Paylocity Hosted Solution Provider Achieves 99.99 Percent Uptime While Supporting Rapid Growth

1. Microsoft SQL Server
Customer Solution Case Study
Hosted Solution Provider Achieves 99.99
Percent Uptime While Supporting Rapid Growth
Overview “Our upgrade to Windows Server 2008 R2 and SQL
Country or Region: United States
Industry: Professional services Server 2008 really improved website responsiveness,
helping us to support our continued rapid growth.”
Customer Profile
Paylocity provides hosted payroll and Chuck Cooper, Chief Information Officer, Paylocity
human resources solutions and services.
The company has 325 employees and is
based in Arlington Heights, Illinois.
Business Situation To succeed with its vision for delivering a hosted, web-based
Paylocity needed a software platform
payroll processing solution, Paylocity needed a software
capable of delivering mission-critical
levels of scalability, reliability, and platform capable of providing superior levels of availability,
security for its hosted solution.
scalability, and security—as required to compete with much
Solution larger companies. In 2004, Paylocity adopted a strategy based
The company selected Microsoft
on Microsoft technology, and over the past seven years, it has
software and now runs its hosted
solution on the Windows Server 2008 R2 evolved that strategy, continuing to take advantage of the latest
operating system and Microsoft SQL
software from Microsoft. Paylocity now runs its hosted solution
Server 2008.
on the Windows Server 2008 R2 operating system and Microsoft
Benefits
SQL Server 2008. The company’s choice of Microsoft software
 Strong reliability, scalability,
performance, and security has helped Paylocity achieve the reliability, scalability, and
 Continual product innovation through
security required to support around-the-clock access by more
adoption of new Microsoft software
 Ease of administration and than 6,000 customers with millions of employees over the web—
management
maximizing customer satisfaction and fueling continued
 Low total cost of ownership
 Strong customer satisfaction business growth.

2. “To effectively support Situation based delivery model is ideal for meeting
Paylocity provides payroll, human all of those criteria. In addition, we saw how
our rapid growth rate resources, tax filing, and time and labor it would enable us to easily scale
management solutions through a software- geographically, as nothing would need to
and compete against the as-a-service (SaaS) model, along with be installed on-premises at customer sites.”
three big companies in complementary professional services. The
company has twice been named the Payroll To succeed with its vision, Paylocity needed
our industry, which are “Service Bureau of the Year” by the a software environment capable of
Independent Payroll Providers Association providing superior levels of availability,
many times larger than (IPPA) because of its 97-percent client scalability, and security. “We needed a
us, our business strategy retention rate for 10 years running. In platform capable of delivering all the
addition, Paylocity has been recognized by mission-critical attributes, as necessary to
has been to leverage Inc. Magazine six times as being among the meet customer needs and compete with
nation’s fastest-growing, privately held much larger service providers,” says
Microsoft technology companies. Cooper. “Scalability was especially
innovations.” important because, at the time, we were
Founded in 1997, Paylocity started as a growing at a rate of 60 percent per year. Of
Chuck Cooper, Chief Information Officer, reseller of a third-party, client-server course, we also had to deliver
Paylocity application. Paylocity customized the uncompromised availability and be able to
solution for on-premises installation at secure our solution for delivery over the
customer sites, with payroll information web.”
generated by the software sent by File
Transfer Protocol (FTP) to Paylocity for In 2004, Paylocity launched Web Pay, its
processing. However, that business model hosted solution, on Windows Server 2003
presented key disadvantages that were and Microsoft SQL Server 2000. At the time,
hampering business growth: The need for the company had four web servers, one
geographic proximity to customers limited database server, 1,900 customers, 83
market size, and there was only a certain employees, and U.S.$7.8 million in annual
degree of customization that could be revenue.
achieved. Most importantly, licensing a
third-party technology prevented Paylocity Over the next few years, the company
from achieving true differentiation in the upgraded to SQL Server 2005, moved to
marketplace. 64-bit servers to take advantage of
additional physical memory, and
In 2003, the company decided that it was transitioned to separate transactional and
time for a change. “We wanted to control reporting databases that were linked by
our own destiny, and saw the opportunity transactional replication. Because of an
to build our own software-as-a-service ever-increasing number of servers in its
solution for delivery over the web as a datacenter, Paylocity adopted a virtualized
means to that end,” says Chuck Cooper, IT infrastructure. “We were growing so fast
Chief Information Officer at Paylocity. “We that we were going to run out of power
set out to create a solution for midmarket and cooling capacity, yet we still had time
companies with 50 to 5,000 employees, and on our data center lease,” recalls Cooper.
to differentiate ourselves by combining a “We adopted Windows Server on VMWare
better product with great service. Clients to address those issues, and have been
want simplicity, cost-effectiveness, and ease using it successfully ever since.”
of adoption and management; and a web-

