This past week workforce management and human capital management technology provider UKG announced its intent to acquire immedis, a current UKG Marketplace integration partner and global payroll technology and services provider. While the terms of the deal were not disclosed, it is presumed to be valued above the $575m valuation immedis reported with its most recent funding round; the deal is expected to close within 60 days.
The acquisition news makes perfect sense when you consider UKG’s vision and mantra of “Be the One”: one suite of products + one people-first purpose, and one approach to simplifying how it does business. Given the complexity and criticality of managing an agile global workforce, that vision was incomplete without a globally capable payroll solution to complement its HCM and WFM technology.
How We Got Here
You could argue that UKG’s path to global payroll was a long journey that was at least somewhat set in motion by the acquisition of Celergo by ADP in Fall of 2018. At that time, Celergo was the go-to-market (GTM) global payroll partner for Ultimate Software’s then-Ulti-Pro HCM platform. The bold move by ADP meant that Ultimate was operating with a GTM for global payroll enabled by one of its biggest competitors.
This led to Ultimate initially selecting four global partners and launching an integrated global payroll provider cohort within its emerging partner marketplace, including activpayroll, CloudPay, immedis, and PayAsia (later acquired by Deel). This provided both a hedge against future partner acquisitions by competitors and leaned into the growing appetite from buyers for marketplaces of integrated solutions to extend the value of their HCM investments.
The new cohort served Ultimate’s international client needs well and gradually expanded to include a few other notable providers, plus those brought by the Kronos HCM platforms when the Ultimate Software and Kronos marriage occurred in 2020.
Fast forward to 2023, and a convergence of global workforce and economic trends has driven a boom in multinational organizations and the complexity of operating as one. Firms of all sizes are increasingly supporting multi-country footprints, often to enable strategic growth or to access top talent and skills, which creates the need to manage HR and payroll at scale and across long-tail country locations.
Many complex MNCs still manage payroll operations globally on a patchwork of disparate vendors and solutions, often poorly integrated and requiring manual intervention and data manipulation to derive global reporting. This is further complicated by the complexity of managing payroll and HR compliance at scale and moving money to workers across multiple countries.
Further, with payroll, a central element in the employee experience and its rich (often untapped) insights capable of supporting improved business and strategic outcomes, global payroll modernization has become incredibly important, particularly upmarket with large enterprise buyers, in de-risking payroll and enabling the organizational agility required to compete in today’s market.
Why The Marriage Makes Sense
It’s no secret that immedis was looking for a buyer and new home, and UKG is the perfect place to nurture and continue building on the modern, technology-enabled global payroll automation solution immedis has developed.
The Ireland-based global payroll provider brings a technology-enabled multi-country payroll platform (tech + services) capable of supporting compliant payroll to over 160 countries, including treasury services for cross-border payments in 120 currencies.
The immedis global payroll technology provides users a platform for unifying payroll to a single experience, control center, and reporting capability globally. The technology includes a perpetual validation engine that maintains data accuracy by proactively identifying errors and enables straight-through processing with UKG planning to enable a fully autonomous payroll process powered by AI and ML longer term. Google’s generative AI and large language model (LLM) technology will undoubtedly influence the combined firms’ global payroll roadmap, leveraging UKG’s existing co-innovation partnership approach with the cloud provider.
Immedis also brings a much-needed and highly competitive managed global payroll services offering to complement its technology. While UKG is no stranger to payroll services, having delivered managed payroll since its earliest days as Ultimate Software, its offering was limited to North America exclusively.
The move pairs immedis’ global payroll technology, which is already tightly integrated with UKG’s suite of powerful HCM and WFM technology, arming UKG with a highly agile and differentiated workforce solution that can support the employee journey from “scheduling to payment” and do so at scale for global organizations wherever they operate.
UKG + immedis Go-To-Market
With the move, UKG has introduced ‘UKG One View,’ which leverages immedis’ SaaS solution for unified global payroll reporting and employee/practitioner experience and existing integration with UKG Pro HCM, which includes UKG Pro Workforce Management (aka UKG Dimensions). UKG will look to quickly deepen that integration to enhance the value for its clients. UKG is also decoupling its core HR and payroll solutions, making them more modular for standalone adoption. Customers of UKG Ready (down market HCM solution) will continue to be supported by partners in the UKG Marketplace.
