HCM and Digital Transformation, with Stuart Sackman, CTO and CIO, ADP
Human capital management is at the forefront of digital change and transformation.
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Human capital management is at the forefront of digital change and transformation. For this episode, a senior leader from one of the largest HCM product organizations in the world shares his view of this evolving landscape.
Stuart Sackman leads ADP’s Global Product and Technology (GPT) organization, overseeing both client-facing product development and internal technology (CIO/CTO) operations. Stuart ensures that the GPT team’s work aligns with ADP’s overall technology efforts and our strategic goal of becoming the world’s leading provider of Human Capital Management solutions.
Stuart joined ADP in 1992, and during his tenure has held positions with broad-ranging responsibilities across several ADP business units.
In Stuart’s previous role as Corporate Vice President and General Manager of Multinational Corporations (MNC) Services, which includes the ADP GlobalView and ADP Streamline businesses, he had direct P&L responsibility for ADP’s largest, most complicated global clients. He also played a leadership role in developing the organization’s product and marketing strategies.
Prior to heading up MNC, Stuart was the Division Vice President and General Manager of National Account Services’ East National Service Center, which provides payroll and HR services to 700+ large employers headquartered in the northeast U.S. Prior to that, he was the Senior Vice President of Product Strategy for ADP Employer Services at a time when ADP was expanding internationally very rapidly.
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Michael Krigsman:
Welcome to episode 184 of CXOTalk. I’m Michael Krigsman and today we are talking about the future of Human Capital Management and HR technology with Stuart Sackman, who is the CIO and the CTO of one of the largest HR technology companies in the world, ADP. Stuart how are you?
Stuart Sackman:
Great Michael and pleasure to be with you.
Michael Krigsman:
Well thanks so much we really appreciate you taking the time. So Stuart, just to set contacts tell us about ADP and a little about your role.
Stuart Sackman:
Great, so you know as Michael said my name is Stewart Sackman, and my actual title is Corporate Vice President of what we call Global Products and Technology. And Global Products and Technology encompasses four major areas. R&D teams those are the groups that build our client facing products and I'll talk a little bit more about ADP in a minute, so our R&D teams, and are what we call our infrastructure and operations teams globally. Those are the people that run our data centers and keep our infrastructure up and running.
We also have a centralized product management team obviously they work very closely with our R&D team around product requirements, as well as with our clients and our operations team to try to keep track of what's going on in the market. Then the last group is internal systems so I also run the groups that you know are in charge of our financial systems and of course we use all our own HR talent and recruiting products, but I guess I’m responsible for those as well. So that’s the scope of my organization.
Michael Krigsman:
So your role includes both internal technology essentially functioning as CIO, as well as external technology you're developing external for your customers to use and you're therefore functioning as CTO. It's an unusual combination and can you tell us what are the reasons and why those roles come together as they do at ADP.
Stuart Sackman:
Yeah so for those that aren’t that familiar with the ADP, as Michael said earlier we’re global human capital management company and we do business in over a hundred countries, and we serve virtually every market segments as a related to human capital management. So we serve very small companies you know, two or three or four employees, mid-sized companies, large US domestic companies and the very largest global multinational companies.
And 100% of the products and services that we provide are cloud-based and for the most part they run in our data centers. And clearly one of the important elements of our services is the overall performance and availability of our solutions for our end user clients. So there's a really very tight handshake for us between the products that you know as we develop them, to market them, and provide them to customers and the infrastructure that runs them.
And one of the journeys that we've been on recently is we moved our whole R&D force to agile development, and we're trying to be you know as everyone is in the market with the pace of change in technology. You know we're trying to be more agile in the way that we develop things and you know it’s and end to end process so if we don’t develop things faster we can't deploy them and our clients can't benefit. So we think it makes sense to have a single leadership for both the again, the products, the R&D, the things that we sell as well as the infrastructure that they run on. So that's the rationale for it.
