Cool product. Tough market. It will be essential to focus on small business targets. Too bad the article centred on competing with the big guys. I don't think that's where the easy money is at.
I'm currently in the middle of an ADP implementation for our company (120 employees), so I have a bit of insight into this. Once you reach a certain threshold of costs associated with payroll, it's very hard to beat the big players:
>"These legacy companies rely on selling to other enormous enterprise clients whose opportunity cost of switching services provides a sufficient lockin"
I don't know about this. How am I locked in? Sure, there is some labour associated with moving employee files from one provider to the next, but you have to do the same to get your data into ZenPayroll. ADP required me to fill out a spreadsheet with the required employee information. Once the data is in, you flip the switch and you're up and running on the new system. I don't see any lock-in whatsoever. I still have my employee information spreadsheet, ready to pass to the next competitor. What am I missing?
>"Faced with expensive and complex software options"
Not really complex. We worked with an ADP "implementation specialist" to design the earnings/deductions rules (customized to our specific needs), which took about a week. Now we enter hours in a text box, and adjust parameters as needed. Sure, the interface isn't pretty, but we're talking about tab-ing through text boxes and entering numbers. Can't be much more intuitive.
>"With ZenPayroll, companies can handle the standard functions of adding employee hours, overtime pay, bonuses, reimbursements, garnishments, benefits, etc., and issuing periodic payments via check or direct deposit."
This is standard for payroll systems.
>"Where ZenPayroll really sticks its head above the crowd is in the long term tracking and management for both employees and employers. On the platform..."
Standard features, at least with ADP.
We made the decision to switch from manual payroll to a payroll service when the cost/benefit made sense. I can understand that that threshold is far, far lower for the multitude of 1-50 employee sized businesses out there. ZenPayroll looks good there.
But the big players can offer something I can only assume ZP can't: support. We have two agents, ready to handle whatever crazy questions our staff has. That's vitally important to an enterprise. Although the author sees payroll as "evil", we're talking about other people's livelihood. It's not to be taken lightly. I don't see one mention of support in the article.
For $30/month, there's a market, and a big one. But let's not fool ourselves into thinking that the big players have nothing to offer. And they won't be easily displaced.
These are all really great points you bring up -- we definitely aren't taking other payroll companies lightly, and providing amazing customer support for both big and small companies is one of our core-tenants.
One of the things that the article didn't mention that I think is worth bringing up is how we eventually plan expose parts of a "payroll API" which can make managing payroll much easier. For example, I would imagine that tabbing through text boxes to enter hours for 120 employees every 2 weeks can get pretty tedious and error-prone. Well, we actually have a (currently internal) API for that, which can eventually be integrated into, say, time tracking software. We believe similar benefits can be realized by integrating our API with accounting software, expense reporting software, etc.
In fact, we've architected our system to be an API from the start, and our JS web-app is just a consumer of our API.
I'd love to hear some other ideas people might have that could take advantage of a payroll API!
>"we definitely aren't taking other payroll companies lightly, and providing amazing customer support for both big and small companies is one of our core-tenants."
Good stuff. I'm going to keep my eye on this. Having gone through it, it's an interesting space. I think it can be done better than the incumbents, and that's key, right?
My point was that there's a bit too much "shoot-for-the-stars" mentality when great start-ups are on the rise. Players like ADP are slow because they are large. But they got large because, at the end of the day, they offer a good product (maybe a tad pricey). $30BB in market cap ain't easy to achieve.
Anyway, I believe there's a big hole ZP can fill, especially if you can market to businesses that can't justify spending thousands per year on payroll. It didn't make sense for us for a long time. It's nice to see a relateable problem being solved. Congrats on the round, and good luck.
Curious - do you see price as being the only differentiator?
To the representative of the company - does anyone on your team have industry experience and/or have been a HR (or possibly finance in smaller companies) director?
>"Curious - do you see price as being the only differentiator?"
Perhaps it's an approach unique to me, but pretty much, yeah. If I can define exactly what I need in a service, and the service provider can assure me they can meet those demands, it's all about price.
Which was my point with regards to ADP. It may be clunky and unpretty, but it does what I need it to do: pay my employees, accurately and on time (disclaimer: I hope, still in implementation!). Flash and prettiness is nice, but if it's superfluous, it has to be free.
I'd be very interested to hear how you feel after you get out of implementation. Maybe we can share war stories (see my email in my profile if you're interested in catching up).
