To understand business and accounting software provider Iris Software's plans in the U.S., Jim Dunham, the company's president and general manager for the Americas region, suggests looking to what it's already done in the U.K.
Iris Software, he pointed out, has been a major force in the U.K. for years. One in five employees in the U.K. are paid via the company's payroll software. Over 850,000 employees there are managed through its HR solutions. It is the largest third-party tax filer in the country. With this in mind, it is difficult to debate the success it has had in the U.K. Dunham said that the broad strategy is to replicate this success on other shores, including the United States.
"The overall strategy, if you step back, is that we're looking to duplicate that [broad reach] in the U.S.," said Dunham.
Acquisitions, he said, have been a key part of this strategy in the U.S., starting in 2019 with the purchase of practice management software solutions Star and Practice Engine (now Iris Star and Iris Practice Engine). It followed this up with the later acquisition of document management solutions Doc.IT and i-Channel. Shortly afterwards, it announced it had AccountantsWorld, which Dunham says is a key part of the company's long-term strategy in North America.
"With the acquisition of AccountantsWorld, this gave us a couple products but one in particular was a very solid payroll technology platform. One of the things we want to be able to do is offer a variety of [solutions] to the CPA market space. We want to be able to offer practice management, document management and payroll in this space," he said.
The purchase of AccountantsWorld has also helped Iris meet some of the U.S.-specific challenges to expanding into the market. He noted that, unlike the U.K., this country has 50 states, each with their own rules and regulations. Building from scratch something that can account for all this complexity seemed a daunting prospect; with its acquisition of AccountantsWorld, though, this suddenly became unnecessary.
"They were already paying employees in all 50 states. While it's a relatively small payroll company by itself, as a technology platform they already had a pretty big footprint. That's where the complexity comes in, and that comes into the calculations of being able to manage federal, state and local [regulations] as they relate tax," he said.
Acquisitions have continued apace, most recently with the purchase of myPay from Thomson Reuters. Iris' intentions with myPay are illustrative of the larger goals. Dunham said the plan is to migrate its current customer base onto the AccountantsWorld Payroll Relief platform, which in turn will be the site of many other service offerings. He pointed to the recent development of the Employee Self Service module, which allows workers to directly change their information from within the platform, as an example.
"It allows a customer to come in and change their information. You'd be surprised how often people want to change their banking information. They're buying a car or want to get a line of credit … We wanted to make that as easy as possible for the employees, so we made that easier for employers and for the payroll providers [to do]," he said.
He also noted that the purchase of myPay deepens Iris' involvement with the U.S. market because it is the only payroll service with money transfer licensing for all 50 states. Those licenses came with the purchase. While currently there is no requirement that a payroll company have such a license, he said there is proposed legislation that would impose one; should this regulation go through, Iris would be especially well-positioned to capitalize on the moment.
Overall, the company intends to integrate the platform with additional market players in order to drive new functionality that will, in turn, lead to larger and larger accounts. And while the current focus is on North America, Dunham said eventually the company will be taking a similar approach to other countries as well. He pointed out there has already been some groundwork laid in the Caribbean.
In the immediate future, Dunham said professionals can soon expect to see a mobile app that assists in the employee onboarding process, and the ability for customers to view and manage multiple accounts in one place.
Ideally, Iris wants to be able to service the market through its technology platform, which can allow different levels of management.
"So, a CPA comes to us and says, 'I need a new payroll platform,' so we have Payroll Relief. They may come and say, 'Look, I want you to take this over and manage it,' and that's our managed service offering … Or the CPA can come to us and say, 'I want to manage some things off your platform and you to manage some from a managed service perspective, maybe a hybrid model. I want to be able to service the market in any of these different models,'" he said.
With this in mind, he said Iris is still hungry for more managed service business acquisitions.
"If you want to get out of the payroll business, I'll buy your managed service business from you. You heard it here first," he said.
