Paycom is a leading provider of a comprehensive, cloud-based human capital management (“HCM”) solution delivered as Software-as-a-Service (“SaaS”). Paycom provides functionality and data analytics that businesses need to manage the complete employment lifecycle, from recruitment to retirement.
Paycom’s solution requires virtually no customization and is based on a core system of record maintained in a single database for all HCM functions, including talent acquisition, time and labor management, payroll, talent management, and human resources (“HR”) management applications.
Paycom’s software allows for easy adoption of its solution by employees, enabling self-management of their HCM activities in the cloud, which reduces the administrative burden on employers and increases employee productivity.
What are employee engagement strategies?
Paycom was founded in 1998 and became a publicly traded company through its initial public offering in 2014. Since its founding, Paycom has focused on providing an innovative SaaS HCM solution. Organizations need sophisticated, flexible, and intuitive applications that can quickly adapt to their evolving HCM requirements, streamline their HR processes and systems and enable them to control costs.
Paycom serves a diverse client base in terms of size and industry. Paycom has approximately 36,600 clients. Paycom stores data for over 6.5 million persons employed by its clients during the year ended December 31, 2022. Let’s see what does Paycom do and how does it work.
What does Paycom do?
Paycom believes multiple providers currently serve the HCM needs of most organizations in an attempt to replicate a comprehensive SaaS product. This approach often challenges system integration and data integrity, low scalability, high costs, and extended delivery times.
Because Paycom’s solution was developed in-house and is based on a single platform, there is no need for its clients to integrate, update or access multiple databases, which are common issues with competitor offerings that use numerous third-party systems to link together their HCM offerings.
Paycom offers an end-to-end SaaS HCM solution that provides its clients and their employees with immediate access to accurate and secure information and analytics anytime from any location where internet service is available.
Paycom claims that its solution has the following benefits:
Comprehensive HCM Solution: Paycom’s solution offers functionality that manages the entire employment lifecycle for employers and employees, from recruitment to retirement. Paycom’s applications streamline client processes and allow clients and their employees to directly access and manage administrative processes, including applications that identify candidates, onboard employees, manage time and labor, administer payroll deductions and benefits, manage performance, terminate employees, and administer post-termination health benefits.
Core System of Record: Paycom’s solution is based on a core system of record that contains payroll and HR information in one convenient database, thereby reducing costs and eliminating the need for multiple software products and vendors and maintaining employee data in numerous databases.
Data Analytics and Business Intelligence: Paycom solution’s core system of record allows clients to strategically analyze comprehensive and accurate employee information to make informed business decisions based upon actionable, real-time analytics provided through a client dashboard.
Enhanced Employee Experience: Paycom clients’ employees also benefit from the HCM applications. As workforces transition from technology-savvy to technology-dependent, employees expect mobile technology and the resources necessary to access information and control their professional development readily.
Software-as-a-Service Delivery Model: Paycom’s SaaS delivery model allows clients with geographically dispersed and mobile workforces to operate more efficiently and allows these clients to implement, access, and use its internet solution on demand and remotely. Paycom’s SaaS solution reduces the time, risk, headcount, and costs associated with installing and maintaining applications for on-premise products within its clients’ information technology (“IT”) infrastructure.
Secure Cloud-Based Architecture: Paycom’s cloud-based architecture allows its solution to be implemented remotely with minimal client interaction. Updates such as software enhancements and newly developed applications can be deployed without client interaction, disruption, or involvement, allowing the clients to make a smaller investment in hardware, personnel, implementation time, and consulting.
How does the business of Paycom work?
Technology, Operations, and Security
Technology: Paycom’s multi-tenant architecture enables it to deliver its solution across the client base from a single platform while securely partitioning access to clients’ respective application data. Because a single version of the solution is developed, supported, and deployed across all of the clients, the Paycom solution is seamlessly scalable.
Operations: Paycom physically hosts its solution for its clients in three secure data center facilities in Oklahoma and Texas. Each of these data centers is owned and managed by Paycom, and Paycom is the only tenant occupying the data centers.
Client data is backed up in real-time among the three data centers. Paycom maintains redundant load-balanced internet lines serviced by multiple service providers to each data center to ensure optimized client access to Paycom’s solution and the client’s stored data.
Security: Paycom maintains a formal and comprehensive security program designed to ensure the confidentiality, integrity, and availability of its client’s data. During the regular course of business, Paycom receives client data through an online system that Paycom, in turn, processes, records, stores, and secures following ISO/IEC 27001:2013 certified controls and procedures.
Paycom’s HCM solution offers a full suite of applications and tools that generally fall within the following categories: talent acquisition, time and labor management, payroll, talent management, and HR management.
Business Model of Paycom
Paycom generated $1.35 billion in 2022. Revenues are comprised of recurring revenues, implementation, and other revenues. Paycom expects its revenues to increase as it introduces new applications, expands its client base, and renews and expands relationships with existing clients.
Recurring revenues include fees for talent acquisition, time and labor management, payroll, talent management, and HR management applications, and fees charged for form filings and delivery of client payroll checks and reports.
Implementation and other revenues comprise implementation fees for deploying Paycom’s solution and other revenues from sales of time clocks as part of its time and attendance services.
Sales and Marketing Strategy of Paycom
Paycom generates client leads and demo requests, accelerates sales opportunities, and builds brand awareness through its marketing programs that target senior finance and HR executives, technology professionals, and senior business leaders of companies that perform HCM functions in-house or outsource these functions to one of the competitors.
Paycom’s marketing programs include:
- Podcast episodes, webinars, blogs, white papers, and infographics;
- National and local television advertising campaigns, personalized direct mail campaigns, email campaigns, social and digital media campaigns, industry-specific advertising and tradeshow exhibiting; and
- Search engine marketing methods include site optimization and pay-per-click searches.