Michael Krigsman:
It’s an unusual combination. Are there tensions or challenges that come up between these two different roles? And the reason I'm asking is because in most companies they really are so different even though I realize that at ADP they're quite converged.
Stuart Sackman:
Yes so there always is a little bit but there's always the natural tension a little bit I think between the developers that are out in front and the infrastructure people. Developers tend to be a little bit more freewheeling. You know, they're out focused on the next features and you know the infrastructure people have to run this stuff, and have to you know meet our very high standards for availability and reliability or a little bit more cautious in their pace.
And years ago they actually we have these two functions separated and there was a little bit of the over the wall kind of behavior inside ADP. We developed it overall for someone else to deploy it and our client suffered in that, because we had you know we had more outages and you know lower performance.
So again one of the rationales for bringing these things together was to you know, close that seem organizationally. Now I wouldn't say Michael that it's perfect, but it's significantly better and we do have a really good partnership. You know I’m sure you're familiar and so much has been written around DevOps and the things that are going on to simplify deployment. And you know, we have a lot of those practices you know we're trying to use containers and newer technologies to simplify our deployment. I guess it enables the agility we need to meet with you know the changing market trends. So I feel good about where we are today and to be honest it wasn't always perfect but it feels pretty good today.
Michael Krigsman:
You mentioned that you're a hundred percent cloud-based, and I don't think people realize that ADP was was genuinely one of the pioneers of the cloud.
Stuart Sackman:
Yeah, you know not a lot of people know you know, know the history of the company. I’m 24 years with ADP and I'm a little bit of historian. I just spend a second with you because we created the outsourced payroll industry, and in many ways we created the one-to-many business model. And as you know the one-to-many business model is the foundation for cloud services; that's one of the big benefits you know, as opposed to having running stuff on premise, it's customized you know where you have to apply upgrades. You know the cloud offers the benefits of you know for new features come to market faster. But it also you know you share that with other people, one-to-many.
And you know company was founded in 1949. Even back in 1949 before computers existed we had a one-to-many business model. Difference was it was a team of bookkeepers and we go get you know, time sheets from companies and we have a single team you know write their paychecks and then send them back out. And we navigated literally navigated every technology you know navigate all the technology changes. We were very early users of IBM computers. And still big user of IBM computers and then you know and client-server, batch processing, and modems came around. We started to push technology out into our clients and we connected by modems.
And as the internet evolved you know, we moved everything to our cloud. And you know, we think we're the biggest business to business cloud HCM provider 600,000 clients globally. And yes absolutely all of our applications are delivered over the cloud.
Michael Krigsman:
We have a question from Twitter, Arsalan Khan is wondering about the impact that you're previous background as a Management Consultant has had on what you do today.
Stuart Sackman:
Yes, so my background is I was a Management Consultant in technology, prior to that actually work for a start-up in the 80s and the first technology boom in Silicon Valley. But consulting is good training for business because it gives you the opportunity, lots of business problems, work across lots of companies, trains you in communication and you know, trains you and analytics and problem solving. And I think I carry those skills forward as we think about the evolving landscape of technology, especially as it relates to human capital. You know, those skills around analysis and strategy, and thinking are helpful. And I think it helps me direct my teams better and keeps us forward-looking as far as you know, what we work on and how we try to drive the HCM market forward.
Michael Krigsman:
I want to remind everybody that we are talking with Stuart Sackman, who is the Senior Vice President and CIO and CTO of ADP. And while we're doing this, while this video is going on, there is a live tweet chat with the hashtag cxotalk. And so feel free to tweet your questions using that hashtag cxotalk to Stuart Sackman. Stuart you are in the unique position of not only being able to observe changes in HCM and HCM technology across a range of different market segments large and small as you said earlier, but you are also shaping that future. And so please share with us your observations on what's going on with HCM and HCM technology today.
Stuart Sackman:
Yeah, so actually it's a really exciting time to be in the human capital management business and exciting for lots of reasons. The rate of technology change and how technology is being applied to HCM is exciting and also is companies broadly around the economy as technology plays a bigger role you know, they're out there trying to recruit new talent and engage their workforces. The tools that we develop we believe help them do that so exciting on lots of fronts but.
