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Study Highlights Market Opportunity and Vendor Strategies for Online Payroll Services

Monday July 14, 2008

Payroll is one of a handful of functions that all 16.5 million HBBs and 6.32 million small businesses SBs in the U.S need to do. However, many have been underserved by conventional payroll solutions. “Online payroll services offer the benefits of payroll outsourcing services and the added advantages of control, visibility and reduced risk of errors—at prices suited to small company budgets,” says Laurie McCabe, VP of SMB Solutions & Insights at New York-based research firm AMI-Partners.

Online pioneers, PayCycle and SurePayroll, have enjoyed steady growth since launching their offerings in 2000, attracting tens of thousands of small businesses to their offerings. More recently, established small business powerhouses ADP and Intuit have each set up shop to offer SaaS-based payroll solutions geared to the needs of small companies. However, online payroll services account for just a small percentage of payroll solutions sold today, with many customers still unaware of this option, “

This report assess whether the headway made by online payroll pioneers, coupled with newer efforts from both a small business software icon and an outsourcing giant, propel online payroll to the mainstream of the small business masses.

Highlights from the report include:

-    Discussion of key demographics, behavior and attitudinal similarities and differences between HBBs and SBs. For instance, the study reveals that among HBBs, finding new business and time management are the top priorities, while SBs rate competition and improving profitability as lead concerns.

-    Comparison of payroll use and plans among HBBs and SBs, for example: The overwhelming majority of both HBBs and SBs process payroll in house. While adoption of online payroll services is relatively low among both groups, online payroll appears to be gaining momentum more quickly among HBBs than among SBs.

-    Analysis of the similarities and differences among vendors’ offerings and marketing strategies. For instance, Payroll and SurePayroll, are each focusing a significant amount of energy on pursuing partnerships with major banks and financial institutions, but also sell directly and via accountant channels. ADP is taking a channels-centric approach, directing most of its marketing energy towards its “RUN powered by ADP Payroll for Accountants” reseller and referral programs. Intuit, meanwhile, has teamed up with Costco to sell its online payroll, and is also selling its offering directly via its Web site and through accounting referral partners.

About the Study

AMI’s Online Payroll Services: Ready for Take off in the Small Business Market?” study synthesizes market data with vendor analysis to:

-    Provide context on the characteristics of both the U.S. home-based and small business markets, including key demographics, attitudes, challenges and other related dynamics, with data sourced from AMI’s most recent U.S. Small Business and Home-based Business surveys.

-    Examine the strategies and solutions of four very different players, including PayCycle, SurePayroll, ADP and Intuit.

-    Assess each vendor’s strengths and challenges.

-    Evaluate vendors’ prospects for stimulating broad-based appeal for online payroll services, and the steps they must take to both create and capture a sizable share of this growth market.

For more information about this study, AMI-Partners, or our global SMB research, call 212-944-5100, e-mail .(JavaScript must be enabled to view this email address), or visit us at

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and “go-to-market” solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.


Quoted Analyst:
Laurie McCabe, 603-472-5530    
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Media Relations:
In US (New York):
Nancy Carty, 212-944-5100 ext 581
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In EU (London):
Claudia Jachtmann, (44) 208 987 2756
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In Asia Pacific (Singapore):
Matthew Foo, (65) 6220 5535 ext 101
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In India (Kolkata):
Dipendra Mitra, (91) 33 4003 3093 ext 205
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