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Although SaaS is getting increasingly visibility in enterprises, it remains a particularly interesting choice for small to mid-sized businesses -- and sometimes even very small businesses can find benefits to using SaaS. I recently interviewed Jim Heeger, CEO of PayCycle to find out about what leads small businesses to SaaS and how it can help with necessary functions like payroll, PayCycle's specialty. Listen to the podcast or read the transcript below.
KD: What do you think are the main reasons why small businesses tend to choose SaaS?
JH: Well, I think small businesses tend to be busy people. Small business owners are busy people. They’re very cost conscience. When they’re looking for solutions, they’re looking for something that’s easy, that’s affordable, that’s convenient. And so I think that’s why they’re going to online services more and more these days.
I also don’t think small businesses necessarily think about it as SAAS, as Software-as-a-Service model. What they’re doing -- and I’m talking -- PayCycle targets the employers that have fewer than 20 employees so we’re talking very small businesses here. They’re bigger than mom and pops but; nevertheless, they’re very small businesses.
And those kinds of businesses, I think, are people who are looking for solutions to a problem and they’re not looking for technology. They’re don’t shop technology. They don’t think of it as a software solution; they’re just looking to get a specific job done. So we’re focusing more and more on what we’re calling the “modern employer”.
The modern employer is the person who is -- why they don’t think about going after technology solutions, they’re trying to find something to solve their problem like payroll. They are technology savvy folks. They’re the people that are comfortable with mobile technology, and they’re comfortable with buying things online and shopping online.
So that portion of the population has grown pretty dramatically in the last few years and I think that’s why this SAAS solutions in general for small business are taking off much like they’ve taken off and been adopted in much larger environments. I think in terms of whether they’re streamlining a process that’s been done before, I don’t think -- I mean they’re trying to do -- for example in our case, they’re trying to do payroll.
So our online solution enables people to do payroll in a way they haven’t been able to do it before because they can completely automate the tasks that they used to do manually. So it used -- with payroll it’s about cutting payroll checks on payday. It’s about filing tax forms with the government, both the state and local government on a regular basis. It’s about paying state and local taxes on a timely basis.
What we provide through our online solution is very different than the manual way of doing it which means you have to go find the form, you’d have to fill out the data, you’d have to manual calculations, check your math, mail it in, and be subject to errors. With ours its, basically, one click.
We send you an email at the end of the quarter, at the end of the period when the form is due, or when the payments are due, and you log on to the system. It reminds you that you have a payment to make. You click once, and the payment is done, and you’ve done your payroll. So I think its -- it really is a different way of doing payroll than has been available before.
KD: All right. That covers a lot of what was in my next question. Do you have any figures on the amount of time and money that companies can typically save by using a SAAS solution?
JH: Well, the IRS talks about that some because they have to -- the government’s mandated to tell you on each form how long they think it will take to manually fill it out. I don’t know if that’s actually the case. It would depend on the number of employees, obviously, but they say it could take up to 15 hours to manually fill out a 941 Form on an annual basis.
Now you do that, you fill out the forms on a quarterly cycle so that may be multiple cycles. But with our online solution, you literally do in it a couple of minutes and it just -- that’s just one of the examples where we’re able to sort of collapse the time because we’re doing it in a very different way than you would do it manually.
KD: All right. So looking at SAAS in general, we were talking a little bit about this before but there’s a lot of press about how some small companies tend to keep the new technology at arms length. Are you finding that at all to the be case? It sounds like maybe they’re just looking for the right tool for the job.
JH: I don’t think they think about it as technology. I think that what you just said was they go look for a solution to the problem that they have and that’s exactly the way they approach it. So they go online and it’s not like they typed in “I need a technology solution for my small business”. They’re saying, “Hey, I got to do payroll. How do I do payroll?” That’s what they type into Google.
So they make that connection through the web and those are the kinds of folks that would likely be the ones that adopt a service like ours. I think it’s changed dramatically over the last few years. I’ve been involved with small business accounting software, small business payroll for ten years. I was in another big firm that did this ten years ago. And only in the last few years has the online space really taken off.
Now, they’ve been online solutions out there for a while but I think it’s really taken off. In fact, just today we’re announcing that we’re now servicing 75,000 small businesses and that was only 50,000 a year ago at this time. So we’re seeing a dramatic increase in the number of small businesses that are being served by these online solutions and think that’s typical of some of the other small business solutions that are out there.
The other thing I think that makes a difference is just making it easy. These small business actually don’t have any patience for anything its takes a lot of time. They get -- they’re working many hours. They’re doing administrative work off hours, weekends, and nights. And so part of making it easy is not just how you find us or do payroll easy but its how you -- can you make it easy to sign them up.
Can you make it easy to service them when they’re doing it? Are you available when they are working on payroll, which is night or day? Can you access it from anywhere in the world if these people are traveling? So those are all aspects of our online solution that I think make it real easy for these small businesses to be successful and I think that the kind of thing where those are going to be the expectations of any small business online solution down the road.
KD: All right. Great. So do you have any tips or advice for small business owners who are thinking about using a kind of as SAAS solutions but aren’t really sure?
JH: Well, I think you got to do your homework before you get started. Its clearly we’re the leader in the online payroll space and a good choice in that space. And I mentioned we got 75,000 customers so, obviously, we’re doing something right. We’ve been around since 1999 and clearly, we’re getting this right. I think another thing to look at is customer service.
As I said, we’re now operating free phone service, email support daily and on weekends. We went to weekends this year because small businesses were finding our -- stretching their workday in their week and so we need to be available when they’re there. Look for something, look hidden fees. We do everything on a flat monthly fee and a lot of places will nickle and dime, add on fees, shipping fees, those kinds of things, or even charge extra for phone minutes of support.
We don’t do any of that. We bundle all of our costs in the monthly service fee. And even the payroll space that means things like direct deposit, or e-filing, all of those come as part of the standard package. And in other cases, people are adding on and using ala cart pricing so I think that’s one thing to be careful for.
Last thing is check with trusted advisors. In the case of payroll, clearly go to your accountant and ask who are they using and what the basic -- there’s accountants, lawyers, IT, the small networking IT profession, they’re all trusted resources that would recommend solutions. And in our case, for payroll we think they’d recommend PayCycle so.
So, I think, do your research, check out customer service, make sure you understand the pricing, and check around for recommendations, especially trusted advisors like accountants. I think those would be the tips, I guess.
KD: Great! We've been speaking with Jim Heeger of PayCycle. Thanks for joining us and have a great day.
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