The Total Economic ImpactOf isolved People Cloud

Improved Employee Productivity

Evidence and data. Interviewees stated that one of the biggest impacts of having a cloud-based HCM platform that employees could access with mobile phones and via desktop was the productivity improvement for the overall workforce. This was especially the case for the interviewees who worked for frontline services organizations running the gamut of hospitality, retail, and personal services. Most of the workforce for such organizations benefited primarily from the ease of submitting worked hours (replacing traditional time cards). However, the larger productivity impact was for people managers and G&A personnel who leveraged the HCM platform for access to benefits, workforce management, learning, and recruitment.

• The HR director for the senior living facilities manager explained: “In terms of overall employee productivity, I would say about 15% improvement with isolved. I am able to audit files right from my computer at my desk. So there’s no driving time all over the state to conduct an audit. I would estimate a 15% increase in productivity for me, just due to digitized processes and reduced driving time for audit.”
• The COO for the security services provider captured productivity in terms of hours saved: “For our employees in general, I would say 2 to 3 hours of time savings a week is a safe estimate. We used to do time sheets in person. With isolved, they don’t have to come into the office to report their hours. It can be done remotely.”

Modeling and assumptions. This benefit quantifies the productivity improvement for the broader workforce that benefits from personalized access to all aspects of a modern HCM platform by no longer being dependent on paper-based processes. Based on the interviews, Forrester assumes the following about the composite organization:

• While all employees benefit from isolved People Cloud, managers, G&A personnel, and management utilize more of the platform than frontline workers. Forrester assumes that frontline workers get about 15% of the benefit compared to the professional staff. For the composite, this averages out to about 28% of employees leveraging the full HCM platform.
• The gross improvement in productivity for an employee leveraging isolved People Cloud is 8.0% in Year 1, 8.5% in Year 2, and 9.0% by Year 3. The net productivity improvement (row A2) is based on the effectiveness ramp of the isolved platform.
• The blended fully burdened hourly rate for an employee leveraging the isolved People Cloud platform is $38 (rounded).
• Forrester applied a productivity adjustment factor for the composite organization that represents the percentage of productivity savings realized. For example, 1 hour of time savings does not necessarily translate into 1 hour of productive work. For these productivity-based cost savings, the composite organization’s employees productively utilize 50% of their time savings.
• To put things in perspective, 9% productivity improvement by Year 3 means that the average employee saves 3.6 hours per week for a traditional 40-hour work week (before the 50% productivity adjustment).

Risks. Forrester recognizes that these results may not be representative of all experiences and that employee productivity gains will vary among organizations depending on the following factors:

• The makeup of the workforce, since the higher the percentage of skilled or professional employees, the higher the number of employees leveraging the HCM platform.
• Not all workers benefit equally from the productivity gains. The 8.0% to 9.0% productivity improvement is based on average usage of the full capabilities of the HCM platform.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of nearly $1.4 million.

Improved HR Productivity

Evidence and data. Interviewees largely focused on the increase in productivity that the isolved People Cloud platform enabled for their HR teams. Interviewees noted isolved covered many aspects of HR functions from talent acquisition to HR and payroll to benefits administration to workforce and talent management. For example, interviewees noted applicant tracking automation saved their recruiting teams time posting jobs, screening candidates, and onboarding. They also reported that isolved’s automated eligibility for benefits, self-service enrollment, and health insurance administration enhanced the benefits administrative processes, while automated compliance reporting (e.g., for I-9 and ACA) enabled the interviewees’ HR organizations to comply with regulatory requirements and avoid costly fines that sometimes occurred with manual tracking of forms. Finally, interviewees stated that the solution’s employee self-service not only drove employee productivity (as outlined in Benefit A), but eliminated the frequent, time-consuming calls that employees previously made to their HR teams.

When asked about quantifying the productivity improvement for the examples cited above, interviewees essentially noted that their organizations could scale their organizational growth without having to grow their current HR teams. With isolved People Cloud, these organizations avoided the cost of building out a more traditional HR team. Without having to expand HR FTEs with their organizations’ growth, the interviewees noted their organizations efficiently served their employees and were more deliberate in bringing on strategically focused new HR managers.

