ADP runs new tax service on IBM cloud software

IDG News Service - Business process provider ADP found that cloud computing can be a handy way of servicing a new market that would otherwise be too cost prohibitive to enter.

The company is launching a hosted version of its automated tax preparation service, called TAXServices, aimed at small and medium-size businesses.

These mid-size organizations are a new market for the company's tax services, said Lori Schreiber, who is an ADP division vice president and general manager for TAXServices.

With more than $8 billion in annual revenue, ADP (Automatic Data Processing) is perhaps best known for its payroll processing services. But it has also long offered an automated tax preparation and filing service for large companies with 1,000 employees or more.

Because the customization needed to be done for each customer, ADP typically initiates this service by dispatching personnel to the customer site to embed and link its own tax compliance formulas with the client's own ERP (Enterprise Resource Planning) software. The ADP software then runs, for the most part, in the customer's own data centers.

Given the time-intensive work of customization, this approach of customizing its software on-site for each customer has been be feasible for larger customers, Schreiber explained. But it would be too expensive for smaller clients. So when the company wanted to expand the services to smaller businesses, it looked for a way to make the service affordable for potential customers and cost-effective for itself.

"We were looking for a lower-cost, more simplified alternative to how we actually integrated with these numerous mid-market premise-based solutions," Schreiber said.

The answer came in the form of a hosted offering. For smaller organizations, ADP could host the tax compliance service on its own site, much like it does with its payroll processing services, and standardize the offering as much as possible through templates.

TAXServices offers a variety of standardized tax-related services, such as the filing and depositing of state, local and federal taxes, online access to deposit and filing statements and W-2 processing. The service has 13 clients who have signed on pre-launch.

A key to making this service, Schreiber said, has been the use of IBM's Cast Iron's data integration technology, which IBM acquired in May when it purchased the Mountain View, California-based appliance vendor Cast Iron Systems. Analysts have noted that Cast Iron's technology was particularly well-suited for easily cloud services with on-premise data sources.

The Cast Iron software speeds the process of establishing a conduit from the on-premise customer data to the ADP hosted offering. The software is a collection of routines and templates that can automate about 80% of task of connecting source data to some other service, said Ken Comee, president of Cast Iron.