Aurora, Ont. -- HR.com, a research and Web destination for Senior HR Professionals, recently published an article reviewing two Total Cost of Ownership (TCO) studies conducted by PwC. The article was written by Lorena Harris, Director of Marketing Communications for ADP National Account Services, which commissioned the study.
TCO is a tool that helps companies determine whether they benefit financially from the use of a specific technology. Although TCO studies are not uncommon, many of them do not include all costs involved, i.e., those ‘hidden’ or shifted to other budgets.
To address these concerns, ADP commissioned PricewaterhouseCoopers (PwC) to conduct two studies on TCO for in-house payroll and human resources systems (2003) and for outsourced solutions (2004).
The key conclusion from the 2003 study is that in-house systems are more expensive and less strategic than buyers may have realized. Hidden costs, such as upgrade expenses, IT resources, and non-payroll department time collection activities drive the average system cost per paycheck to $16 and the average annual HRIS cost to approximately $500,000. The key finding from the 2004 client study is that outsourcing means an average 35 percent improvement in payroll TCO and more than 50 percent savings for HRIS, plus many other benefits associated with outsourcing.