But I think you know, there's some trends that are well proven like the move to the cloud and one of things that we think is going on is I think there’s been a lot of work done and user experience and that people have written a lot about the consumerization of IT. We think maybe the next big trend in Human Capital Management is what we call conversational user interface. So we believe that over time HCM human capital management solutions will be like automated assistance and the interface will be more conversational.
So today when you use a traditional human capital system, you know you log on somewhere. You navigate somewhere, and you go who are people and you search people who are my high performers. We think in the future that could be conversational. So you pick up your mobile device and the system will be like an automated system and you go, hey who are my high potentials? And the system would return it back to you or that the systems would use machine learning to help actually make your life easier which is end value you know one of the benefits of system. So you know the system might remind you like, hey your time card is due or I know you worked a regular week this week would you like me to submit your standard hours for you? And look at your calendar and knows you worked your regular shift.
So we think this change to conversational user interface, and this idea of more push where there's more notification in conversation with our systems than today. And what we describe as where again you navigate some menu system, and then you go down and get the information you need. We think that's kind of an interesting way that technology evolved and we're working on this in our lab and we think it will change the way people interface with HR technology.
Michael Krigsman:
So these come these conversational user interfaces as you're describing, so it's a combination of rethinking the user experience backed up by machine learning to interpret the data that the system is collecting it is it.
Stuart Sackman:
Yeah, so you can think about the HR system becoming a box sort of in the background that’s monitoring your patterns of behavior and work as well as on call for you to ask questions. And you know like an example might be you know it's looking at your calendar and says, Stuart I see you're going to be in California. You know you're visiting your office in California and have some meetings. Did you know that you have two high potential people there, associates there? They’re at high risk of leaving ADP?
Because I’ll talk a little bit more about our predictive analytics. You know we're focused also on big data, so if these predictive analytics on flight risk. So it might say, while you're there you have these two high potential associates they’re a flight risk, maybe you should consider meeting them for breakfast or lunch and talking about career opportunities at ADP because you know clearly you want to retain them.
And today that's really hard to do because you know when my admin sets up my appointments she doesn't know what's going on. She's not searching our HR database, and if it's not top of mind for me and that's something I might miss. That's an example of how it would be both interactive and you know using machine learning is it seems my patterns and says hey, Stuart loves to have lunch with associates and skip level meetings then it would learn that. And as I do other traveling it will continue to you know build on that and help me establish those connections within the organization.
Michael Krigsman:
As you are talking with your customers, how are customer expectations changing? I’m assuming that these technology developments you're describing are in response to the customer expectations and what they want from you.
Stuart Sackman:
Yeah so I do spend a lot of time with our clients. Prior to this role I ran in global multinational business where I spent the majority of my time with our largest global clients. And you know one of their challenges is the challenges of HR that's been around you know forever is that there's lots of information in these systems. But it's hard for people to get the value out, because they're busy with the regular jobs and you know they don't show up to work every day necessarily thinking about what HCM activities and transactions I need to do.
So we need to make the applications easier that's where the push and pull comes in so we're notifying them. And we need the machines to do more of the heavy lifting around understanding patterns of work and helping you know, push data to whether its managers or practitioners or employees. Push information to them at the right time so they can take the right actions to keep them engaged in the company.
So another area that were heavily focused on is you know, kind of what we call the study of behavior of economics. So we're looking at how you know we're trying to study behaviors and how people behave, and we're trying to redesign our systems around the way people really work. Not the way you want them to work, you know we want everyone to be perfect and engaged and you know on time and you know do all their HR, clean their room and do all the things are supposed to do.
But the truth is they're busy. So we're studying behavioral economics and we're trying to find lower friction ways to help bring value to our clients that are less disruptive. So again just so that people complete them. So we developed an application we call leader compass and we actually tested internally inside at ADP with our 56,000 global associates. And it's all email based so it's an incredibly light application. There's no registration, no passwords, you don't have to do anything. And we send an email and the first email is confirm who your manager is, then you just type reply with your managers name. And from that we reassemble the org chart for the company.