3. “Our clients trust By 2008, that IT infrastructure had grown to new software development and relies on
12 web servers, 1 active transactional Microsoft Visual Studio Team Foundation
Paylocity to ensure that database server, and 2 reporting database Server 2010 for all aspects of application
servers, supporting 4,200 customers. lifecycle management.
their employees are paid
accurately and on time, Solution “We rely on our hosted solution even more
Paylocity originally chose Microsoft than you might expect,” says Cooper. “Not
and we trust the software because it met all mission-critical only does it support more than 6,000
requirements. “To effectively support our customers with millions of employees, but
Microsoft platform to rapid growth rate and compete against the it’s also used by our own staff to both
ensure that we continue three big companies in our industry, which manage our client’s payrolls and run our
are many times larger than us, our business own business. We also use various
to achieve that goal— strategy has been to leverage Microsoft Microsoft Dynamics products to support
technology innovations,” says Cooper. “Our sales lead management and accounting.”
even as we continue to clients trust Paylocity to ensure that their
grow at a rapid pace.” employees are paid accurately and on time, “Windows Server 2008 R2 Enterprise
and we trust the Microsoft platform to offered significant improvements in
Chuck Cooper, Chief Information Officer, ensure that we continue to achieve that reliability, security, and scalability, with
Paylocity goal—even as we continue to grow at a support for up to 256 logical processors,
rapid pace.” which provides plenty of capacity to
support our continued rapid growth,” says
Paylocity also chose Microsoft software Cooper. “We also identified several new
because it offered superior developer and improved features in SQL Server 2008
productivity. “We had ambitious goals but that we were eager to adopt, such as
a very small development team when we compression of log files, table partitioning,
started this project,” says Cooper. “We and dynamic views.”
looked at both Microsoft .NET technology
and Java, and realized that Microsoft .NET To minimize downtime, Paylocity planned
would better enable us to more quickly and for an across-the-board upgrade of its IT
easily deliver a rich and robust solution.” infrastructure. “Because we have a solution
that is accessed by our customers literally
By late 2010, Paylocity was once again 24/7 [24 hours a day, seven days a week]
ready to take advantage of newer Microsoft throughout the year, when we do have a
software to support its continued rapid major release with scheduled downtime, we
growth. Paylocity upgraded its IT make several environmental changes at
infrastructure to the Windows Server 2008 once,” explains Cooper. “For example, when
R2 operating system. The web servers run upgrading to Windows Server 2008 R2 and
Windows Server 2008 R2 Standard with SQL Server 2008, we also installed a new
Internet Information Services (IIS) 7.5, the storage area network. Everyone agrees that
latest web application platform from we have a much more stable system, and
Microsoft. The database servers run we’ve seen the fastest performance
Windows Server 2008 R2 Enterprise and benchmarks we’ve ever seen, with average
Microsoft SQL Server 2008 Enterprise data webpage response times of less than one
management software, and SQL Server second.”
Reporting Services is used extensively.
Paylocity uses the Microsoft Visual Studio After testing the new environment,
2010 Premium development system for Paylocity upgraded all 25 web and

4. “Microsoft software gives database servers on a Saturday. “We “We selected SQL Server Reporting Services
completed the upgrade with no issues at as our reporting engine because it allows
us choice and flexibility all,” says Cooper. “In fact, the week us to programmatically create our own
following the upgrade was one of the reports,” says Cooper. “This has allowed us
in meeting customer busiest of the year in terms of server to build our own front-end Report Writer,
needs, while at the same workload, and everything held up which allows nontechnical users to create
remarkably well.” their own reports with just a few mouse
time providing great clicks. Just as important, the scale-out
Current Architecture architecture for SQL Server Reporting
scalability and Today, the IT infrastructure supporting the Services helps ensure that we can continue
dependability.” company’s hosted solution consists 43 to keep up with an ever-increasing
virtual servers running on 9 quad-core reporting workload.”
Chuck Cooper, Chief Information Officer, Xeon 5500 servers, each configured with 72
Paylocity gigabytes of memory and 2 host-bus Important New Capabilities
adapter Fiber Channel cards. The web In implementing the versions of Windows
server tier includes 12 virtualized servers, all Server and SQL Server it uses today,
of which run Windows Server 2008 R2 with Paylocity took advantage of new and
IIS 7.5. Paylocity uses vMotion from improved functionality in those products to
VMware to move the virtual machines from improve performance, security, and
one physical server to another to evenly scalability. Features in Windows Server
distribute the load. 2008 R2 that the company adopted include:
The transactional database that supports  Active Directory Federation Services 2.0,
the web tier is also hosted in a virtualized which Paylocity uses to enable single
environment, where it runs on Windows sign on (SSO) among its various payroll,
Server 2008 R2 Enterprise and SQL Server human resources, time and labor, and tax
2008 Enterprise Edition. To maximize services products. The company also
availability, the database is configured as uses Active Directory Federation Services
an active-passive cluster using failover 2.0 to integrate with hosted solutions
clustering in Windows Server 2008. The from business partners.
database is approximately 500 gigabytes in
size and averages 2,600 transactions per  Improved static compression in IIS 7.5,
second, with a physical input/output (I/O) which reduces the processor and
rate of 50,000 kilobytes per second. memory utilization associated with
Enterprise-class storage is provided by a compressing static content before
Hitachi ASM2500 storage area network. transmitting it from the company’s web
servers to a customers’ web browsers.
The reporting tier, which is based on SQL
Server Reporting Services, resides on three Paylocity also took advantage of several
additional virtualized servers and is new and improved features in SQL Server
supported by a separate reporting 2008, including:
database. Paylocity uses transactional
replication to copy data from the  Backup file compression, the use of
transactional database to the reporting which has delivered an 80 percent
database, with changes typically replicated decrease in disk space used for backups
in less than four seconds. and a 75 percent reduction in the time
required to complete those backups. “In

