 $556,740 $727,164

Three-year total: $1,785,564 Three-year present value: $1,462,499

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 18

Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

The financial results calculated in the
Total costs Total benefits Cumulative net benefits Benefits and Costs sections can be
used to determine the ROI, NPV and
$5.0 M payback period for the composite
Cash
flows

organisation’s investment. Forrester

assumes a yearly discount rate of 10 %
$4.0 M for this analysis.

$3.0 M

$2.0 M
These risk-adjusted ROI,
NPV and payback period
$1.0 M values are determined by
applying risk-adjustment
factors to the unadjusted
results in each Benefit and
Cost section.
-$1.0 M

-$2.0 M
Initial
Initial Year
Year 11 Year 2 Year
Year 33

Cash Flow Analysis (Risk-Adjusted Estimates)

Present
Initial Year 1 Year 2 Year 3 Total
Value
Total costs ($934,417) ($573,660) ($613,803) ($727,164) ($2,849,043) ($2,509,530)

Total benefits $0 $1,592,327 $2,388,388 $3,267,674 $7,248,390 $5,876,497

Net benefits ($934,417) $1,018,667 $1,774,586 $2,540,510 $4,399,347 $3,366,967

ROI 134%

Payback period
12.0
(months)

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 19

Appendix A: Total Economic
Impact
Total Economic Impact is a methodology developed PRESENT VALUE (PV)
by Forrester Research that enhances a company’s
technology decision-making processes and assists The present or current value of
vendors in communicating the value proposition of (discounted) cost and benefit estimates
their products and services to clients. The TEI given at an interest rate (the discount
methodology helps companies demonstrate, justify rate). The PV of costs and benefits feed
and realise the tangible value of IT initiatives to both into the total NPV of cash flows.
senior management and other key business
stakeholders.
NET PRESENT VALUE (NPV)
TOTAL ECONOMIC IMPACT APPROACH
The present or current value of
Benefits represent the value delivered to the
(discounted) future net cash flows given
business by the product. The TEI methodology
an interest rate (the discount rate). A
places equal weight on the measure of benefits and
positive project NPV normally indicates
the measure of costs, allowing for a full examination
that the investment should be made,
of the effect of the technology on the entire
unless other projects have higher NPVs.
organisation.

Costs consider all expenses necessary to deliver the

proposed value, or benefits, of the product. The cost RETURN ON INVESTMENT (ROI)
category within TEI captures incremental costs over
A project’s expected return in
the existing environment for ongoing costs
percentage terms. ROI is calculated by
associated with the solution.
dividing net benefits (benefits less costs)
Flexibility represents the strategic value that can be by costs.
obtained for some future additional investment
building on top of the initial investment already made.
Having the ability to capture that benefit has a PV DISCOUNT RATE
that can be estimated.
The interest rate used in cash flow
Risks measure the uncertainty of benefit and cost analysis to take into account the time
estimates given: 1) the likelihood that estimates will value of money. Organisations typically
meet original projections and 2) the likelihood that use discount rates between 8 % and
estimates will be tracked over time. TEI risk factors 16 %.
are based on ‘triangular distribution’.

PAYBACK PERIOD

The break-even point for an investment.

This is the point in time at which net
benefits (benefits minus costs) equal
initial investment or cost.

THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 20

Appendix B: Supplemental Material
Related Forrester Research
'Case Study: Best Practices From Payroll Provider ADP’s Response To The COVID-19 Pandemic,'
Forrester Research, Inc., May 5, 2020

'The Forrester Wave™: Cloud Human Capital Management Suites, Q2 2020,' Forrester Research, Inc.,
May 14, 2020

Appendix C: Endnotes

1
Source: 'Making payroll pay,' PwC, 2015 (https://www.pwc.co.uk/assets/pdf/makingpayrollpay.pdf).
2
Source: Sue Jones, 'Engaged Employees Lead to More Profitable Business Outcomes', VRM intel, January 5,
2017 (https://vrmintel.com/engaged-employees-lead-profitable-business-outcomes/).

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THE TOTAL ECONOMIC IMPACT™ OF ADP GLOBAL PAYROLL 22