The joining forces of two sizable companies, in this case totaling over 12,000 employees, can be expected to elevate both business risk and business opportunity. The risk side of the ledger typically impacts employees and customers. Employees become distracted or have their productivity dip until they know exactly how they will be impacted and what is changing, or even leaving voluntarily. Similarly, a segment of existing and potential customers view a merger as a net positive down the road but face fear, uncertainty and doubt about when those benefits will be achieved. Delays can lead both employees and customers to hitch their wagons to other horses as it were.
The opportunity side of a merger is also significant, especially when the organizations come together in a collaborative and harmonious way. In my view, the coming together of Ultimate Software and Kronos is one of the most synergistic M&A events to occur in the 30+ years I’ve been involved in the HCM systems and HR domains. Two of the most critical areas to assess the degree of synergy when two enterprise software companies join forces is the resulting product set and company culture. On both fronts, major synergies from this union are undeniable. In addition to keeping a steady flow of effective communications and updates internally and externally, execution was still necessary at the highest level across the organization to keep plans in motion, make optimal adjustments, standardize the sales and customer practices, and harmonize all HR/people practices and policies. By all accounts, UKG’s CEO and leadership team have been up to the task, while simultaneously dealing with the effects of the pandemic. UKG’s CEO Aron Ain recently announced plans to keep growing the combined entity in addition to continuing each of the company’s past compensation and benefits practices, which I would consider to be representative of the upper end of the market.
At the same time as the merger integration, improving organizational agility and bolstering the resilience of workers has ascended to the top of nearly every CHRO’s radar and strategic HCM agenda. These themes are logical extensions of the employee experience (EX) topic that has seemingly dominated the HCM marketplace the last few years. On this timely topic, we assert that through 2022, one-half of organizations will realign HCM investments toward applications and tools that can directly improve the EX. High-impact EX use cases are far too plentiful to detail here; however, I have outlined a framework for delivering a great EX at the very beginning of the “EX phenomenon” in this 2018 analyst perspective.
Kronos was the overall leader in our last Workforce Management Value Index market report that highlighted critical elements of technology enabling a great EX such as HR service delivery and advanced workforce management. An updated report is planned to publish this year. The concept of EX includes being paid correctly and UKG has one of the most successful payroll products for the mid-market. UKG is positioned well to grow market share among buyers who are EX-centric in their evaluation process.
UKG has clarified its primary HCM software products that will lead its market offering, as follows:
- UKG Pro is a global HCM suite with features and capabilities that address key automation and decision-support needs in HR, Payroll and Tax, Recruiting, Onboarding, Compensation Management and Learning Management/Training Administration, utilizing AI/ML to predict outcomes and personalize experiences.
- UKG Dimensions is a global workforce management platform powered by the UKG D5 platform, a much more open API framework that delivers Kronos Workforce Dimensions product extensions to drive user adoption and ROI for customers.
- UKG Ready is the vendor’s unified HR, talent, payroll, benefits and workforce management approach designed for the SMB market, yet with personalization and other system intelligence capabilities previously more prevalent in larger enterprise products.
UKG is now working aggressively toward creating a unified experience for its customers, from sales to product usage to value realization and customer support. UKG plans to support a range of use cases that infuse transactional data with behavioral insights like a burnout predictor, as well as features that allow the effective engagement of both candidates and gig workers. A major source of differentiation for UKG is the combining of transactional and behavioral/sentiment data to deliver higher-value insights. Other capabilities we believe will attract market attention include: WFM innovations such as greater shift flexibility and posting, and the system’s capability to let workers know which other shifts or projects they can apply for if they upskill in a certain area; system-triggered targeted communications (a major asset in managing change); and more enhancements related to “employee voice” and pulse surveys. As the pandemic continues and hopefully starts to taper off, UKG will also continue releasing product updates to help HR professionals and line managers support the daily lives of remote workforces during a time when this functionality is critical for both business continuity and workforce productivity.
Organizations that had previously viewed one of these two vendor’s offerings as incomplete or not an ideal fit should consider re-examining UKG’s combined and unified offerings to see if that assessment still holds true. These two HCM-dedicated vendors are among the longest-tenured players in the HCM software market, and with such a synergistic merger and the progress being demonstrated, that dynamic should not change very much.