SWAS is PYG's trendy term for Saas but with service.Think of...

SWAS is PYG's trendy term for Saas but with service.

Think of SaaS as the cloud based solution you pay for on subscription. SwaS comes with on-going support. In the payroll/HR world, having the tool is half the battle. Governing the tool to make it work according to legislation is the real value adder. Under PYG you've got a selection of payroll and HCM tools ... all add up to formulate a hand in delivering a solution to sell to businesses. You want digital tools that work all industries. What works in a mine doesn't work in a white collar environment. The goal is to get the royal flush of tech tools and service options.

Astute is their labour hire and recruitment tech, Talent One is the hire to fire HCM tech for HR managers, Pay Asia and Payroll HQ are their Asia Pacific payroll solutions - the tech and the service delivery ... training, implementation, configuration, auditing and outsourced expertise.

Jurisdictional difference and pay complexity means this is a challenging market. A tool and team in Asia will struggle with NZ or AU payroll compliance. You only need to look at Woolies, Commbank, ABC, etc etc for all the underpayments where outsourcing or internal lack of skills cost them underpayments. Australia's payroll rules change every month from payroll tax changes, super obligations, changes to the modern awards by Fair Work, court issued interpretations of legislation, withholding rates ..... the tech does the job but you need to continually configure it.

So how to they compare to your stated listed competitors?

ELMO have a pretty suit with tight marketing. They spend big on the marketing but their real value within the product is HR tools. They bought Sky Payroll which was a heap of shit. Now they are screwing around with Payroll Metrics. I think every payroll tool on the market that says it can work Australia has pitched at ELMO but the ones that work and are good have not or chose not to knowing ELMO struggles with their core piece of the puzzle. I'll grade their hand as a flush.

HR3 is far more comprehensive. You've got the HR tools and payroll engine but they need integration with 3rd party work force management tools to clock in and out and roster staff. This limits them to only part of the market or added costs of integrations. Some of the tech on the back end is a little dated for the bigger end players. Date driven tech VS batch based can be an issue when you need data by the minute for managing a large fluctuating workforce. Lets give these guys the four of a kind hand.

PYG. You've got a service delivery team in Asia to reduce costs and the acquisition of Payroll HQ to provide onshore service both outsourced governance and call center support. Neither own their tech, they license 3rd party vendors which means no developer costs and the ability to jump to the latest providers in the market, remaining agile. Astute owns it's tech but has really smashed the market and will struggle for sales, really only playing to new and emerging smaller businesses. Astute's strategy will be to create a line extension into managed services based on the back of the service delivery models of PHQ and Pay Asia, then it will have a whole new revenue model to capitalize on. Talent One owns it's tech and has a full development team, offshore too so it's a lot cheaper. This brings tech staff to the Astute table and the ability to do fast integrations with the 3rd party solutions creating more bespoke services. Lets call this a royal flush hand. You've got Asia Pacific covered, the HCM and all industries sorted from a technology and service basis .... hence SWAS.

Will this make the share price go up ...probably not, well at least not for a while or at least until capital goes towards creating awareness of the hand they are holding. Others who watch the continued revenue growth of the tech + subject matter expertise service model will get the play PYG are making.

There are plenty of players with big marketing war chests.... Ceridian acquired Riteq and have rebadged their product to call themselves Australia ready, they picked up Harris Farm (retail workers awards are bread and butter in the industry and everyone wants the easy work with big head counts). RAMCO leverage their international presence and war chest to market hard but have not yet been able to pick up significant clients. You also mentioned WorkDay, a $$$ offering, not so much for the underserviced middle market who are price sensitive and cluey to looking around.

Ultimately the share price rises on market sentiment. Expect continuous revenue growth from PYG with their royal flush. The hype train we see in other tech companies at the moment isn't likely to come for PYG due to the detailed nature of their strategy .... though no one really every knows these things.