In-depth report by Nucleus Research provides customer insight into bottom-line results from Kronos deployments

Wellesley, Mass. - December 23, 2002 - According to the results of a study issued today by Nucleus Research, Kronos (NASDAQ: KRON) users studied by Nucleus are achieving a median ROI of 469 percent, primarily in direct benefits, with average payback in five months. The report showed that customers achieved a positive ROI as a result of significant reductions in payroll errors, which had averaged nearly 1.2 percent of total payroll costs, along with six other key benefits that led to cost savings. Kronos provides integrated human resources, payroll and labor management technology solutions.

ROI Evaluation Report: Kronos Workforce Timekeeper

The report, which focused on companies using Kronos' flagship time and attendance product, Kronos Workforce Timekeeper, is the latest in a series of financial analyses from Nucleus Research that identify best practices for companies to achieve positive ROI from enterprise technology investments. The Nucleus Research report is available at NucleusResearch.com.

"In studying the ROI of Kronos implementations, we determined that the majority of the benefits recognized by the sample population are direct benefits in terms of bottom-line cost savings," said Rebecca Wettemann, vice president of research for Nucleus Research. "In the majority of IT-focused ROI analysis, many of the benefits are a mix of direct and indirect, such as gains in productivity. While both types of benefits are inherently real and affect the bottom line, CFOs tend to give the most credence to hard dollar savings."

Kronos Workforce Timekeeper is a Web-based time and attendance solution designed for organizations that need to provide access to real-time information on the labor components of their business. It allows corporations to collect, manage and distribute critical labor data, resulting in improved use of labor sources at reduced costs. Key functionality areas of the Kronos Workforce Timekeeper include the abilities to collect valuable labor data, control labor costs and increase payroll accuracy.

As part of its research, Nucleus found several key return areas for the Kronos customers surveyed:

• Reduced payroll error rate: Payroll error rate-overpayments due to errors in data entry, applying pay rules and similar clerical mistakes-is by far the largest area in which organizations can reduce costs. Eighty-eight percent of the companies surveyed realized savings from the reductions in payroll error rate that exceeded the entire cost of implementing Kronos Workforce Timekeeper; in fact, the ROI for payroll error rate alone pays for implementation almost six times over.
• Reduced payroll processing time: Almost 85 percent of organizations surveyed had some savings from payroll processing time improvements.
• Reduced payroll inflation: The inflation of payroll due to the inaccurate calculation of hours worked due either to mistakes or "buddy punches" can be a significant cost. Nucleus estimates the industry average to be .72 percent.

Additional return areas included improved labor reporting, reduced unauthorized leave time, elimination of timecards and reduced payroll headcount.

Study Methodology

Nucleus Research contacted 75 customers provided by Kronos, of which 25 agreed to participate in telephone interviews. The aggregated data provides representative information for using Kronos Workforce Timekeeper. The organizations surveyed ranged in size from 300 to 15,500 employees, with slightly more than half at more than 1,000 employees. There was an equal distribution among five major industries: manufacturing, government, education, health care and retail.

All organizations that participated in the survey shared highly confidential data, including total payroll, pay rates for numerous employees, invoices and cost/benefit analyses for Kronos Workforce Timekeeper, and numerous other data points necessary for an ROI study. Nucleus Research spent several hours with each contributor and contacted each one at least twice to confirm the accuracy and comprehensiveness of all the data.

Nucleus Research's published report is available at NucleusResearch.com.

About Nucleus Research

Nucleus Research is an independent global research and advisory firm that provides CFOs and CIOs with the financial and technology expertise they need to evaluate and manage their information technology investments the same way they evaluate and manage other capital investments. Nucleus Research is the first firm of its kind to blend "Big Four" financial analysis with comprehensive technology expertise to deliver 100% impartial return-on-investment (ROI) data and financial analysis services to organizations worldwide. Nucleus Research uses an uncompromising set of processes and tools to evaluate the financial return on IT assets throughout a technology's life cycle, from selection and deployment to upgrade and retirement. Nucleus Research's ROI assessment methodology can be applied to virtually any technology investment.

The company was founded in 2000 by former senior executives from International Data Corp., Dataquest and AMR Research, and is headquartered in Wellesley, Mass., with additional offices in London and Paris. More information can be found at NucleusResearch.com.