Ceridian and Dayforce Merger Drives Market Success

by | Oct 23, 2014

Mergers and acquisitions are rarely successful.  Studies have cited that 70 to 90 percent of all mergers and acquisitions fail. Sears and K-Mart, AOL and Time Warner, Sprint and Nexcom, and eBay and Skype are big name examples that illustrate my point.   And for every big name failure, there are countless of other smaller mergers that have resulted in wasted money, devalued equity and lost product and ideas.

Even when the acquisition works out over an extended period, the short-term disruption to business is often significant. Innovation suffers, market momentum slows, and customers are impacted as executives and employees play musical chairs in their new entity.

So, when Ceridian announced it was acquiring Dayforce in 2012, there are more than a few – and to be fair, I was one of them – who wondered, how it could possibly work?

On the one hand, we had Ceridian, an 80-year-old company with a storied past.  Over its history, it was bought and sold off by parent companies, operated as a standalone business that was publicly and privately traded at various times.  By the time of the Dayforce acquisition, it was best known for two different businesses: as a payroll service bureau and for its stored value/gift card services.

On the other hand, we had Dayforce, a young, hot workforce management startup.  Led by industry veterans, Dayforce burst into the market just a few years before with an award-winning WFM suite. Dayforce was the first enterprise-ready, SaaS-based solution on the market. Its innovative, rich user interface raised the bar for WFM usability and intuitiveness.  It offered a crawl-walk-run implementation approach that got clients and up-and-running very quickly and allowed them to adopt more sophisticated functionality at their own pace. It built a loyal and growing portfolio of clients such as Aéropostale and Hibbett Sports that would readily share their success stories, thereby attracting more like-minded customers

How could these two very different companies succeed as one? 

It turns out that, by the time of the acquisition, there was a strong connection between the two companies.  In 2009, Ceridian made a minority investment in Dayforce.  This allowed the two companies to get to know each other, learn how the other worked and begin to establish a collaborative and complementary strategy.  The acquisition in 2012 was a logical progression of this relationship.  As a result, after the deal closed, there was no slow down and two years later, the acquisition looks like one of the best HCM mergers ever.

Dayforce has been a fountain of youth for Ceridian, inspiring innovation and growth. Likewise, Ceridian has given Dayforce market reach and sales capability that would have been hard to grow organically.  And, nothing exemplifies the successful acquisition more than Dayforce HCM.

Dayforce HCM is Ceridian’s human capital management solution that currently includes modules for core HR, benefits and payroll.  Built by the Dayforce team, it encapsulates the same ground-breaking SaaS platform and user experience that made its WFM solution successful.  Perhaps most exciting, Dayforce has accomplished something that no other vendor has been able to do with their enterprise-class HCM solution: its HCM and WFM solution share a single employee record.

This may sound simple, but most HCM and WFM solutions use separate employee records with the vendor integrating the two data models behind the scenes.  In extreme cases, vendors are integrating employee records between modules with in an application such as payroll and benefits within HCM or time keeping and scheduling within WFM.  Dayforce HCM and WFM share a common data model.  This greatly simplifies reporting, integrating HCM and WFM data with other systems, and new feature development.  And, this last point around feature development is important.

Ceridian is a very customer-centric organization.  As Axsium Group has seen working with Ceridian customers, Ceridian does a remarkable job working with their users to truly understand how their product is being used and what their customers need.  The Dayforce development team is able to incorporate changes into their product rapidly. Because the solution is hosted in the cloud, Ceridian can get new features into their users’ hands frequently without disruption or downtime.

The results speak for themselves.  Today, Ceridian has over 1,200 Dayforce HCM and WFM customers with more than 1,000,000 users on a common code base. While this does not make Ceridian the largest provider of cloud WFM or HCM solutions, it is impressive given their relatively recent entry to the market.  These customers include small and mid-sized organizations as well as large employers and well-known brand names such as Trader Joe’s, J Crew, Crate and Barrel, and Petco.

Such success is attracting attention.  While Dayforce has competed with traditional WFM vendors such as Kronos, WorkForce Software and Workplace Systems and Ceridian has competed with traditional payroll providers such as ADP and Paychex, others are taking notice, too.  Workday, the investor and analyst darling of HCM, recently identified Ceridian as a competitive threat.  As Ceridian grows its market share, it will continue to make waves in the marketplace, and that’s good news for end users.

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