ADP's Formula Determines Cloud Apps


by Tony Kontzer

When Mike Capone says cloud computing is nothing new, it's better not to argue.

As the CIO of payroll outsourcing firm Automatic Data Processing Inc., Capone brings a unique perspective on the cloud. Although few of its 500,000 customers would consider ADP to be a cloud provider in the strictest sense of the word, the company has essentially been a payroll services cloud provider for 60 years--albeit the definition of "cloud" would have to be liberally applied during the pre-Internet era. Since then, the company has offered the option of accessing its systems via an online interface to a multi-tenant architecture that affords customers assurance that their data doesn't co-mingle with that of other customers.

Capone, meanwhile, has been with the company for 21 years, the most recent one as CIO. From his numerous perches, Capone has had plenty of opportunity to form some well-thought-out philosophies about the cloud, both as a provider and a customer, as ADP has become an aggressive user of the cloud's software-as-a-service category.

For instance, he feels comfortable converting the decision of whether to place an application or process into the cloud into a simple numbers game: "If it's a quarter of my business, then it's something I'm going to keep. If it's not a quarter of my business, then I can put it in the cloud."

To be clear, although he says the cloud has saved a few dollars for ADP, Capone doesn't champion the cloud's reputation as a cost-saving miracle cure. In his eyes, the cloud's greatest impact--and the only one that really matters--has been its ability to let ADP focus on what it does best. Hence, the company hasn't hesitated to entrust its CRM environment with Salesforce.com and its expense reporting system with Concur. And now it's preparing to move its procurement processes to an as-yet-unidentified SaaS provider sometime in the next three months.

"We always ask our customers, 'Why would you ever host a payroll system on site?" Capone says. "Similarly, why would we ever host a procurement system on site? We're not in that business."

But what of the potential for mission-critical apps to be housed in the cloud? Would ADP ever consider handing over its crown jewel payroll processing system to a cloud vendor? For that matter, would financial services companies ever place their closely held systems into the cloud? It's hard for Capone to imagine, but in order for such developments to become remotely possible, he believes that "the Microsofts and IBMs, the heavy hitters, have to get uber-serious about providing cloud platforms."

That means not only doing a better job at defining SLAs that CIOs can live with, but also settling on pricing models that make sense in a cloud paradigm.

It shouldn't be that hard. After all, ADP's been doing it for years, and they've got 500,000 satisfied customers who are pretty much oblivious to that fact. And if that's not the cloud as it's meant to be, then I don't know what is.