So again in HR systems if the practitioners aren’t keeping track, people do move around especially in big and mid-sized companies. And sometimes just the org chart it's out of date. So we assemble that with again, no systems install, we assemble that just through email.
And then the next thing we do is we did a short 12 question survey like a 360 for your leader with 12 questions. Then we assembled the results and we were able to provide them back, again no login, no work and you know we got like 96% participation because it took you know 10 minutes to fill out the survey.
And then we assemble the results and we distribute them back to the leaders and we show them on a bell curve how their relative score compares the rest of the ADP organization, and then we have an automated coach in the background so to identify their opportunities you know based on the feedback. You know we register them for coaching and we call it ADP coach and it sends very brief targeted emails on those specific topics that the leader compass showed that people needed development. And again we get incredibly high click-through rates on the coaching because they’re short.
You know we can't guarantee that everyone's reading and internalizing it. We know that at least they’re opening the emails and reading them. And you know just that simple thing, no installs, no logins, no work, you have a leadership development tool basically. And that's where again we think the world is going, because today's systems are just still too heavy, too hard to use to navigate and all the rest.
Michael Krigsman:
With your scale and I should ask you, can you give us a sense of how many people actually use your systems.
Stuart Sackman:
Yes, so I think roughly 30 million people worldwide use our systems in one form or another. We pay one in six people in the US, so that's obviously a big population. The majority of our large and mid-sized clients you know use us for payroll as well as HR and the talent sweet. And we're in business in I think I said earlier in a 100 countries globally.
Michael Krigsman:
So at that scale every time you make a change there's a massive ripple effect that takes place. And so you must be always thinking how do you balance change and improvement against the risk of disruption and causing change for your customers. So how do you think about that?
Stuart Sackman:
Yeah really good question. So we do have multiple systems because we do have different products that serve small business and different products that serve mid-sized domestic and large domestic and global. We have individual country solutions in some of the countries where we do business. So we make one change and it’s typically not affecting all 30 million. But it is something that we worry about is as we've gone to agile development and we started to you know delivered most of our product lines kind of three major releases the year, we do get in some cases feedback both from our clients and our service associates you know that we're going too fast. But you know we try to solve that through elegant design and making sure that the experience itself is easy enough to use so the changes are generally positive.
The other area that’s you know also a challenge for us is we have a big service organization and they need to stay obviously well trained on our current solutions as well. So that's another area that we spend a lot of time on. So yeah, it's a challenging problem but you know the market for HCM I think there's two or three thousand startups that we compete with, and they move incredibly quickly. So we have to stay agile to survive and to continue to compete and win. And I think we're doing a good job at that and you know and we're getting better all the time at how we test, release, and sort of feather in the improvements but stopping isn't an option so we just got to keep moving forward.
Michael Krigsman:
So you said there that you compete with two or three thousand startups, that's an extraordinary number I mean had how do that, how do you think about them, how do you build strategy around that? I mean you must feel like you've got arrows in your back continuously.
Stuart Sackman:
Yeah so I'll go back a little bit and sort of you know, the evolution of HR systems if you can remember back to the you know the heyday of the ERP solutions. You know when people saw from Oracle and SAP, they tried to build these gigantic systems that solved every problem for business and they got weighted down by their complexity and cost of upgrades. So you know just didn't really work and then what happens is all these sort of best of breeds popped up, “I do performance reviews, I do recruiting” and they kind of attached themselves around ERPs.
And then when we made the transition to the you know the cloud again, the cloud companies would started in these best to breeds. You know try to build out the entire HCM suites, and now you try to have this fully integrated solution in the cloud. And we've done that as well, but I don't think that's the future of HCM and again I’m sure the people that are listening and watching, you know have read a lot about the API economy and what's happening around APIs and how systems talk to each other. But our strategy for competing is not to try to do everything. So we have a solution that we call the ADP marketplace and we publish all of our API is in the marketplace. And then we encourage you know companies, some of these 3000 they might compete with us and recruiting or a specific pillar of talent management in our time attendance and benefits. We actually you know we try to recruit them to participate in our marketplace and use our API is to connect to us because we can't stop the progress of our clients.