5. the past, backups did not always finish  Dynamic database views, which have
before the start of the business day but improved the company’s ability to see
now they do,” says Cooper. “Backup file what is occurring inside its databases
compression has also made it much and prioritize the performance-tuning of
faster to copy a full database backup to stored procedures.
our quality assurance lab and disaster
recovery data center, even though the Even though it just recently completed its
actual size of our database has grown infrastructure upgrade, Paylocity isn’t
fivefold in the past couple of years. We standing still. Developers have migrated
can now replicate the data in our the company’s hosted solution from
production environment to our test Microsoft ASP.NET 3.5 to ASP.NET 4 for the
environment on a daily basis instead of a company’s upcoming release, featuring a
weekly basis.” new Employee Self-Service Portal. Paylocity
is developing its Time and Labor
 Table partitioning, which enables Management product using the latest
Paylocity to run simultaneous database ASP.NET Model-View-Controller (MVC)
queries against different partitions of its pattern—often referred to as ASP.NET MVC
largest database tables, while restricting 3. The company is also participating in a
lock escalation to only the affected Microsoft technology adoption program for
partition instead of the entire table. Windows Workflow Foundation, and is
“With table partitioning, we were able to looking at using Microsoft BizTalk Server
Figure 1. Paylocity used the improve the performance of calculating a 2010 to support its integration needs.
programmability of SQL Server payroll batch by more than 150 percent,”
Reporting Services to build an says Cooper. “We plan to use workflows to support
intuitive Report Writer for use by additional business processes, such as
nontechnical customers. human resources-related work streams,”
says Cooper. “We already have the
customer data in our systems and, with the
new workflow innovations from Microsoft,
we’re able to easily take advantage of that
data to deliver new customer offerings.”
Finally, Paylocity also is keeping an eye out
for new technologies—such as Windows
Internet Explorer 9—to recommend to
customers. “With Internet Explorer 9, we’re
seeing a 30 percent performance gain in
the rendering of our Employee Template
feature, which enables users to design the
layout of employee-facing webpages—
something we attribute to the improved
JavaScript performance in Internet Explorer
9,” says Cooper.

6. “Our software is Benefits minor issues that we have experienced
Since 2004, Paylocity has taken advantage have been hardware-related. In the past
phenomenal! It has of Microsoft software innovations to seven years, we’ve only had to call
support and fuel business growth—and to Microsoft for support twice.”
enabled our sales keep its hosted service up and running
management team to smoothly. Today, the company relies on Superior Scalability and Performance
Windows Server 2008 R2 and SQL Server The company’s recent upgrade has
attract the best talent 2008 to achieve the reliability, security, and improved application performance, helping
scalability needed for 24/7 access by its Paylocity to support business growth and
available in our industry more than 6,000 customers. keep customers happy without excessive
from coast to coast to investments in additional hardware. “Our
“Microsoft software gives us choice and upgrade to Windows Server 2008 R2 and
help us expand from two flexibility in meeting customer needs, while SQL Server 2008 really improved website
at the same time providing great scalability responsiveness, helping us to support our
markets in 2007 to more and dependability,” says Cooper. “Just as continued rapid growth,” says Cooper.
than 30 markets today. important, we get all of the great ‘extras’ “Over the past two years, webpage
out-of-the-box—features such as Active response times have decreased by 60
Our sales force is now Directory Federation Services 2.0 and SQL percent while our overall web traffic has
Server Reporting Services that we’ve used tripled.”
significantly more to deliver an even better solution. Seven
productive and our new years ago we adopted a strategy based on The upgrade has also improved reporting
using Microsoft technology innovations to performance. “During peak periods, we run
sales have quadrupled compete against much larger companies more than 20,000 reports per day, with an
and, if our continued rapid growth is any average report generation time of seven
since 2007.” indication, that strategy has continued to seconds, even though many of the reports
Mike Haske, Vice President of Sales and serve us very well.” are large and complicated,” says Cooper.
Marketing, Paylocity “That’s a significant improvement over
Mike Haske, Vice President of Sales and what we were seeing before the upgrade,
Marketing at Paylocity, adds, “Our software when reports took an average of 11
is phenomenal! It has enabled our sales seconds.”
management team to attract the best talent
available in our industry from coast to coast Strong Security
to help us expand from two markets in Paylocity has been able to maintain strong
2007 to more than 30 markets today. Our security, which Cooper attributes to two
sales force is now significantly more things: the integrated security model built
productive and our new sales have into the Windows Server operating system,
quadrupled since 2007.” and guidance provided by Microsoft on
how to best take advantage of it. “We
High Reliability haven’t had a single security breach since
Because customers use its hosted service launching our hosted solution seven years
24/7, 365 days per year, Paylocity has a ago,” says Cooper. “We’ve had external
goal of 99.99 percent service level penetration testing done, with good
availability—equal to about 52 minutes of results—and give a lot of the credit for
unplanned downtime per year. “Windows those results to the Claims-Based Identity
Server 2008 R2 and SQL Server 2008 have and Access Control guidance provided by
been rock solid, enabling us to hit our the Microsoft Patterns and Practices
target service levels,” says Cooper. “The few group.”

