Nick Southcombe talks to us about HR software, innovation and how Frontier Software is rethinking marketing
Nick Southcombe is the general manager at Frontier Software – the company behind chris21 (Comprehensive Human Resources Integrated System). Frontier Software has been around for 33 years, continually developing leading edge software systems for payroll and HR. The company currently has 850 clients in Australia and its systems pay around 10% of the Australian workforce. Frontier Software’s largest client has a staggering 64,000 employees.
In this week’s Thought Leaders Series, Nick talks to Steve Pell about the world of payroll and HR software. They discuss how to sell to HR, the importance of demonstrating ROI and how Frontier Software has replaced local sales seminars with thought leadership webinars – with global reach.
Steve Pell: Nick, thanks for taking the time to speak with me today. Let’s kick off with your elevator pitch for Frontier Software – what you guys do and where the business has come from?
Nick Southcombe: Sure. Frontier Software was founded about 33 years ago by an Englishman living in Melbourne at the time – Michael Howard. Then in the mid-90s, he started building the organisation in Europe and more globally. Australia is still the most significant part of the business and most of the product development is managed and done here.
In tier one we compete with Oracle and SAP – where we believe our product is more feature rich, the application is faster and it’s more cost effective. Then in the tier two space, we consider ourselves to be market lead.
Steve Pell: Can you give me an example of who your clients are?
Nick: Yes, the South Australian government, ACT Government, PwC, Ernst and Young, Ramsay Healthcare… We also do the vast majority of Victorian Public Health. We’re spread reasonably well across all market verticals and horizontals. I think that’s a credit to the product and our services. It’s comprehensive enough to be able to deal with this and we continue to invest in it whenever there’s a new opportunity.
Steve: Let’s switch up a little bit and talk about you. How did you come to be General Manager?
Nick: I started life in accounting, which I found boring enough to move into systems and IT! Rather than do advanced degrees in finance, I moved over into information systems where I have worked in both CIO roles and for software vendors in senior management positions.
Steve: Do you enjoy the HR space?
Nick: Oh very much. I never worked in HR or payroll before. But it’s great working with an organisation that Michael has built over time, that’s got good legacy, good product and continues to invest in the future.
Steve: When you go out and talk to your clients, what do they love about the organisation?
Nick: The payroll people like it because so much in our system is automated – that’s not automated in other systems. Finance people like it because our reporting capabilities are really second to none, and because of our ability to easily integrate with other finance systems.
Stability is also important. There aren’t many organisations that could say they’ve been in the same business for 33 years with consistent ownership all the way through with year on year growth and it’s all we do: HR and payroll.
Steve: Are there any major differences selling to an HR market versus where you’d been before?
Nick: Yes, certainly HR people tend to be different. In the past I’ve sold financial systems. Finance people understand systems while HR is not necessarily so system based. Now the question is, should it be? You can answer yes, a lot of it is systems-based but HR people aren’t brought up mostly, in my view, with systems design, systems implementation, business process improvement. They focus a lot on the people side. Which is important but not necessarily how you deliver ROI. That’s been a challenge.
Steve: Let’s jump into that a little bit because this is really interesting. Where you’re going from a product direction is, “We need to get systematic in HR.” But you’re not really able to sell that benefit direct to your end user?
Nick: It’s hard because when you put in a new finance system, it’s very easy to prove a return on investment, particularly when you’re dealing with the CFOs. “I’ll put in a new system. I’m going to save so many people, save so many costs. If I put a new time and attendance system, this is going to improve our accuracy and this cuts down things like time”. There is a bit of an ROI. How do you develop ROI for something like a performance management system? It’s very difficult to do.
I think this is something that software vendors and clients should work on together. Developing those metrics to help measure where the HR function is delivering ROI to organisations. It’s a big challenge for the HR community to demonstrate that.
Steve: So you do a lot of work there?
Nick: Yes, certainly that’s something we continue to work on because we want to sell it, right? And it’s got to make sense to buy. But even using our systems internally, we try to measure this type of thing. If we can demonstrate that it works for us that helps us sell it. So developing those types of metrics is something we’re continuing to work on.