• The HR director for the lodging services organization responded: “How much more head count would I need in HR if we didn’t have isolved? I mean, talking to other HR directors everybody really tells me [they have] one HR person for every 50 employees. So when I tell them that I am the only HR person for a 300-person organization, they are totally surprised.”
• The COO for the security services provider stated: “I think our HR team would have to double. We have 1.5 [FTEs] that are focused on HR functions. Without People Cloud, I would need three people to put in the same hours.”
• The HR director for the senior living facilities manager expressed the impact on HR productivity: “In general, the ratio for HR to employee is typically one to 100. If I didn’t have [isolved] and I was doing everything manually, I would need double the HR staff to process everything because we’re a very high turnover business.”
• The HR director for the food services provider said: “Without isolved, we would likely need two or three more people, absolutely. Our payroll manager is at a point where the process is seamless. Having isolved for the accountability and for the second pair of eyes is critical.”
• The finance and HR director for the real estate services provider had the following explanation: “It’s hard to estimate how much the value of the compliance part of filing all the payroll tax returns, for every state even if you just have one person in a state. You’ve got federal taxes. You’ve got unemployment tax. You have workers’ compensation and all of those things. I would have to hire somebody else to do all that and then you always wonder if they’re getting it right.”

Modeling and assumptions. This benefit addresses how the composite organization streamlines their HR team with the deployment of isolved People Cloud. It focuses on the FTE savings derived by deploying isolved relative to what would have been needed more traditionally with legacy HCM platforms. Based on the interviews, Forrester assumes the following about the composite organization:

• Based on the interviews, row B1 (in the table below) captures how the HR team typically grows for a fast-growing organization with isolved People Cloud deployed.
• The gross number of HR FTEs that would be required without isolved deployed would be one FTE per every 100 employees based on market data and the interviewees, on the conservative side.⁴ The net number of HR FTEs required – in the prior state – is adjusted based on the effectiveness ramp of the isolved platform (row B3). Thus, row B2 captures the net number of HR FTEs that are not required to be hired with isolved People Cloud.
• The fully burdened annual salary for an HR generalist in the services industry is $74,250.
• Forrester does not apply a productivity adjustment factor for FTE cost savings.

Risks. Forrester recognizes that these results may not be representative of all experiences and that improved HR productivity will vary among organizations depending on the following factors:

• The number of HR FTEs needed for an organization with isolved deployed will depend on the nature of the organization and the specific subsegment in the services industry.
• The number of HR FTEs not needed to be hired will similarly depend on the nature of the organization and the specific subsegment in the services industry. Given the range of one HR professional per 50 or 100 employees, the savings could be much higher than modeled.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV of nearly $1.1 million.

Increased Employee Retention

Evidence and data. Interviewees noted that retaining employees was important for their organizations, especially due to the high expense and disruption of employee turnover. The interviewees’ organizations were mostly in a growth mode and were already challenged with onboarding and sufficiently training a large number of new employees. Because many of the interviewees’ organizations were in the personal and hospitality services industries, they were already encumbered with a significant amount of natural churn, which can result in a workforce that is less productive and may experience higher error rates due to a less experienced workforce.

Interviewees noted higher levels of employee engagement and satisfaction affected churn or turnover rates (technically, churn only captures voluntary departures, while turnover includes all departures, including retirement and workforce reduction, etc.). A high churn rate suggests issues with company culture, compensation, career growth opportunities, or management.⁵ The interviewees’ organizations were largely in the personal and hospitality services industries, which are traditionally associated with higher turnover rates. The interviewees stated that one of the biggest reasons for frontline workers leaving was due to mistakes in payroll or not being correctly paid. Higher turnover also impacted productivity and profitability due to recruitment, training, and ramp-up costs for replacing departed employees.

Interviewees reported increased engagement among their employees after isolved People Cloud was deployed. Mostly, frontline workers were more likely to stay as payroll was accurate and entering their hours was more seamless. In general, nonfrontline employees began using self-service for their questions about benefits, communicating with fellow employees and the HR team, participating in training videos, and generally feeling more a part of the team.

• The HR director for the lodging services organization noted: “For our employees who are focused on their career, I believe that retention has improved by between 10% or 15%. It has improved with isolved because they want to go ahead and educate themselves with the learning tools, etc.”
• The COO for the security services provider stated: “I can say that isolved has helped us get applicants in the system faster and we are able to track them easier and more efficiently. With that capability, we are able to hit that 400 seasonal employee number in the fall more consistently vs. 350 previously [which works out to about a 15% reduction in turnover].”

