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I just went digging around the zenefits.com and pulled this verbiage out, which i think outlines the fundamental business problem: 'Zenefits works with all top

by apalmer 11y ago

I just went digging around the zenefits.com and pulled this verbiage out, which i think outlines the fundamental business problem: 'Zenefits works with all top payroll providers, so there's no need to switch from your favorite system.' ADP doesn't want to be a 'provider' in the 'Payroll As A Service' sense. Further Zenefits entry point into the market is based on the low friction of you not needing to leave your current payroll system... why on earth would ADP let this continue?

markbnj 11y ago
I see you getting downvoted, but I don't think that's fair. Whether people like it or not this is almost certainly how ADP views the situation. The term "disintermediation" used to be tossed around 10-15 years ago, to describe the process of upstart tech companies getting between older, slower moving companies and their customers. ADP is definitely in the older, slower moving category. Defense is probably the only real offense they can bring to bear. I know they do business as a back office provider to various resellers who target segments they aren't particularly good at servicing. They probably don't view the Internet as a candidate for this, though.
- matthewsimon 11y ago
  Sorry to quibble, but I don't think that's what "disintermediation" means. Disintermediation typically refers to "cutting out the middleman", not introducing additional middlemen. Cf: https://en.wikipedia.org/wiki/Disintermediation https://en.wikipedia.org/wiki/Disintermediation
  - markbnj 11y ago
    It's been a long time since I heard the term, probably late 90's or somewhere in that timeframe. At the time I was in the banking business and there were various services that were launching with the idea of aggregating bank accounts, rolling up loan offers into portals, etc. The term "disintermediation" was used as a label for what happened to you if you let someone else capture your customer's attention and just treat you like a supplier. I'm sure there were other uses at the time, and later.
    - rahimnathwani 11y ago
      "The term "disintermediation" was used as a label for what happened to you if you let someone else capture your customer's attention and just treat you like a supplier." Banks, along with selling their own products, act as middlemen to sell other types of product (e.g. insurance). The only disintermediation I can think of in relation to retail banks, is the move for people to buy things like insurance from (i) web sites, who may kick back some of the commission that would otherwise go to the bank, or (ii) insurers who sell direct through their own channels. What you describe is intermediation or reintermediation: http://www.investopedia.com/terms/r/reintermediation.asp http://www.investopedia.com/terms/r/reintermediation.asp
j_s 11y ago
Yes, providers have every reason to keep their customers trapped within their walled garden. Zenefits has a track record of prioritizing punting the blame ahead of solving the problem: https://news.ycombinator.com/item?id=9499906 https://news.ycombinator.com/item?id=9499906 it's a running theme in most customer service interactions with Zenefits (Aetna's fault, Intuit's fault, etc.). There's also tends to be long delays in response times because of the back and forth between Zenefits and the provider, and sometimes conflicting responses which make things really frustrating
pkaye 11y ago
I don't think ADP should block customers from working with Zenefits but I can also see in a few years Zenefits moving to the payroll provider market if they get big enough.
ganeumann 11y ago
To play devil's advocate, I can think of two reasons: 1) If you're choosing a payroll provider, Zenefits integration may help you choose ADP because you have a non-awful user experience with Zenefits as a front-end. 2) It could run afoul of antitrust law for tying, monopolizing, or the essential facilities doctrine (http://en.wikipedia.org/wiki/Aspen_Skiing_Co._v._Aspen_Highlands_Skiing_Corp. http://en.wikipedia.org/wiki/Aspen_Skiing_Co._v._Aspen_Highl...), if the case could be made that ADP has sufficient market power.
Dylan16807 11y ago
Because their job is to provide a payroll system. Not to care about the subcontracting their customer does. Unless the customer is doing something abusive, they have no place getting in the way. (And using a third party manager is clearly not abuse.)

by apalmer 11y ago

markbnj 11y ago

I see you getting downvoted, but I don't think that's fair. Whether people like it or not this is almost certainly how ADP views the situation. The term "disintermediation" used to be tossed around 10-15 years ago, to describe the process of upstart tech companies getting between older, slower moving companies and their customers. ADP is definitely in the older, slower moving category. Defense is probably the only real offense they can bring to bear. I know they do business as a back office provider to various resellers who target segments they aren't particularly good at servicing. They probably don't view the Internet as a candidate for this, though.

matthewsimon 11y ago
Sorry to quibble, but I don't think that's what "disintermediation" means. Disintermediation typically refers to "cutting out the middleman", not introducing additional middlemen. Cf: https://en.wikipedia.org/wiki/Disintermediation https://en.wikipedia.org/wiki/Disintermediation
- markbnj 11y ago
  It's been a long time since I heard the term, probably late 90's or somewhere in that timeframe. At the time I was in the banking business and there were various services that were launching with the idea of aggregating bank accounts, rolling up loan offers into portals, etc. The term "disintermediation" was used as a label for what happened to you if you let someone else capture your customer's attention and just treat you like a supplier. I'm sure there were other uses at the time, and later.
  - rahimnathwani 11y ago
    "The term "disintermediation" was used as a label for what happened to you if you let someone else capture your customer's attention and just treat you like a supplier." Banks, along with selling their own products, act as middlemen to sell other types of product (e.g. insurance). The only disintermediation I can think of in relation to retail banks, is the move for people to buy things like insurance from (i) web sites, who may kick back some of the commission that would otherwise go to the bank, or (ii) insurers who sell direct through their own channels. What you describe is intermediation or reintermediation: http://www.investopedia.com/terms/r/reintermediation.asp http://www.investopedia.com/terms/r/reintermediation.asp

j_s 11y ago

Yes, providers have every reason to keep their customers trapped within their walled garden. Zenefits has a track record of prioritizing punting the blame ahead of solving the problem: https://news.ycombinator.com/item?id=9499906 https://news.ycombinator.com/item?id=9499906 it's a running theme in most customer service interactions with Zenefits (Aetna's fault, Intuit's fault, etc.). There's also tends to be long delays in response times because of the back and forth between Zenefits and the provider, and sometimes conflicting responses which make things really frustrating

pkaye 11y ago

I don't think ADP should block customers from working with Zenefits but I can also see in a few years Zenefits moving to the payroll provider market if they get big enough.

ganeumann 11y ago

To play devil's advocate, I can think of two reasons: 1) If you're choosing a payroll provider, Zenefits integration may help you choose ADP because you have a non-awful user experience with Zenefits as a front-end. 2) It could run afoul of antitrust law for tying, monopolizing, or the essential facilities doctrine (http://en.wikipedia.org/wiki/Aspen_Skiing_Co._v._Aspen_Highlands_Skiing_Corp. http://en.wikipedia.org/wiki/Aspen_Skiing_Co._v._Aspen_Highl...), if the case could be made that ADP has sufficient market power.

Dylan16807 11y ago

Because their job is to provide a payroll system. Not to care about the subcontracting their customer does. Unless the customer is doing something abusive, they have no place getting in the way. (And using a third party manager is clearly not abuse.)