UKG recently held the spring edition of its annual analyst day in Boston, bringing together senior executives from across the organization and products for a deep dive business and innovation update with the analyst community. The following is a recap of the highlights from the annual event and my thoughts on the outlook for UKG and its HCM technology suites.
2023 is off to a solid start as UKG achieved a company milestone in surpassing $1b in quarterly revenues for the second consecutive quarter in its history as a combined company and steaming toward its goal of $5b in gross revenue by FY’2025.
Adoption across UKG’s portfolio of HCM and WFM solutions remains strong, with 20% y/y growth in Q2 FY’23, driven by an equal mix of full-suite adoption and expanded module uptake by existing clients. UKG’s shrewd and well-timed (2021) acquisition of Great Place to Work (GPTW) is holding its own in the portfolio with 45% y/y growth in new clients. It remains a key channel for new client platform discussions, adoption, and growth, particularly with firms outside North America.
Improvements to the customer care approach have positively impacted the CX. UKG’s support ‘pods’ strategy (piloted late in 2022) is now in place, providing platform adopters with a consistent group handling a consistent client set. The approach has improved suite/module “handoffs” and resulted in an 18% CSAT increase and a 25% reduction in resolution times for its clients. UKG expects the service approach to drive improved retention and value for its clients and long-term growth for the business over time.
Central to UKG’s continued growth is the mantra of “Be the One”: one suite of products + one people-first purpose + one approach to simplifying how it does business. To support this, UKG invested >$625m last fiscal year and is trending to exceed that amount this year to fuel its next wave of innovation and mission of developing human-centered products with differentiated insights to enable every organization to become a great place to work.
While UKG is certainly focused on the total workforce, it’s placing significant emphasis and innovation toward the frontline, shift, and hourly workforce, which means focusing intently on the tactical “day-to-day” aspects of HR and payroll.
Examples include a new (Fall’2023) single unified mobile experience across the UKG portfolio of platforms, UX improvements to reduce workflow “clicks” and steps, deeper insights infusion in the flow of work, including Great Place To Work data, and UKG FleX enabled “micro-front ends” for shaping personalized experiences and enabling apps to pivot around employee needs.
AI will play a significant role in shaping the UKG product roadmaps and extends its history with AI technology dating back to 2015. UKG is very focused on leveraging the profound capability of generative AI (GenAI), aiming for an eventual infusion across the UKG suite of solutions. Platform partner Google Cloud will fuel UKG’s push toward generative AI and large language models (LLMs), leveraging a co-innovation partnership approach and expanding on its existing partnership.
UKG is also leveraging the technology internally to improve its processes, including the client-impacting service experience to improve case management, ticketing triage and resolutions, data migration, quality assurance, and testing, with more to come.
UKG is enabling its AI to be “fit for purpose” and training it in the rich Great Place To Work dataset and leading practice insights. Further, UKG is layering in pre and post-processing controls and human review to audit and confirm accuracy, prevent bias, and address feedback for improving its AI models. UKG is also increasingly engaging outside research and academic agencies to ensure it leverages leading and ethical AI design practices.
The Outlook for UKG
While UKG has enjoyed much of its adoption and growth from organizations based in North America, international adoption for its platform solutions will be increasingly key as it seeks to push toward its goal of $5b in gross revenues by 2025. Partners, resellers, and SI’s will remain essential to its growth path and adoption, particularly in locations beyond North America.
The Great Place To Work brand remains both a capability differentiator and a potential rich channel for continued global adoption of its technology. Great Place To Work enables and positions UKG to conduct unique and impactful HCM conversations and engage HR executives with unmatched insights, consulting, and leading practice design capability that already enables UKG with expanded sales opportunities.
The introduction of UKG FleX has positioned its technology for the next level of innovation and growth. FleX opens the platform, empowering partners (>250 currently and growing) and 3rd party developers to accelerate innovation and extend the UKG products and ecosystem. It also provides increased extensibility in what is becoming an API-driven workplace for seamless experiences, bi-directional data flow, and filling white spaces to meet unique requirements.
While UKG is developing many flashier HCM and WFM innovations, such as leveraging advanced cognitive technology like GenAI, it remains keenly focused on improving common, daily HR tasks and activities to enhance the ‘blocking and tackling’ elements of HR and payroll for practitioners, managers, and employees.
No surprise that payroll remains a priority on the UKG roadmap and a significant opportunity for the firm as a brand and technology provider uniquely positioned to provide a unified solution for payroll and time. With build-to-gross commonly the heavy lift for most organizations and multi-country payroll footprints increasing with buyers up and down-market, UKG has an opportunity to engage and support multicounty buyers with global payroll and time.
While UKG is known for its HCM and WFM technology, it’s also been quietly delivering managed payroll since its earliest days as Ultimate Software. It maintains a growing client roster represented by many large and notable employer brands in North America. UKG has recently enabled its core HR and Payroll infrastructure to make both more portable and modular to accommodate increased adoption.
UKG is, however, missing out on this incredibly rich potential of pairing its WFM technology with a global payroll capability, which will remain enabled through its global payroll partner set, which is increasingly in demand amongst its buyers.
Looking forward, UKG remains in a highly differentiated position in the HCM marketplace. Its ability to support workforces of all sizes holistically through a single brand globally for HCM, WFM technology, and Great Place To Work insights remains unique amongst its peers in the HCM technology market.