ADP 2012 Annual Report Download - page 10

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Competition in ADP’s industries is primarily based on service responsiveness, product quality, and price. ADP believes that it is very
competitive in each of these areas and that there are no material negative factors impacting ADP’s competitive position.
Clients and Client Contracts
ADP provides its services to approximately 600,000 clients. In fiscal 2012, no single client or group of affiliated clients accounted for
revenues in excess of 2% of annual consolidated revenues.
Our business is typically characterized by long-
term client relationships that result in recurring revenue. ADP is continuously in the process
of performing implementation services for new clients. Depending on the service agreement and/or the size of the client, the installation or
conversion period for new clients could vary from a short period of time for an SBS client (as little as 24 hours) to a longer period for a
National Account Services or Dealer Services client with multiple deliverables (generally six to twelve months), and in some cases may exceed
two years for a large GlobalView client or other large, complicated implementation. Although we monitor sales that have not yet been billed or
installed, we do not view this metric as material in light of the recurring nature of our business. This is not a reported number, but it is used by
management as a planning tool relating to resources needed to install services, and a means of assessing our performance against the
installation timing expectations of our clients.
ADP’s average client retention is estimated at approximately 11 years in Employer Services, approximately 6 years in PEO Services, and
10 or more years in Dealer Services, and has not varied significantly from period to period.
ADP’s services are provided under written price quotations or service agreements having varying terms and conditions. No one price
quotation or service agreement is material to ADP.
Systems Development and Programming
During the fiscal years ended June 30, 2012, 2011, and 2010, ADP invested $706 million, $674 million, and $614 million, respectively,
from continuing operations, in systems development and programming, migration to new computing technologies and the development of new
products and maintenance of our existing technologies, including purchases of new software and software licenses.
Product Development
ADP continually upgrades, enhances, and expands its existing solutions and services. Generally, no new solution or service has a
significant effect on ADP’s revenues or negatively impacts its existing solutions and services, and ADP’s solutions and services have
significant remaining life cycles.
Licenses
ADP is the licensee under a number of agreements for computer programs and databases. ADP’s business is not dependent upon a single
license or group of licenses. Third-party licenses, patents, trademarks, and franchises are not material to ADP’s business as a whole.
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