Price is most definitely not the only differentiator for us, though we do see it as one of main benefits of using us, especially for smaller businesses. One of our main differentiators is having much more intuitive, simpler, and beautiful payroll software.
I think if you are banking on something being simpler and "beautiful" as your key differentiator then you are not in a good place. A lot of solutions on the market are not hard to use and they are very entrenched. Sure, they don't look great but at the end of the day you need to realize this is payroll software. People don't live in these systems like they do with Apple products. Not to mention, most of the current companies will have a trained tech setup your account. You really don't have to do much. All customers want is:
a) Flexible. Can handle my current and future employee payroll needs.
b) Accurate.
c) Reliable
d) Great customer support. This includes people who are very knowledgeable with what Congress is up to, taxes, etc, and can make sure I am always in compliance.
I agree with a lot of the comments above. I am not sure with the ROI is from your system vs. PayChex or ADP.
Just to heed a warning...be very careful with design being a differentiator when it comes to large enterprise (as the article insinuates). The person buying the software may not be the one actually using it, so therefore this is not as much of a USP as you may hope.
Good luck and happy to give some direction on the challenges of dealing with the enterprises area. Contact details in profile.
We currently use paychex and hoping to switch to ZenPayroll as soon as you guys allow us :). The biggest attraction is the API which will make managing all our workforce sooooo easy!
I think the article is referring to much bigger implementations - I'm just finishing up a 3,000+ employee implementation with all kinds of crazy things going on that cost my client an arm and a leg. To put it into perspective, the implementation took ~ 3mos to go-live for employees across almost all 50 states and another 2mos to fix the issues that cropped up during the first few payrolls. It's unlikely they'd be willing to switch anytime soon regardless of how unhappy they are up to this point.
>"I think the article is referring to much bigger implementations"
Absolutely. I can imagine the kind of work an implementation like that entails.
Maybe I misunderstand "lock-in". Nothing is preventing me from switching providers, since there is no reliance on proprietary measures anywhere along the line. Switching from one implementation to a different one is as easy as re-doing the labour (not that that is "easy", as you point out). But that's the bare minimum that I can expect to do anyway. I certainly can't have less work to do the second time.
Yes, I would agree with that statement as well. There is certainly nothing stopping us (nothing proprietary, etc.) other than a lot of work. But, to your point, it should be less the 2nd time around!
I'm currently in the middle of an ADP implementation for our company (120 employees), so I have a bit of insight into this. Once you reach a certain threshold of costs associated with payroll, it's very hard to beat the big players:
>"These legacy companies rely on selling to other enormous enterprise clients whose opportunity cost of switching services provides a sufficient lockin"
I don't know about this. How am I locked in? Sure, there is some labour associated with moving employee files from one provider to the next, but you have to do the same to get your data into ZenPayroll. ADP required me to fill out a spreadsheet with the required employee information. Once the data is in, you flip the switch and you're up and running on the new system. I don't see any lock-in whatsoever. I still have my employee information spreadsheet, ready to pass to the next competitor. What am I missing?
>"Faced with expensive and complex software options"
Not really complex. We worked with an ADP "implementation specialist" to design the earnings/deductions rules (customized to our specific needs), which took about a week. Now we enter hours in a text box, and adjust parameters as needed. Sure, the interface isn't pretty, but we're talking about tab-ing through text boxes and entering numbers. Can't be much more intuitive.
>"With ZenPayroll, companies can handle the standard functions of adding employee hours, overtime pay, bonuses, reimbursements, garnishments, benefits, etc., and issuing periodic payments via check or direct deposit."
This is standard for payroll systems.
>"Where ZenPayroll really sticks its head above the crowd is in the long term tracking and management for both employees and employers. On the platform..."
Standard features, at least with ADP.
We made the decision to switch from manual payroll to a payroll service when the cost/benefit made sense. I can understand that that threshold is far, far lower for the multitude of 1-50 employee sized businesses out there. ZenPayroll looks good there.
But the big players can offer something I can only assume ZP can't: support. We have two agents, ready to handle whatever crazy questions our staff has. That's vitally important to an enterprise. Although the author sees payroll as "evil", we're talking about other people's livelihood. It's not to be taken lightly. I don't see one mention of support in the article.
For $30/month, there's a market, and a big one. But let's not fool ourselves into thinking that the big players have nothing to offer. And they won't be easily displaced.