So you know we have a great performance system that ADP offers, but some companies like GE are dropping annual performance reviews and they want to do check-ins. Well we don't have that capability today, we might not have immediately, so we want to have a partner in our marketplace so if you change the dynamic the way you want to do performance or recruiting you can go to the marketplace and get a partner that's integrated.
So the way we compete is we try to co-opt them in a this co-opetition thing, we think our scale and our capabilities, our system of record is tremendously valuable. And you know over time we may or may not have solutions to compete in some of these pillars. But I don't think that there's you know this fully integrated HCM suite is going to be the future. It's going to be a core HR with some specialized solutions that will differ broadly by clients. Because what the clients tell me is hey we want our solutions personalized around our needs. We don't want to you know just use your out of the box, we like portions of it, but other portions we want to get from elsewhere and we want to enable that.
Michael Krigsman:
So your argument or your view is that smaller - I was going say components but it's probably not the right word, smaller applications that are more finely grained and tailored to the needs of narrower segments of users and then stringing those together through APIs, so that that's really the future of HCM.
Stuart Sackman:
That's our belief and our marketplace is growing rapidly and you know as our marketplace grows I think others will be forced to also move in the same direction. Because again as I said it's not just that different companies might have different ways of doing certainly HR tasks inside an individual company you might want to do things differently.
So you know we were building up an Innovation lab and Chelsea in Manhattan and we're building up the lab we're trying to hire very specialized high technical person and we had a lot of open positions. So our standard recruitment processes aren't a good fit, so we needed a different system to support the way we recruit for that group in that location. And again many of our clients say the same things, they have things that are going on that are unique in some of those unique activities require a unique solution.
So while the bulk of ADP might use ADP standard recruiting system, this division or this department or this location needs something different. They might use that for a couple years and then go back to the standard. So the world is so dynamic again and things change so quickly that we don't create the marketplace and the APIs, and we don't find ways to you know to include this startup community I think you know we're afraid you know that we’ll be left behind. And an equally important our clients won’t be able to get the full benefit because it will make it too difficult to leverage to the tools, and they have to do all point-to-point integrations and all the rest, the sort of the heavy lifting of technology connectivity.
Michael Krigsman:
So really the goal then is greater simplicity and ease for your clients it sounds like.
Stuart Sackman:
Yeah I mean again my vision of this is a mass personalized. So we have this in the consumer space right. You know, you might have an iPhone, I have an iPhone and when I go to big groups you know a lot of people have iPhones but no two people have the same set of applications on their iPhone because we personalize them around our needs. And individual applications change over time.
You know I used to use whatever MapQuest and I used Google Maps then I use Ways and you know I don't have to throw out my phone. I just get rid of that component. I don’t have to change my calendar you know my contacts and all sorts of other stuff. So you know our technology design is actually based on that. You know we think you know these bigger more integrated application will go to a series of mini apps that share common platforms, because your HR, your org structures has to be shared. You know the workflows and approvals have to be shared because that's common to the organization as a whole. But the individual way you do a performance review might be different in different segments, and it might change over time.
So we think you know this platform common set of capabilities, with what we call mini apps or you know smaller applications for discrete tasks is the way the world is going. And it's so consistent with the consumer experience that you know we think it will be a very comfortable thing for our clients especially as millennials become a bigger part of the workforce.
Michael Krigsman:
I want to remind everybody that we are talking with Stuart Sackman, who is one of the senior leaders at ADP. And there's a tweet chat going on with the hashtag cxotalk, and you can send questions in for Stuart. Stuart these changes that you were just talking about do they fall under this general broad category of jargon that I don't particularly like but we all use, digital transformation.
