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The Starr Conspiracy | Confidential

The enclosed material is proprietary to The Starr Conspiracy Intelligence Unit. This material may not be disclosed in any manner to anyone other than the addressee and authorized representatives of the client organization. 1

October 28, 2015

Employee Benefits TechnologyTrends and Predictions for 2016 and Beyond


Today’s Agenda• Introduction: About The Starr Conspiracy & About Steve Smith

• Benefit Technology Trends

• Benefit Technology Risks

• Predictions for 2016 and 2017

• Questions

The Starr Conspiracy | Confidential 2


About The Starr Conspiracy


• Strategy Marketing & Advertising Agency• Founded in 1999• Focused on Enterprise Software / HR

Tech• Co-located in San Francisco & Dallas /

Fort Worth• Multiple Best Places to Work Awards• $40 million in capitalized billings for 2015


About Steve Smith


• Partner at The Starr Conspiracy and chief of its Intelligence Unit (TSCIU)

• Focus is growth-oriented strategy, research, and advisory services, providing the guidance and key insights needed to grow market share and increase profitability

• Since 2001, specialized in human resources and human capital-focused strategy, messaging, positioning, brand, market research, thought leadership, and content marketing strategy

• Based in San Francisco, runs the company’s office there• Award-winning employee benefits/wellness/HR communicator• Former newspaper journalist

The Starr Conspiracy | ConfidentialThe Starr Conspiracy | Confidential 5

Benefits Technology Trends


Trends1. Shift to SaaS continues

2. Consultants solidify power position

3. ACA anxiety continues unabated

4. Wellness shifting to well-being

5. Support services get smart

6. Consumer expectations for UI/UX



Shift to SaaS continues


SOURCE: Sierra-Cedar 2015-16HR Tech Survey




The current market for SaaS benefits administration solutions is $6 billion and will reach $7.3 billion by 2017 (6.76 percent CAGR). (TSCIU)

The current market for SaaS wellness solutions is $3 billion and will reach $3.48 billion by 2017 (7.7 percent CAGR). (TSCIU)




SOURCE: William Blair 2015 HR Technology Report


Consultants solidify power position




ACA anxiety continues unabated


SOURCE: International Foundation of Employee Benefit Plans. 2016 Employer-Sponsored Health Care: ACA's Impact. https://www.ifebp.org/pdf/aca-impact-survey-2016.pdf


ACA anxiety continues unabated


SOURCE: William Blair Benefits, Health and HR Technology Conference 2016

“Employers and service providers alike underestimated the complexity of the reporting, with submission mismatch rates as large as 20% to 30% in some cases. This issue is becoming increasingly critical given that penalties will be assessed for reports that are determined to contain errors. One panelist estimated that the IRS invested an additional $50 million in its audit staff, so the frequency of audits and fines in general is likely to increase.”


Wellness shifting to well-being

SOURCE: 2015 Wellness Research Survey, Wellness Research Institute



Support services get smart



Consumer expectations for UI/UX



Benefits Technology Risks


Risks1. Experience matters. Choose tech vendors carefully.

2. Private exchanges struggle to gain traction

3. Brokers struggle to keep up with technology

4. Security remains a significant risk

5. The importance of “service” in SaaS



Experience matters



Private exchanges struggle with traction


SOURCE: International Foundation of Employee Benefit Plans. 2016 Employer-Sponsored Health Care: ACA's Impact. https://www.ifebp.org/pdf/aca-impact-survey-2016.pdf


Brokers struggle with technology


Employee Benefits Brokers

Strategic response:1. Vendor agnostic approach2. Preferred provider list3. White label (OEM)


Security remains a significant risk


Across more than 10,000 cloud services available today, only 9.3% meet requirements of large enterprises for data protection. (Skyhigh)


The importance of service in SaaS


Average NPSscore for an

HR technology company

=-35%


Benefits Technology Predictions


Predictions1. Aggressive M&A activity clouds vendor selection decisions

2. Data integration will continue to be a key selection criteria

3. Stand-alone compliance solutions will grow rapidly as an HR Tech category

4. Visible separation will occur in the broker market between tech-friendly and tech-phobic

5. Benefits will find a place in the employee engagement equation

6. Defined contribution plans, voluntary benefits will gain momentum



M&A clouds selection decisions


Tech IPOs

2014 2015 2016 (YTD)

62

531

HR Tech Investment

2000 2015 2016 (Q1)

$859M

$2.185B

$552M

Typical HR Tech Revenue:1. Technology

Benefits Tech Revenue:1. Technology2. Brokers3. Carrier

SOURCE: William Blair SOURCE: WSJ / CB Insights


Integration drives selection process




Compliance grows as a category

The Starr Conspiracy | Confidential 28SOURCE: The Starr Conspiracy Intelligence Unit


Brokers: Tech-phobic vs. Tech-friendly


or


Benefits & Employee Engagement



DC plans, Voluntary Benefits rising1. xx



Questions?


Thank youSteve [email protected]

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