Steve: That’s really getting into the heart of thought leadership, right? Developing new metrics, building awareness…
Nick: Yes, what matters – and all the HR publications are filled with this – is the value that HR can add. HR can add all this value to things but what they’re not good at is measuring it. They need to get good at measuring it. On that basis for instance, we’ve developed a dashboard module which can show what the key metrics are and how people are performing against KPIs.
It ranges from what overtime costs were compared to what the budget was. To the time to recruit, number of vacancies available, staff turnover.
Steve: What’s your view on the future of work? Do you think people will be as critical or even more critical tomorrow as they are today?
Nick: Yes, any organisation that’s really a service-based organisation, 80% of their cost is people related. That’s a significant cost, or an investment in people, whichever way you want to look at it. I think most organisations are flat out trying to get it right now in order to position for the future.
In my view, any manager who’s not working hard to get the best return out of the staff, isn’t properly doing their job. To be able to understand what attracts people to your organisation, what keeps people in your organisation, and how to develop those people is a key.
Steve: Yes, as an aside, we did some work recently showing that there is no market in the world that is searching on Google for “cost cutting” with more frequency than Australia.
Nick: Is that right?
Steve: I think it nearly doubles the next market.
Nick: Yes, I mean every organisation wants to cut costs of course but managing your staff isn’t necessarily about cutting costs. You need to pay people fairly. Sometimes cutting costs on your staff can turn out to be a false economy because then you’re getting the cost of turnover involved and all the opportunity costs you miss along the way. This then goes back to the measurement point because frankly a bit of staff turnover in organisations is not a bad thing.
Steve: Do you see technology as a threat to your business model?
Nick: Frontier Software has been well managed over its life and seen a lot of software payroll & HR vendors come and go. I think the barriers of entry into payroll are reasonably high – so it keeps competitors away. In countries like Australia, New Zealand and the UK there’s complexity in the labour laws and the tax. Indeed in the US, income tax can be taxed at three levels: federal, state and local government, things like that.
To build a comprehensive payroll system takes time, and the tolerances for quality have to be high because you can’t get your payroll wrong. If it’s right no one talks about it. If it’s wrong everyone knows about it.
What’s more of a challenge is that the barriers for entry for individual HR systems are much lower. Someone can come up with a good learning and development system for instance and that’s all they do. They can sell that, develop it relatively cheaply and sell it quite cheaply. They don’t have to worry about integration.
While we’re focusing a lot on our HR products nowadays, we have to be very cautious about any change we make so it doesn’t impact payroll critical functions.
Steve: Let’s talk about now versus when you started out with the company. How is what you’re doing from a marketing perspective different from what you were doing say five years ago?
Nick: Certainly, when I started, a lot of the marketing was through seminars, “come along to a presentation seminar, let us show you product and talk about it”. What we see now is there’s very little interest in people coming along to those types of presentations.
A lot more of our marketing is EDMs, electronic marketing, and so on, a lot more of that. It’s still a requirement for us to attend trade shows and for a company like Frontier Software in Australia we’d be visible by our absence. That’s still quite a strong source of leads, and certainly reinforcement because it’s also an opportunity to touch and feel without being sold too heavily.
The other thing that I’ve noticed in recent times is the number of organisations putting out tenders is increasing. I think this is because of the sophistication and the complexity involved, so they can be very prescriptive about what their requirements are. Because of this we’re now focusing a lot more on outbound marketing.
Steve: When you say outbound are you talking blogs and content, what else…?
Nick: Yes, Frontier Software isn’t bleeding edge in this type of area yet. We’re improving our website. We’ve got LinkedIn presence, Facebook presence and things like that. The electronic marketing is more about webinars to our prospects on thought leadership. Not so much talking about our system but more the things we’re talking about in this interview for instance – then just create some linkages in with what we’re doing from a product perspective.
Steve: Ok, that makes sense.
Nick: There’s been great interest in those webinars. We did a number of those in the last 18 months and we’re just launching a program to commence those for this year. Our reach on those goes not just out in Australia. We have people from New Zealand, New Guinea, Pacific Islands logging. They’ve been very successful I think, and we support that with follow-up marketing and what not. But these things do take time.
Steve: Nick, that’s been fantastic, really interesting. Thank you for taking the time.
Nick: Thank you.