Boat maker Genmar turns to on-demand outsourcing to give management better data
Boating enthusiasts might recognize brands such as Wellcraft, Ranger, and Seaswirl—well-known names in the world of fishing and leisure crafts. These and others are all part of Genmar, a $1 billion Minneapolis-based holding company that sells vessels under 12 brands and employs more than 5,000. What you might not know is that despite having built successful brands, as recently as 2005 Genmar still operated an archaic HR platform that could not quickly produce critical reports or provide an enterprise-wide view of its operations. The company was further saddled by what it said were exorbitant fees charged by a payroll service provider.
So when Dave Mahler, vice president and treasurer for Jacobs Management, a management company that provides back-office support for Genmar, decided to improve operational efficiency and visibility, he faced several choices: invest in internal capabilities, expand outsourcing, or turn to an on-demand services model. In his mind, any change would have been an improvement over the status quo.
“We had 10 types of [payroll] systems as a result of acquisitions. To get basic information, it was nearly impossible,” he recalled. “Some did payroll with [an outsource provider]. Some did it on their own. We had no visibility of any of this information. Plus, we were paying a lot of money to [outsource payroll].”
One of the biggest back-office challenges mid-size companies face today is the hodgepodge of systems accumulated through a series of acquisitions and decentralization. Part ERP investment, part home-grown solution, and a whole lot of Band-Aids hold the parts together well enough to keep paychecks flowing, benefits accumulating, and employee records mostly updated, but these systems woefully lacked structure and robust functionality. Moreover, it requires significant IT resources to keep them running. This was the scenario Genmar faced.
Mahler said he began considering options in the fall of 2004. Although outsourcing served its purposes until then, he said the company was paying too high of a fee. In addition, the provider offered “awful” service.
From many perspectives, Software as a Service (SaaS) seemed like it was the best option—particularly because of the monthly pricing structure and functionality. One of the businesses had installed an Ultimate’ Software solution on-site, and the SaaS option offered what Genmar was looking for. But he had to convince executives internally because each individual operating company was highly autonomous, and all 10 presidents needed to approve the change. “To get this done, it was a sell job I had to make,” he recalled.
Executive buy-in was one hurdle, but implementation proved just as daunting. Some of the businesses preferred to continue to outsource to the existing payroll provider; others had no experience with outsourcing of any kind. Of course, the fear of a bad implementation was top of mind for everyone. “Anytime you deal with someone’s payroll, you don’t want to screw up his livelihood,” Mahler said, adding that he made sure skeptics of the plan were placed on the “advance” team to immediately win their support.
Despite those initial fears, Mahler said rollout was completed by the end of last year. He began the implementation at corporate and four other divisions. Others were added later on. The process went mostly as expected, except for a problem with direct deposit at one site. A small local bank in Michigan had trouble with the change, which caused some headaches for Genmar. But that, too, was fixed. All other aspects of the rollout, he added, were without major difficulties.
Since implementing the on-demand service, management has benefited from the transparency and efficiency of the system as well as from cost savings, Mahler said. For instance, processing costs for 401(k) contributions have dropped significantly. Average labor costs for each job type can be easily culled from reports, giving executives the data they need to make sound business decisions. Because less HR intervention is needed in generating reports, fewer errors have been made. Another plus: employees are provided reports on how much the company contributes to their benefits so they understand the true value of their compensation packages.
Mahler said the company has only scratched the surface of the functionality of the SaaS offering. He said as the divisions become more comfortable and familiar with the system, a broader rollout of self-service, for instance, will come next. For now, he pointed out, the company is acclimating to the SaaS model.