Q & A: Sheri Sullivan, CEO, Intercomp Global Services
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SSON: How does the global payroll market place perceive Intercomp Global Services?
Sheri: Intercomp is quite different than what is currently out in the marketplace. There are a lot of vendor management companies who are using in-country third parties and are just managing them for the customer. Although that creates some value, our experience is there still is some loss of information because you are going to somebody who is going to somebody and so on and so on….Our customers have told us that ‘our’ difference is the fact that we are real payroll experts and we have the ability right now to do payroll in many other countries than any other supplier globally. We also have a methodology, where if we do not have the country we can develop that country very quickly for our customers..
SSON: What has the main challenge been in distinguishing Intercomp from other global payroll providers, particularly in the current environment?
Sheri: The challenge is just a matter of investment and having the chance to get your message out there. As you know there is a lot of noise on the market. This has been an idea that people have had for quite a while - in fact when I look back at the first talks of implementing one supplier globally – it started in about 1999 – 2000. It’s only been recently within the last two or three years that companies have started providing the service . I think overall the biggest challenge is that there is this old idea - that this is going to happen, we need this – but no-one could really provide it until now. And yes there are some people who can provide it. But how are they providing it? Are they giving me one price for all of my countries and are they really saving me time and money and all the things that a customer is looking for. So our biggest challenge is the marketing budget, if you want to know the truth. We are not a small company. In fact of all companies that provide international payroll in more than 2 countries, we are about number four in the world based on annualized revenue. .
SSON: Throughout the series Sheri, some organizations from the buyer-side have said there isn’t such a thing as global payroll – what are your thoughts on that statement?
Sheri; Well it is obviously very incorrect, we have customers who say there is such a thing as global payroll. I guess it depends on what the company is looking for in global payroll. They are right in the fact there is not one single person who does 100% of absolutely everything inside their own company with their own software. I think the value of global payroll is the economies of scope and scale, the better management processes resulting in a lower cost, easier response and consistency of processes. All of that absolutely does exist and Intercomp Global Services is currently providing this to our clients.
SSON: What are the other biggest hurdles for global payroll providers right now?
Sheri: In the current economic situation, it is getting the message out and getting it specifically to the end-users in a way that they can understand how that currently affects their company in a cost effective manner. Because every company is looking to down-size, decrease costs, especially G & A costs, which is the category in which payroll processing costs and staff is currently included in. Since all companies in the current economic environment are looking for cost savings with no risk, there is an increase in clients and contracts being awarded and an increase in sales opportunity. I think overall the challenge in the industry is how to clearly identify with the customer all of the ways to save them time and money.
Another challenge is that even though people or companies want to down-size or right-size their organizations - there is still a hesitancy to do so. When things become uncertain, many organizations simply delay decisions.
SSON: In your own opinion what constitutes a good customer verses a bad one?
Sheri: I think a good customer is one that is clearly determined to go to a global payroll solution, because of the cost savings, and also wanting to improve the efficiency of their enternal processes because they see the benefits. These customers let our team "inside" to help provide them with a complete process and this ensures there are no errors in the set-up and transition to our solution..
We have encountered three different models for how multi-national companies are managing their global payroll. One of the models is a central expert group and they are determining the overall payroll methodology for the whole company and then rolling it out. The global decision-maker asks that Intercomp Global Services help them look at their systems inside their company to help them to re-engineer everything from data-collection through the process, because what we find is we can easily jump in and help provide information and services, but a lot of times the most difficult part is what that company is doing internally to collect that information. I think that what makes the difference between a good customer and a not-ideal customer, is the fact that they are open to having us share from our experience with all these different companies. We come in and give them the tools and processes that they are really ready to embrace internally within their organization to help the whole process flow smoothly.
SSON: How do you overcome legal hurdles when designing local contracts?
Sheri: We have one contract that we use for our customers and I don’t think we have much of an issue. We have a standard contract which has been reviewed in many different countries and we just tend to give that contract to the customers and quite frankly we haven’t had any issues as far as legal hurdles are concerned. You tend to have a company whose procurement group determines on a contract and whether you centralise or decentralise – it doesn’t really matter. Our contracts are organized so that you can put additional statements of work per country as attachments. It makes it easy for customers to add additional countries as they expand and their organization changes. IN other words, we believe dealing with us should be very easy in all aspects (even contracts and billing).
SSON: Can Intercomp Gglobal Services manage several associate payroll providers to a global framework. For example – say an organization was present in 120 countries and didn’t have one global payroll provider?
Sheri: Yes – in order to participate in the role of a Global Payroll provider,we not only have capabilities to provider fully manged payroll in 16 different countries, but the other 104 would be managed by us, with gross to net done by identified local payroll partners. For all our partners, we have actually personally visited, audited and put together processes that will enable theme to fold into our processes. With all prospects, we look at their project and have a very honest conversation with them clearly identifying the ones we do internally and the ones where we have preferred partnerships.
