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2006: HRO’s Year of Being Burr

In 1804, Aaron Burr out-dueled Alexander Hamilton because Burr had better aim. I’m reminded that victory goes to the one with best bead on his target. In 2006, HRO is all about being Burr (but without the gun)

by Jay Whitehead

Every American school child knows about “The Duel.” At dawn on a humid July 11, 1804 in Weehawken, NJ, Thomas Jefferson’s vice president Aaron Burr and former treasury secretary Alexander Hamilton squared off, aiming their .56 caliber pistols at each other at 20 paces. When the order came to fire, Hamilton pulled the trigger first. He missed wide right. Burr shook off the terror of the moment. Then he buried a bullet in Hamilton’s aorta. Hamilton died the next day in Manhattan’s West Village, near what is today an Italian restaurant.

There are parallels between the duel and today’s HRO vendor competitions. Some are cruel, some are less so.

Here is a gruesome truth. Dueling pistols only have one bullet. There is good reason. Duels are for ending serious disputes. One projectile makes duels “sudden death.” From shootouts, you get two things—a dead guy and a winner. In the rules of dueling, if the first shooter misses, as did the shaky-handed Hamilton, there is no second chance. The guy who missed is a sitting duck for the second guy. That is, if the second guy can hold his hand steady.

In HRO competitions, the buying decisions are much like an old-time gunfight. No pistols, but plenty of finality. They result in only one winner (that is, not including the sourcing advisors and lawyers, who always wins, no matter who loses). On the losing side, the provider who goes home empty-handed often feels like he has just taken a bullet. (I have felt this pain, indirectly. More than once, I have consoled a losing provider into the wee hours at an establishment that serves adult beverages.) And the ache is very real because—check this out—enterprise-level HRO
pursuits today last an average of a year and cost an average of $2 million. The cost of customer acquisition is often the largest single one-time cost in an HRO contract.

In HRO in 2006, many providers have told me they are practicing their marksmanship. So here is my prediction for 2006. Next year’s victors will be the better shots. Here are some examples of providers whose aim will be much-improved in 2006.

Until November 2005, Ceridian’s HRO efforts depended on a shared sales resource, which also sold the company’s payroll, EAP, tax filing, and benefits administration products. Late in 2005, the company realized that it was having little success selling one-stop HRO to the Fortune 100.

On the other hand, another group was very hot for its HRO services: companies with 1,000 to 15,000 employees. So wisely, the company reorganized into four units: HR/payroll, HRO, benefits, and EAP/other, each with its own dedicated sales and marketing resources focused on its own sweet-spot prospects. In addition to this structural change that allowed it to go after mid-market firms, Ceridian also funded a landmark psychographic study, which identifies the companies whose circumstances or attitudes make them most likely to buy HRO. (I cannot share the exact methodology.) Bottom line: much tighter focus on a target customer, shorter client contract cycles, less wasted time for both clients and the company.

I have also heard about efforts of other HRO leaders who are refining their sweet spot. Aon is focusing on another segment of the mid-market. Accenture has refined its aim on larger firms. ADP has spent some time and effort to find its home-base HRO client. Hewitt has found itself with a few sweet spots. ExcellerateHRO has re-energized its focus on a certain profile. ACS has learned well in 2005. Fidelity has found success with a certain profile, although the mutual fund giant is staying stealthy. ARINSO has long been known to have a focus on European-basedmultinationals with European cross-border payroll processing needs.

Others have yet to declare a clear target, and I worry for their health in the duels of 2006. One notable question mark is Convergys. While it has just scored its big win with DuPont, it is unclear whether DuPont represents a focus away from the company’s historic public-sector strength or a new focus. Only time will tell. As in Aaron Burr’s case, sometimes the slower duelist wins, but sometimes, the first guy fails to miss. In those instances, the slow guy goes home dead.

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