Modeling and assumptions. This benefit quantifies the impact of improved employee retention as a result of deploying isolved People Cloud. The value of this benefit is calculated by determining the avoided cost of not having to hire employees based on improved retention rates. Based on the interviews, Forrester assumes the following about the composite organization:

• A 35% employee turnover rate is assumed before the adoption of isolved People Cloud. This rate is more consistent with the overall turnover rate in the US economy, but it is much lower than the average turnover for the interviewees’ organizations’ industries. Turnover in the hospitality industry is about 74%, while the turnover rate in the services is in the 60% to 65% range.⁶ Row C2 (in the table below) assumes a more conservative turnover rate for the composite organization.
• The gross improvement in employee retention with the deployment of isolved People Cloud is assumed to be 6 percentage points (or ~17% improvement relative to the 35% turnover rate in the prior state). By applying the effectiveness ramp of the isolved platform, the net improvement in retention is reflected in row C4 in terms of percentage points.
• The difference between rows C3 and C5 are the number of employees who do not turn over because of isolved People Cloud or the number of employees who do not need to be rehired and retrained.
• The blended annual salary for an employee (not fully burdened) is $41,650.
• The average cost to replace employees (e.g., recruiting, drug tests, background checks, training, etc.) is 30% of the hourly or base salary.⁷ In order to be more precise in calculating the value of this benefit, row C6 is not fully burdened.

Risks. Forrester recognizes that these results may not be representative of all experiences and that employee retention will vary among organizations depending on the following factors:

• The turnover rate before the deployment of isolved People Cloud will depend on the industry and other factors specific to an organization.
• The cost to replace an employee — as a percentage of an employee’s hourly rate — will depend on the industry and factors like the amount of training needed for new employees.

Results. To account for these risks, Forrester adjusted this benefit downward by 18%, yielding a three-year, risk-adjusted total PV of just over $1.0 million.

Accelerated Onboarding Productivity And Faster Time To Revenue

Evidence and data. Interviewees noted that there are two aspects of the overall talent acquisition that benefit from the use of an HCM platform: improvement in recruiting efficiency and accelerated onboarding. Three of the interviewees were able to quantify the improvement in recruiting efficiency with the use of the isolved People Cloud platform. These improvements mostly centered around the ease of job postings on multiple sites, the use of AI for narrowing down candidate resumes, and speeding up the hiring process with automation. However, since these benefits accrue to the talent acquisition team, which is part of the HR team, improved recruiting efficiency is captured in Benefit B and cannot be double counted here.

Interviewees also quantified the acceleration in the onboarding process with the deployment of isolved’s HCM platform. Filling out forms and initial paperwork used to be manual and on paper. Training new employees used to require dedicated time both for the new hires and their managers, going through slide presentations and demonstrations. With isolved People Cloud, interviewees noted that filling out initial paperwork could be done online and completed remotely. This presented the interviewees’ organizations as forward-thinking and technologically savvy, which was another factor in successful recruiting. And, with training videos and online training, new employees were able to ramp up much faster than in the prior state. Consequently, these new hires were able to speed up the path to revenue generation.

• The HR director for the senior living facilities manager described the impact on recruiting efficiency as follows: “Having isolved has improved our reach with applicants. So we have more applicants and then everything is recorded and in the same place. So it’s all organized for us. That’s been a big time-saver for everybody involved in the hiring process. I would say we have seen more like a 20% productivity improvement in recruiting.”
• The COO for the security services provider explained: “Our efficiency in terms of hiring somebody has changed immensely. Instead of losing 20%, or five out of 25 candidates, due to less streamlined processes, we’re now 25 out of 25. We can better track people and they know exactly where they are in the system.”

Modeling and assumptions. This benefit quantifies two aspects of the accelerated onboarding with isolved People Cloud: the faster time to revenue for new employees and the productivity gain for new-hire managers. Based on the interviews, Forrester assumes the following about the composite organization:

• In the prior state, a new hire required two weeks of training before they could start independently doing their job and thus generating revenue for the composite organization.
• The gross improvement in onboarding efficiency with isolved People Cloud is 30%. By applying the effectiveness ramp of the isolved platform, the net improvement in onboarding efficiency is reflected in row D3.
• The revenue per employee per hour (row D5) is based on the overall composite organization’s revenue across the entire employee base. In reality, the hourly revenue per frontline worker is likely higher than this conservative estimate.
• The earlier incremental revenue generated by new hires is 0.25% of overall revenue in Year 1, 0.29% in Year 2, and 0.33% by Year 3.
• To determine the net business impact for the composite, the revenue benefit is converted into operating profit (row D8). Forrester assumes that the operating margin for the composite’s industry is 10%.
• Each new-hire manager is assumed to save three-quarters of an hour (relative to 1.5 hours in the prior state) with a more automated initial one-on-one onboarding session.
• The fully burdened hourly rate for a people manager is $49.
• Forrester applied a productivity adjustment factor of 80% for the people managers for this initial onboarding session, because this is a more focused activity.

