The 2003 findings suggest that organizations looking to lower their TCO by replacing an existing in-house system with a newer one should carefully consider whether there really is an advantage. In-house systems appear to reduce costs for payroll and HRIS, but are often shifting costs to other budgets, making their association harder to identify. Larger systems are no different. When all these costs are factored in, the average per paycheck TCO for major ERP systems and all others is consistent at around $16. This deflates the idea that large in-house applications offer TCO efficiency over other software packages, including smaller vendors and homegrown systems.

The 2004 study showed that ADP's clients saw dramatically lower maintenance costs, upgrade costs, and processing non-labor costs - essentially reducing rather than shifting costs. The total cost of ownership for outsourcing with ADP is easy to calculate, as the costs involved are transparent. Some portion of each check may be attributed to system costs, processing costs, and non-labor costs - no additional "hidden" costs. ADP's scalability, combined with its domain expertise delivered in the form of best practices, helps to deliver these lower costs.

• The average TCO per paycheck for all in-house systems is approximately $16.
• Large in-house software applications do not offer TCO advantages over smaller vendors.
• ADP's clients saw dramatically lower maintenance costs, upgrade costs, and processing non-labor costs - without additional "hidden" costs.

 

What system costs are typically shifted?

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