Further, the solution is highly extensible, agile, and rapidly deployable vs. traditional ‘rip-and-replace solutions’, offering adopters a fully integrated and consolidated view of global payroll within weeks vs. months, which can provide adopters with rapid ROI, transforming their global payroll operations while preserving existing investments and resources.
What it Means for The Marketplace
While UKG and its HCM tech peers have enjoyed much of their adoption and growth from organizations based in North America to date, international adoption for HCM tech solutions will be increasingly key, particularly as UKG pushes toward its goal of $5b in gross revenues by 2025.
The acquisition of immedis provides UKG both a gateway to international buyers and the ability to meet the holistic workforce technology and service needs of its MNC prospects in HCM technology deal pursuits. It also brings UKG’s deep HCM and WFM product development expertise to the global payroll space, where innovation will be a key opportunity for the newly combined firm.
UKG’s WFM solutions are amongst the most powerful and widely adopted advanced scheduling and time and attendance solutions globally that now have a differentiated, agile, globally capable technology-driven payroll solution to pair with and target a sizable addressable market for a globally capable and unified payroll and time solution.
It accelerates UKG past much of the HCM marketplace, still sorting how to solve for multi-country footprints (although a slower mover, UKG has always kept payroll a priority) and thus opens a massive TAM opportunity for a global payroll and time GTM, not to mention the value of potentially leveraging its HCM + WFM + Great Place to Work data (which is driving MNC prospects to engage its brand for insights and consultation) and global payroll solution and data in concert. UKG’s roadmap was already focused on engaging more touch points across its applications and 3rd party tools to “connect the dots” and drive improved user outcomes by sharing its rich and differentiated data in context across its apps.
With the global payroll marketplace still fragmented and no clear definitive leader yet to emerge, the absorption of a leading provider like immedis by an HCM tech provider, unfortunately, will do little to provide global payroll marketplace clarity. It will, however, be highly impactful in the global HCM technology race, where UKG’s biggest HCM tech competitors are all making their global payroll plays.
Workday recently announced a global payroll GTM with its long-time Workday deployment and BPaaS services partner Alight Solutions. A somewhat reactionary move that focuses on backfilling Workday’s multi-country payroll whitespaces and selling Workday licenses in Europe and beyond with plans to co-innovate around global payroll longer term.
Ceridian has amassed a formidable one-stop shop of HCM, global payroll, and digital payments solutions through a mix of organic calculation engine development and acquisitions, including Ascender (2021), ADAM HCM (2021), and Excelity Global (2020), which provided depth in LATAM and APAC respectively. However, Europe remains a gap previously filled by immedis as the Dayforce HCM go-to for Pan-EU multi-country payroll. Given the presumed competitive conflict, it will be interesting to see how Ceridian and immedis move forward.
SAP SuccessFactors holds arguably the largest (nearing 50 with its H2 roadmap release) organic, widely adopted sets of multi-country payroll calculation engines available in the HCM marketplace. For example, much of the calc engines powering Alight Worklife are enabled by SAP technology, essentially fueling Workday’s global payroll GTM. Further, SAP has been in the lab working on a next-generation EC payroll capability that is globally capable and highly intelligent, with users in the U.K. already in BETA testing. (I’ve enjoyed a sneak peek, and it’s impressive.)
Further, with multiple down-market HCM platforms curating their own global payroll and HR capabilities with varying levels of maturity and enablement, the push to solve global payroll by the HCM technology provider community will no doubt be heating up as we move forward.
With the global payroll marketplace still fragmented and no clear definitive leader yet to emerge, the absorption of a leading provider like immedis, unfortunately, will do little to provide global payroll marketplace clarity.
I do expect to see more consolidation across the global payroll marketplace, where firms are seeking to supplement and fortify their offering and capability (primarily addressing gaps in key geographies). Further, with some emerging and growing payroll firms targeting to double revenues in the coming year, acquisitions will offer the most likely path to achieving that goal.
I’ll be keeping my finger on the pulse of the HCM tech and global payroll market activity over the coming months and expect to see payroll as a key topic on HCM roadmaps around the marketplace.