UPDATED 17:30 EDT / OCTOBER 01 2018

NEWS

Small investment yields big payoff in HR outsourcing for IronRoad CEO

In today’s expensive world, there are many things to spend $8,000 on. A used car might be one, but it won’t have the latest technology. Rottweiler or chow chow dog breeds can cost that much. Some appliance companies even make an $8,000 refrigerator.

In the mid-1990s, Billy Southerland (pictured) had worked for and sold his family’s Cincinnati, Ohio, insurance business and was looking for a new opportunity. Two friends came to him with an idea to use software for managing human resources needs at small-to-medium-sized companies. They asked Southerland if he wanted to buy-in, so he did … for $8,000.

Today, Southerland is the chief executive officer of IronRoad, a $175-million company providing full-service employee administration solutions to clients across the nation. It was probably a better decision than buying a really nice refrigerator, but it certainly wasn’t planned.

“I wish I could tell you we had a great idea, but it was a complete accident,” Southerland said. “My friends had no clients and a little bit of software they had purchased to do the payroll.”

Southerland spoke with Dave Vellante (@dvellante) and John Walls (@JohnWalls21), co-hosts of theCUBE, SiliconANGLE Media’s mobile livestreaming studio, during the Inforum event in Washington, D.C. They discussed the evolving role of professional employer organizations, the impact of healthcare legislation on IronRoad’s business, and its partnership with Infor Inc. in the delivery of human resource services and support. (* Disclosure below.)

This week, theCUBE features Billy Southerland as its Guest of the Week.

Tapping into a growth industry

Southerland might not have realized it at the time, but he had tapped into a rising business service opportunity known as a professional employer organization, or PEO. These organizations provide comprehensive HR solutions, usually to small- or medium-sized businesses, which run the gamut from payroll and benefits to tax support and regulatory compliance.

PEOs are a growth industry too. A study released in September by the National Association of Professional Employer Organizations found that PEO employment growth is 14 times higher than the overall rate for the entire U.S. economy.

“The whole liability of being an employer is something they can share with us,” Southerland explained. “So many of the things that they’ve got to do internally, that have nothing to do with why they got into business, they can outsource to us. You name it, and we do it for them.”

Healthcare complexity drives demand

One of the factors contributing to the growth of PEOs and IronRoad’s own business is healthcare, specifically the Patient Protection and Affordable Care Act. Passed by Congress and signed into law by former President Barack Obama in 2010, the ACA or “Obamacare” as it has become known, dictates a set of regulatory requirements surrounding healthcare coverage and report filing required of businesses with more than 50 employees.

Companies with operations in multiple states are being confronted with the shifting sands of ACA compliance as numerous state legislatures have passed new laws governing employer-mandated care. “The whole ACA compliance with Obamacare has been a tremendous boom for our business because people are looking left and right for how to deal with this, what to do,” Southerland said. “It’s so complex for them; they’re looking for experts to manage it.”

Managing increased regulatory complexity takes technology, specifically software tools that can stay up to date while being easy to install and use within enterprise networks. Infor has built CloudSuite Human Capital Management, or HCM, as its signature set of software solutions to drive HR service delivery in organizations.

Infor recently announced new HCM features at its Inforum 2018 gathering, including TrueCost Healthcare, designed to help improve the cost and quality of care delivered. The company also offers Talent Science, a software tool that uses predictive analytics to improve the hiring process.

Infor partnership pays off

Two years ago, IronRoad vetted five vendor software systems to select one that would be integrated with its PEO platform. Infor was the ultimate choice.

“The differentiator for us not only was the software from our perspective, which was far and above better than anything we were looking at; it was they provided us with an opportunity to be able to provide an in-tenant solution for current clients that Infor has,” Southerland said. “Taking the best-in-class cloud suite services from a human capital management system to the marketplace and partnering with a company like Infor really is a dream come true for us.”

IronRoad has made no acquisitions or pursued any mergers, and it remains entirely self-funded, according to Southerland. Its growth in the PEO space is a reminder that talent is usually what gets results, especially in a business that is focused on maximizing human resource efficiency.

“We’ve got some amazing people that have a real passion about what we do, and we do it really well,” Southerland said.

That alone is probably worth well more than $8,000.

Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s coverage of the Inforum event. (* Disclosure: TheCUBE is a paid media partner for Inforum 2018. Neither Infor Inc., the event sponsor, nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE

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