For your initial post, write a brief overview of the article. Describe how a gap

For your initial post, write a brief overview of the article. Describe how a gap analysis could help Paychex make a decision about the possible expansion of their payroll service to larger corporations. Business Process, Financial Performance, and Data Management is the title of the article about Paychex.
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PAYCHEX, INC.
Company Background
Paychex, Inc. offers payroll, human resource, and benefits services to small and medium sized business. The company was
founded in 1971 by B. Thomas Golisano, who was the only employee at the time. Paychex now employs more than 12,000
people and serves more than half a million businesses in the United States. With more than 100 office locations in the US,
the company has gone international and has 4 offices in Germany. Paychex went public in 1983 and is currently traded on
the NASDAQ Stock Market and is a member of the S&P 500.
Paychex implemented an Enterprise Data Warehouse in 2005. Figure 1 Paychex Data Management System shows the flow
of data through the data warehouse. Each “Source System” brings together different aspects of all of the products and
services offered by the company. For example, “Source System 1” is client payroll data and “Source System 2” is client
Human Resource Services data. Data from each source system is collected, but all of it is in different codes, therefore the
data is run through an “Extract, Transform, and Load” (ETL) tool. This tool translates everything into one common data
dictionary and then loads the data into the data warehouse. The data warehouse contains two targets, one of which is loaded
weekly and the other is loaded monthly. The data is then retrieved by analysts within the company to perform an
examination using a business intelligence tool. This tool offers a user friendly interface for non-IT users. The analysts then
transform the data into information.
FIGURE 1
Paychex Data Management System
Organizational
Development
Business Intelligence Tool
ETL Tool
Enterprise Data Warehouse
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Strategic Data Management
The analysts’ extraction of data from the data warehouse allows them to gain valuable knowledge and create competitive
advantages. The four major ways in which this information is used is in identifying revenue producing clients, new product
packages, key performance indicators, and key risk indicators. Each process is discussed as follows.
Identifying revenue producing clients allows the company to focus on the customer service of specific clients. Customer
service is, of course, supplied to all clients, but once major revenue producing clients are identified, it becomes the
company’s business to keep that client with Paychex. Losing these clients would have a devastating impact on the
company’s overall financial performance, especially on revenue.
Identifying new product packages is done in order to appeal to more potential clients as well as the company’s current
clients. Since 2005, Paychex has added several new products and services, such as Paychex Premier Human Resources,
Health Savings Accounts, Tax Credit Services, and Time and Labor Online. These products and services were found to be
sought after by clients through the use of the data warehouse. Because the data is all translated into one format, it isn’t hard
to put the data together into a useful piece of information.
Identifying key performance indicators (KPI) is helpful in assessing the health of the company. The analysts have an
existing method to identify KPIs. The important part is that by having all data readily available, it becomes quite easy to
identify new KPIs in an ever changing environment.
Identifying key risk indicators is important in Enterprise Risk Management. Due to the ease of which data is extracted
from the data warehouse, this division of the company can compile data on a monthly basis and see where security should be
increased or where fraud must be decreased. By identifying these risk indicators, the company can watch particular areas and
react efficiently and effectively.
Each of these identifications can create a competitive advantage if used properly.
Financial Performance
Figure 2 shows some of the financial aspects of Paychex, Inc. The company’s revenue has been stable since 2008, while
their equity and total assets dropped around 2008 when the stock market crashed and the economy entered this recession. It
is presumed that this is because of the Enterprise Data Warehouse and the significant advantages discussed previously. This
company has managed to keep its annual revenue on a relatively steady incline and is rebounding in most other financial
areas without a bailout.
FIGURE 2
Paychex Financial Performance (In Thousands)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Revenue Total Assets
Stockholders’ Equity Cash&Cash Equivalents
Source: Paychex (2011), based on the financial data retrieved from the Paychex. Inc website at http://www.paychex.com/,
accessed in December 2011.
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FINDINGS AND IMPLICATIONS
As described above, it is clear that the data management system provides a fundamental platform on which Paychex has
sustained competitive financial performance as evidenced for the past ten years by both quantitative and qualitative financial
measurements. If such a system has made Paychex so successful, what is really the relationship between and interactions of
data management and the performance? What are most important factors that make the company so successful? Can any
other company build a similar system? What are the most important experiences or lessons (successes or failures) in building
a similar strategic data management system?
First, at Paychex, IT initiative is driven and guided by business requirements and strategies, i.e. business processes created by
data management, instead of just looking for sheer technology fashion.
Second, Paychex management is acutely sensitive to challenges and opportunities brought by newer technology and continue
sto upgrade and advance its IT capabilities to catch business opportunities by technology drivers.
Third, Paychex’s data management system is fully integrated with its key business processes. This integration creates a
unique and valuable corporate resource. Because the integration process of IT and business is usually implemented under the
contexts of the very unique historical, business, and technological situations, with the intrinsic and contextual complexities
and causal ambiguity, this would make the capacity of managing the integration very difficult and even impossible to be
imitated by competitors.
Thus the capacity of managing the strategic integration of IT and business would be a possible source of competitive
advantage for the organization which implements an enterprise system. This issue has not been well addressed in the
literature.
RECOMMENDATIONS FOR FUTURE RESEARCH
A growing trend is that firms in all sizes, large or small, will implement an enterprise system such as the ERP, which
typically contains the attributes of integration, modularity, and IT personnel skills. Thus, an existing competitive enterprise
system will eventually become either a strategic necessity (Clemons & Kimbrogh, 1986; Clemons & Row, 1991; Powell &
Dent-Micallef, 1997), or a prerequisite for staying in IT-enabled business (Porter, 1985; Hamel & Heens, 1994), but not the
potential for competitive advantage.
It is the uses of IT that ultimately create competitive advantage. It is the business-driven integration of business processes and
IT, which is illogical or difficult for rivals to imitate.
Thus, what is essential is the ability to manage, to apply IT for a well-defined specific business strategy under a unique
context, and to implement a cross-functional and/or cross-activity integration, which is much beyond the technical system
integration. It is this type of ability to manage IT that may be one sustainable source of competitive advantage. Thus, this
type of managerial IT capability needs to be considered as the core of the firm’s IT capacity and warrants further empirical
studies.