Stuart Sackman:
Yeah I mean now it's sort of an all-encompassing term digital transformation. I guess the answer is yes in the sense that they're all enabled by technology and their digital you know in nature. You know again, as I said earlier you know we're in the cloud, we’re a cloud based company all our products and services are already technology-based so I don't know that's you know per se digital transformation with us. But it's the way technology can be deployed and used is you know is changing so we do think about you know wearables and how we have notifications can work, how we have big efforts in machine learning as I talked about earlier. You know try to recognize patterns so we can push information to managers and practitioners and employees that's meaningful at the right time to make their lives easier, and make their work experience better.
We have big efforts around big data and data analytics. And you know all these things I think fall under that broad umbrella of digital transformation and if transformation means continual evolution and driving forward, then yeah we're going to be out of digital transformation for the foreseeable future. Digital transformation you know it's a radical shift it's a little less relevant for ADP. You know maybe a car manufacturer goes from you know old fashioned car to a self-driving car that's a big digital change. You know for us I think it's a little more evolutionary in the sense that you know as I said multiple times our systems already all cloud-based we're already a technology company.
Michael Krigsman:
These types of changes that you're describing, the different technologies, the different ways of thinking about these technologies and developing technologies that match different types of HCM strategies. What does this do inside ADP? You mentioned DevOps and agile development what are some of the implications for all of this in terms of ADP itself changing and adapting.
Stuart Sackman:
So excellent question. This is not easy, there's some heavy lifting inside ADP in the sense that we still have a lot of legacy applications and you know and moving those forward and moving our clients forward from legacy applications to our modern applications is not easy. It's disruptive for them and a lot of change.
And the way we’ve attack this problem is we started by opening a new location and our first location in Chelsea, Manhattan, and we opened an innovation lab there. And we went out and purposely recruited all largely or 90% new people from outside. And we went to Chelsea because its referred to my guess is like Silicon Alley. It's you know close to the ad agencies and we think there's a wealth of design capability to help us think through the user experience. And then we went through and recruited a lot of new talent and ATP could help us think about how technology works and help us guide the future, and we've expanded that and now we have a lab on the west coast, we have one in Atlanta. So we use these labs to help kind of sparked the thinking and help us you know with the vision. And then we have converted as I said earlier our whole R&D organization I think we have 5,000 developers around the world who are 100% agile.
So we take the ideas and designs that we create the labs and then we permeate that throughout the whole organization. And then the other thing I would add is our CEO it’s his fifth year in the job, he really set innovation out as a critical element for us. The whole organization is aligned behind this idea of innovation. And he created you know both the strategy as well as the funding to help us move our team's forward. But it's a journey like everything it is a journey.
Michael Krigsman:
You mentioned working with startups and you've been talking about the innovation lab, so can you describe a little bit more in depth this focus on innovation and how does such a large company ensure that innovation takes place on a constant relentless non-stop basis.
Stuart Sackman:
Yeah again it's an excellent question. And you know that there's not really a magic wand for this but what we've done is we've reserved a significant portion of our total investment in development. So you know roughly almost a quarter of our R&D investment we have on future stuff. Future stuff being tomorrow solutions or you know like sometimes likes I say horizon two solutions and horizon three solutions. So we reserve a significant amount of our budget that for that and then we you know, we try to recruit the talent that can help think through and build those. Then we leverage our global knowledge our deep functional knowledge and our knowledge about global compliance to understand and are a large client base so you know try to get a pulse of what the needs are around our clients, and what they're struggling with. Then you know we experiment.
So you know I mentioned earlier leader compass, but you know we had this idea that need a lighter approach to help develop leaders. There's been lots of research done that suggests that you know front-line managers and the most important people on any organization. They direct the troops and makes perfect sense right. They direct the troops and almost everything is like associated engagement and associated productivity and associate satisfaction, and it’s tightly linked to the quality of their manager. So we said that's a problem all of our clients have, but we need a way to measure their you know, their skills and their opportunities for development in an easier wa in a lighter touch way.