We have had customers ask us to take over their suppliers – saying "look we have a supplier in this country – we like them a lot, but we just don’t want to deal with them giving us information in non-standard formats, we don’t want to have to audit them to make sure they are following the right processes – we don’t want any of that. We want to deal with your expertise and for you to put them on your system to work though all the processes operationally and otherwise with them and then you take responsibility of it, but we like this group – can we use them?" We have had a lot of success with this approach and adding value to our clients.
SSON: What happens when an organization only has a few employees in one location – can they implement global payroll if they only have say 5 employees working from a smaller country?
Sheri: Absolutely. We have some companies that only have two locations. With one location who may have 100 employees and the second location may only have 4 or 5. We have other companies who have over 5 locations and some of those locations may only have 1 employee. So it really doesn’t matter. What is most important is that they have a need internationally and that they are looking for a central solution with all the standard reporting, one contact and communication in English and in the local language. That is really the criteria of it.
SSON: Other than payroll, do you think Intercomp may diversify in a few years into other types of solutions?
Sheri: We do provide other services besides payroll. Currently we also provide HR administration related to payroll globally. So anything to do with hiring or firing employees – payroll related items such as vacation accruals, vacation reporting and expense reporting; those are things that we already provide and we expect that we will just add to those. In many of our markets we also provide, expense reporting, book keeping, some legal (HR) related services and even employer services. If it is going to end up on a payslip – therefore there is an administrative calculation to get it on there, then that is what we will be focusing on as far as future product growth opportunities. We see our niche as really being the payroll experts. We are looking to partner with other companies who provide more complex financial and HR services and looking for someone who is really good at payroll and able o fit in with their product offering.
SSON: Sheri throughout this global payroll series, I have spoken to some people working in payroll that had the opinion that payroll should not sit within HR, what are your thoughts on that?
Sheri: I think it is an individual company decision regarding where global payroll should sit. We see both scenarios – payroll with HR and within the finance departments. We have customers who are HR directors and customers who are Coos. I think it all depends on how the company is structured – I don’t think one size fits all. I do think from a HR perspective, if they are responsible for the payroll function, then it is important for them to think through from a process perspective how they want that process to run – not just the payroll, but their overall process related to employees management.
What we do find is that within a financial organization, they tend to be more process focused. I think what is most important is that the holder of this function needs to have a holistic methodology which takes into account a mathematical process and who have the authority to implement their solution throughout the organization. However, regardless of where the function is housed within an organization, they should ensure they have a great provider that works with them to make the process easy and so that the internal staff can focus not on payroll processing but on the tasks that bring real organizational value like people management, strategy planning, increasing margins, …etc.
SSON: What does a customer’s typical retained organization look like after they have outsourced their payroll?
Sheri: When they have outsourced with us, depending on their internal structure all we need is one contact within the organization who can answer questions and qualify specific things and answer questions. That person can can be within the HR or finance group. What we tend to see is that on average that person will not need to spend more than 4 hours per month total with us, and usually what that involves is getting us in contact with the right people to answer questions. And I will give you an example; when we get payroll information from a company, we go through a series of control checks and if those control totals are off, then we need somebody in the company who can verify it is ok. So we don’t need anyone internally responsible for payroll full time. Our customers tend to give this responsibility to somebody as a small part of their overall responsibility. And depending on the size of the organization – say they are a smaller organization only present in a few countries with only a few variable pay element, that time may as little as 15 minutes to two hours a month. It just depends on the complexity of the organization. Their role is just to verify a process and help answer questions.
SSON: And what percentage of the investment should be allocated to the retained organization in your opinion?
Sheri: Oh very small. I think if they get the right supplier, they are only going to need 5% of the total investment maximum retained. Because if you get the right supplier that knows what they are doing, they should come in and be able to sit with you and say that their processes are going to enable you to spend less and less time controlling the process. I think the biggest challenge is always the set-up process, but besides the set-up; the only other challenge is a mid-year organizational change (Acquisition or other). The worst thing a payroll provider can do is come and introduce brand new tools that are outside the company process. You can introduce new tools that supplement the process, but a lot of companies have processes for gathering hours or allocating time to customers and so the set-up needs to be where the payroll vendor audits the other processes and identifies how to improve it but doesn’t create and become another process outside of the norm.
SSON: Sheri, where do you see global payroll going within the next 5 years – what do you think Intercomp Global Services will be doing differently?
Sheri: I think you are going to have a couple of things in global payroll market over the next five years. One thing you are going to have is more pricing consistency, a one price per-payslip regardless of geographic location. Currently in the market there is a toll based on the country or bundled pricing based on the geographic location; so for instance North America may be one price, South America may be another price and APAC another price. So I think companies are going to see the achievement of price reductions and an economies of scale resulting in one per payslip price.
The second thing I would predict is greater customer sophistication and requirements. For example, we already have a great reporting tool for our customers and we are currently spending a lot of money and effort on improving that tool for our customers. Our tool eventually will be a widget that will provide a direct link into the common business tools (Excel) to tie-in to our payroll their database for their company so that a user can actually slice and dice the data for what they need in real time, verses having to ask for customised reports. You know right now the industry isn’t as flexible as it needs to be. In summary, I have two predictions; reduction in price -one price per payslip and greater flexibility on how you use that data that comes out of the systems and process that you are already putting in place.