7. “Over 90 percent of our Continual Innovation capability, helps pay for itself,” says Cooper.
With feature-rich software and a world- “We could have spent many more times on
customers would refer us class development environment, Paylocity Oracle to get the same performance that
has been able to continually and rapidly we get with SQL Server.”
to a friend or business innovate—as necessary to stay ahead of
associate.” competitors with hundreds of times as High Customer Satisfaction
many developers. “We’re the small guy For Cooper, customer satisfaction is the
Jenifer Page, Vice President of going up against several multibillion dollar ultimate gauge of whether his strategy to
Operations, Paylocity competitors, and have been able to run the business on Microsoft software is
compete successfully by leveraging the working. Recent survey results reflect that
enormous investments continually made by he’s made the right decision. “Clients have
Microsoft in research and development,” been extremely happy with Paylocity and
says Cooper. “When I consider all of the our Web Pay product, as shown by recent
new capabilities we gained through our customer satisfaction surveys,” says Jenifer
latest upgrade—including Active Directory Page, Vice President of Operations at
Federation Services 2.0, static compression, Paylocity. “Over 90 percent of our
log file compression, table partitioning, and customers would refer us to a friend or
dynamic database views—it’s like getting business associate.”
10 additional developers for less than the
price of one developer’s annual salary.”
Ease of Administration and Management
Even with 43 virtual servers, the company’s
production IT infrastructure requires very
little hands-on administration. “Microsoft
software makes system administration and
performance tuning easy, which is why
we’re able to get by with only six system
administrators and three database
administrators,” says Cooper. “Choosing
Microsoft Dynamics software has also
contributed to ease of administration, as
we’re able to maintain and support those
systems with the same tools and skillsets
that we use to support our hosted
solution.”
Low Total Cost of Ownership
With Microsoft software, Paylocity is able to
invest more on innovation with respect to
its own products and less on hardware,
licenses, maintenance, add-ons, and
consulting—contributing to a low total cost
of ownership. “Microsoft software is well
worth the investment—in addition to the
extensive capabilities it provides, it
essentially runs itself and, through that

8. For More Information Microsoft Server Product Portfolio
For more information about Microsoft For more information about the Microsoft
products and services, call the Microsoft server product portfolio, go to:
Sales Information Center at (800) 426- www.microsoft.com/servers
9400. In Canada, call the Microsoft
Canada Information Centre at (877) 568-
2495. Customers in the United States and
Canada who are deaf or hard-of-hearing
can reach Microsoft text telephone
(TTY/TDD) services at (800) 892-5234.
Outside the 50 United States and
Canada, please contact your local
Microsoft subsidiary. To access
information using the World Wide Web,
go to:
www.microsoft.com
For more information about Paylocity,
visit the website at:
www.paylocity.com
Software and Services  Technologies
 Microsoft Server Product Portfolio − Active Directory Federation Services
− Windows Server 2008 R2 Standard 2.0
− Windows Server 2008 R2 Enterprise − Internet Information Services 7.5
− Microsoft SQL Server 2008 Enterprise − Microsoft ASP.NET 4
 Microsoft Visual Studio − Microsoft SQL Server Reporting
− Microsoft Visual Studio 2010 Services
Premium
− Microsoft Visual Studio Team Hardware
Foundation Server 2010  12 custom-build quad-core servers
This case study is for informational purposes only.
MICROSOFT MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, IN THIS SUMMARY.
Document published April 2011