Risks. Forrester recognizes these results may not be representative of all experiences and that the faster time to revenue for new hires and productivity savings for hiring managers will vary among organizations depending on the following factors:

• The time to onboard new employees in the prior state will vary by company and industry.
• The hourly revenue per employee will depend on the type of services offered, the composite’s industry, and company-specific factors (like hours of operation).
• The amount of time spent by hiring managers for their initial one-on-one onboarding session will depend on the nature of the organization.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of just over $68,000.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Ability to scale for growth. Interviewees noted that as their organizations experienced rapid growth, their previous providers often could not scale to meet their increasing demands. This included managing a larger workforce, handling more complex payroll needs, and ensuring compliance across multiple locations. This inability to scale led to operational inefficiencies and disruptions. Interviewees stated that isolved People Cloud was designed to scale with their growing organizations, accommodating increased workforce sizes and more complex HR needs. The HR director for the food services provider said: “The [isolved] platform is built for scale. When we started with isolved, we were probably at half the size of what we are now. So we were probably around 1,500 and in the last three years, we’ve grown to 3,000 employees and [isolved has] not skipped a beat.”
• isolved customer service. According to interviewees, their organizations’ previous HR solutions often lacked personalized customer service, treating clients as just another number. This was particularly problematic for interviewees’ organizations that had unique needs and high demands for customized reporting. Interviewees credited isolved its customer service, which provided personalized support and quick resolutions to issues. Interviewees benefited from isolved’s responsive customer support with dedicated account managers available to assist with any issues. The interviewees also noted that their support team provided timely and effective solutions. The HR director for the lodging services manager stated: “I’m very satisfied with the service that isolved has to offer. I have worked with several different payroll companies in my past, and isolved really stands out.” The finance and HR director at the real estate services provider elaborated: “Their customer service is excellent. I can call almost any time of day or night and get access to a customer service person. And, within a few hours, or sometimes a few minutes, I will have an answer and a resolution.”
• Other cost savings. The interviewees reported that isolved platform integrates various HR functions, eliminating the need for disjointed systems and redundant data entry. By eliminating legacy and redundant on-premises tools, the interviewees’ organizations were also able to eliminate the related ongoing maintenance and support expenses for those tools. Interviewees cited other savings that resulted from deploying the isolved platform. The HR director for the senior living facilities manager relayed the savings from outsourcing their payroll function: “We outsource our payroll with isolved. We had an internal payroll specialist dedicated to that role and we actually eliminated her position last year. This resulted in a net savings of $30,000 a year to do that.” They also provided another example of cost savings from fraud detection: “This manager had entered every single person she knew on her time card for months, including her mother. She had stolen over $10,000 in fraudulent payroll. She had to admit to it, because we had the evidence right there in our isolved records. So we got our $10,000 back, which was a big savings for us.”

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement People Cloud and later realize additional uses and business opportunities, including:

• Leveraging AI capabilities. Interviewees noted isolved uses built-in AI to streamline processes, boost productivity, and provide a user-friendly experience for users, which led to the aforementioned quantified benefits. While acknowledging this, some interviewees discussed how AI could unlock new use cases, including improved recruitment and candidate matching.
• Flexibility of outsourced services. Two of the interviewees noted their organizations outsourced their entire payroll function from isolved. Other interviewees’ organizations were looking into outsourcing functions that they were planning to provide (e.g., benefits) but did not want to build out a staff internally. With HR services from isolved, interviewees noted their companies were strategically spending to augment their internal HR staff with tenured experts. Not only did this result in a net cost savings for these organizations, but it also provided the opportunity of flexibly managing their growth.
• Increased professional image of organizations. Interviewees reported that the automation of the recruitment process drove recruitment productivity for their organizations. Some interviewees also noted that a professional website and online application process enhanced their organizations’ credibility and professional gravitas in the eyes of prospective employees.

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).