We need a way to help our clients develop and that's how we came up with this idea of Leader Compass based on behavioral economics. And as I described earlier where we these really light touch surveys, and we get the responses and then we have the coach that based on the feedback that you got as an individual. For you as a leader we could direct coaching to you and we're going to roll this out more broadly. And we believe that as we rolled out more broadly will learn so much about what it takes to coach develop managers as we can run these surveys that are so light and easy.
You know we're going to run them internally twice a year, and eventually might run them portably and able to track the progress and then look at the coaching and see if the coaching is actually working and helping make managers more effective. And as we roll this out to our clients will get more data. Holistically across the broad spectrum of clients that we serve and we think we'll have even more insights. And you know our hope is that we can bring these insights and knowledge to our clients to help them be more effective in managing their human capital. That's our strategy and you see our tag lines, the more human resource. You know we really want to help our clients be more effective at managing their people so that they can be more effective in their individual businesses about driving business success and business results.
Michael Krigsman:
In many large organizations one of the challenges of innovation is the senior leadership may have these goals but as it filters down through the organization, people are used to doing things in a particular way and they're developed almost you could say the corporate anti innovation antibodies. And so how do you prevent that from happening inside ADP.
Stuart Sackman:
Yeah so we have the benefit of having our CEO as I mentioned who is laser-focused on the idea of innovation. And you know he keeps us pushing forward. He's you know, he's concerned big companies, you know there's a tendency in big companies to become bureaucratic and you know bureaucracy slows people down. But he's done a really fantastic job in his tenure. You know we used to be a little bit of a dashboard company and you know what are the internal metrics and what are we doing, you know into a windshield company. So you know head up looking out for word he's kept us focused more on the competition.
And you know he's out every day talking about you know the avoidance of complacency and the avoidance of bureaucracy and the need to push forward more to beat our competition. And we're in a really competitive market and you know I said earlier, there's a ton of startups. And you know we see and our associates see that. And I think he's done a really nice job about you know communicating our strategy and keeping our 56,000 associates around the world focused on moving forward. Now isn’t perfect Michael, nothing in the world is never perfect. You know what I feel pretty good about where we are in the progress that we're making.
And I think our results show that. We just released our annual results. We had a great year. We sold I guess $1.75 billion of new HCM. New business bookings that's the annual revenue of our new clients. It’s tremendously large numbers and I’m sure people can appreciate, so we’re really happy with that and you know in our overall business performance you know it's doing good and you feel good about where we are.
Michael Krigsman:
Stuart we have just five minutes left and we have a question from Twitter, Connie Woodson asks how do you safely manage to document payroll cloud-based payroll Information, which I guess is part of the larger issue of safety in the cloud especially at your scale and with the type of confidential information. So maybe can you talk about that issue and relatively briefly because again we only have a few minutes left?
Stuart Sackman:
Yeah there's two aspects to payroll globally that are really hard. One is compliance which is keeping track of all the changes to go on around the world. I think last year there were like fifteen thousand statutory changes. If you look across all the states and countries are we do business, so it’s a huge number and we have a team of statutory experts that monitor that around the globe so we can get that IP into our systems.
And then yeah data security is a big focus and a big issue for us and you know we have all the standard defenses. We focus on encryption at rest, and we're constantly its hand to hand combat to keep our data secure. And then on the global basis there's such big changes going on in data privacy regulation and this again is a big part of what we do for our clients. And you know we have external auditors and you know ethical hackers that we work with. So we have a have global security organization called GS, and their life is just trying to protect our data. But it is as it is for every company its hand to hand combat. You can't protect your perimeter defenses it's impossible. People are in so you’ve got to encrypt data and the rest and you‘ve got to do things to make sure that you're protecting you know the crown jewels inside of the inside network. But that’s probably Michael a topic that could be a whole topic for maybe another conversation because so much to it.
