Customer Stories / Software & Internet / United States

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Building an Automated Workflow to Process W-2s Using AWS Serverless Solutions with ADP

Learn how ADP in software modernized its W-2 processing system using AWS Lambda and AWS serverless solutions.

14x improvement

 in processing speed

33% reduction

 in costs

55% reduction

 in API response time

Virtually 100%

uptime maintained


Automatic Data Processing (ADP), an AWS Partner, processes 80 million W-2 forms every year for employers in the United States, who must meet an Internal Revenue Service mandate to report each employee’s annual wages and taxes withheld.

For companies that do not use ADP for payroll, ADP offers a Wage Payments business to generate and deliver W-2s. It operated this data-intensive workload, which peaks at the end of the year, within the constraints of on-premises hardware. Seeking to modernize, ADP turned to Amazon Web Services (AWS) for an infrastructure that would facilitate performance and enhance the development of new features for clients while cost-effectively scaling to accommodate growth.

Working alongside AWS, ADP redesigned its Wage Payments system from scratch. It built automations into the workflow using AWS Lambda, a serverless, event-driven compute service that lets organizations run code for virtually any type of application or backend service without provisioning or managing servers. Using AWS Lambda and other serverless solutions from AWS, ADP improved the processing speed for the 34 million W-2s outside of its payroll system by 14 times at one-third of the cost while providing customers with an API response time that is 55 percent less than expected.

ADP Wage Payments Team Photo

Opportunity | Using AWS Lambda to Modernize the Technology Stack for ADP

For 20 years, ADP has been running its Wage Payments business on a mainframe computer, which sometimes glitched when the load of W-2s stressed the system. Additionally, clients were unable to search individual W-2s without downloading and laboriously navigating large PDFs. “Our mainframe system had limitations, which were hurting our business,” says Lohit Sarma, senior vice president of product development at ADP. “It was affecting our development speed and our ability to optimize the user experience. Our speed and service cost were the two primary factors driving us to move away from the legacy stack.”

ADP was already running its human capital management technology using about 250 microservices from AWS. After evaluating potential solutions, ADP elected to rebuild and modernize its Wage Payments system using AWS Lambda. (See figure 1: ADP Wage Payments system on AWS.) In 8 months, the team gained expertise in AWS serverless solutions, rebuilt its system, and migrated the first 100 clients. “When we started this journey, the Wage Payments team was new to the cloud,” says Narendra Verma, director of development for Wage Payments at ADP. “With the help of the AWS team, we upskilled our team. We got up and running on the technology at a speed beyond our expectations.”

W2 Modernized Architecture Diagram

W2 Modernized Architecture

ADP W2 Modernized Architecture Diagram

Using AWS, we have seen a 14 times performance improvement in our processing layer at one-third the cost of our mainframe architecture."

Narendra Verma
Director of Development for Wage Payments, ADP

Solution | Improving Performance by 14x at One-Third the Cost

Built on AWS Lambda, the modernized system automates the workflow of ingesting, processing, producing forms and reports, and billing. The business uploads its W-2 data to ADP, which automatically extracts information, validates and saves data, and generates forms and reports in a manageable and searchable format. For clients with more than 400,000 employees, the forms and reports download service runs on AWS Fargate, which provides serverless compute for containers. “The report format is a major benefit now,” says Verma. “Earlier, all reports used to be in text format. Now, the readability of reports has improved a lot, which enhances our client experience.”

For document and report storage, ADP uses Amazon Simple Storage Service (Amazon S3), an object storage service offering industry-leading scalability, data availability, security, and performance. Rather than provisioning its database by hand, ADP uses the serverless Amazon Aurora, a relational database management system built for the cloud with full MySQL and PostgreSQL compatibility.

Instead of a monolithic model, ADP uses the agility of AWS Lambda to quickly test and deploy automations in independent environments. “We improved our speed to market,” Verma says. “Our development is really efficient, and we can now do more releases than before.” ADP also regularly betters the 4-hour requirement of its service-level agreements for file processing, and it improved its API response time for clients by 55 percent. “Using AWS, we have seen a 14 times performance improvement in our processing layer at one-third the cost of our mainframe architecture,” says Verma.

In addition to cost savings on processing, ADP no longer has to spend on the maintenance of its legacy mainframe. “It’s not an apples-to-apples comparison because we don’t have to worry about ordering hardware, selecting security patches, and meeting compliance requirements, which all go through research-and-development cycles,” says Sarma. “Now, we can just concentrate on product development while the rest is handled by AWS.”

ADP operates across multiple AWS Regions to maintain virtually 100 percent uptime and robust disaster recovery that is critical for clients, especially during January, the peak month. “The system is designed to be up and running during this critical time, which then helps us sell to our clients,” says Sarma. “They know it’s a reliable system. It’s super, super critical for our system not to go down.”

Outcome | Using AWS Serverless Solutions to Optimize the Client Experience

After successfully migrating 67 percent of its clients to the new system, ADP aims to migrate the rest by January 2024. It also plans to expand its Wage Payments business. “We can sell to bigger clients because we have a solid product that can handle nearly any scale, which historically we were a little nervous about,” says Sarma.

As part of Wage Payments modernization journey, ADP built multi-Region architecture for disaster recovery, and revamped features for clients. The modernization of the Wage Payments business also has inspired other internal teams within ADP. “To see a legacy product go through a major transformation in such a short time has provided an impetus for other parts of the organization,” says Sarma. “They see how quickly we could do it on AWS, and that’s helped turbocharge the transformation journey throughout the company.”

About ADP

Automatic Data Processing (ADP) provides payroll, human resources, and tax services to more than a million clients in 140 countries. In the United States, the company processes the payroll of one in six employees.

AWS Services Used

Amazon S3

Amazon Simple Storage Service (Amazon S3) is an object storage service offering industry-leading scalability, data availability, security, and performance.

Learn more »

Amazon Lambda

AWS Lambda is a serverless, event-driven compute service that lets you run code for virtually any type of application or backend service without provisioning or managing servers.

Learn more »

Amazon Aurora

Amazon Aurora provides built-in security, continuous backups, serverless compute, up to 15 read replicas, automated multi-Region replication, and integrations with other AWS services.

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AWS Fargate

AWS Fargate is a serverless, pay-as-you-go compute engine that lets you focus on building applications without managing servers.  

Learn more »

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