And I'm sorry that we didn't get a chance to talk more about data analytics. I know we're out of time. It’s another tremendous investment area for ADP we have this data we've accumulated literally over 600,000 clients you know over the last 20 years and we're trying to use that data to provide benchmarks and predictive analytics for our clients that help them to again, manage their teams better. Show them how their salaries, their increases, their turn over, their benefits costs compared to others and then you know predictive analytics our first one being flight risk to help them manage their employees better so again maybe we get a chance to talk again that might be a whole subject on its own.
Michael Krigsman:
Yes well we definitely should take just a moment to talk a little further about this, so data analytics maybe just tell us more. So you're aggregating data across from your millions of customers, many vast amounts of data and you have a data scientist I assume, so please do elaborate a little bit on this.
Stuart Sackman:
Yeah so we got permission from our clients to take the data and aggregate it in an anonymized fashion and we have a team of data scientists, they're working every day to provide insights back to our clients.
One of the first things that we've done is benchmarks, relatively straight forward for us and you can drill down our benchmarks literally by industry and by state and to the position level. So if you want to know what a sales clerk you know makes in New Jersey on average, we can tell you that. Or if you want to know what is small business sales clerk earns in New Jersey we can tell you that, and there's not good data available in the market of survey data but we have real data. And you know so we can show you that or what what's the turnover percent, so you can compare your own statistics against your peer group and see if you might have a problem. Or you know what's the annual increase you're trying to set your you know, the pool for an increase year or what are other companies doing so you stay competitive in pay. So we have all the benchmarks and then that's the first thing we did.
The next thing we're doing is trying to drive and develop predictive analytics. You know I mentioned flight risk a few times and then you know we could show you things like you know, who's a good performer the type flight risk so you can take some action. And we're taking these metrics now and the benchmarks and we are embedding them in the workflows, so that at the right time. So I used the example of visiting another location, if I'm going to visit and I’m going to do some meetings you know I should know who's a high performance and risk, so I can do something while I’m there. Not every business shows up every day and you say let me run some analytics and see what's going on. We try to embed them in the workflows if you're doing a new hire, we tell you what the relative salaries are at that time or when you open a new position with all their salaries are. So again we're just trying to help our clients be more effective and leverage you know aggregated and anonymized data that we have.
Michael Krigsman:
And how important do you think this is going to be for your business moving forward. What kind of investments are you actually making?
Stuart Sackman:
Yeah I mentioned you know spending you know up to quarter of our budget in innovation and this is part of that, and I think it's critically important. You know I know you read and follow technology closely and a lot of listeners, big data is on the top of everyone's mind and you know the nice thing about ADP is we like to say in order to deliver big data you actually have to have big data. And we have big data because we have the big you know we have 600,000 clients globally and our average client retention this year is 90% , so our average client life is like 10 years and been in the cloud forever. So we literally have you know years of historical data as well as some of the aggregated data.
And it's actually really cool because we try to create predictive analytics. We’re able to go back in time, so we go back to the you know what the client looked like so, Stuart’s at risk of turnover and then you know we run the metrics on 85 years ago and say these people are at risk a turnover then we follow him forward in time and we can see if they actually leave or not. So we can see the you know, the sort of the effectiveness of our predictability on metrics.
Michael Krigsman:
Well pretty interesting stuff. We have been talking on episode number 184 of CXOTalk with Stuart Sackman, who is one of the Executives of ADP, Stuart thank you again for taking time today to speak with us.
Stuart Sackman:
Really appreciate it Michael it was a great conversation. Thanks for having me and I hope we got some tweets and it was a great chance to talk about it.
Michael Krigsman:
Well we have a lot of tweets and I hope you come back again. Everybody thank you for watching. On Tuesday we're speaking on CXOTalk with the CIO of VMware and a week from today next Friday, we're speaking with the CEO of Dale Carnegie and so that'll be interesting. So everybody thanks so much and have a great week bye bye.
Companies mentioned in today’s show:
ADP www.adp.com
ADP Twitter https://twitter.com/adp
Oracle www.oracle.com
SAP www.sap.com
GE www.ge.com
Google www.google.com
Stuart Sackman: