Ceridian growth is good sign for the Twin Cities

You may have to forgive some of us for our enthusiasm at the launch of Ceridian HCM Holding as a public company.

It's a compelling growth story right now, sure. Yet some us can't help but be a little excited just by seeing a Control Data successor re-emerge as a publicly held Minnesota technology company.

Control Data (CDC) is a name younger people in the state may not even recognize, although they probably should. It's one of those companies that helps explain why the economy of Minnesota eventually caught and then passed the economies of neighboring states like Wisconsin in the back half of the 20th century. It helps explain how companies like UnitedHealth Group could have thrived here.

There's a certainly a strong family resemblance to the old Control Data in Bloomington-based Ceridian HCM, too, a fast-growing company providing human capital management software that recently filed to go public.

Its main offering is called Dayforce, used by employers for basics like making sure employees get paid accurately as well as things like recruiting and scheduling work. It promises a cloud-based system so easy and intuitive to use that it can be considered "consumer-grade."

Not much the old Control Data produced could have been easy to use, as its first mission was building big computers for customers like the U.S. Navy. A full corporate genealogy — from Ceridian HCM back to Control Data — begins in 1957 in St. Paul, where talented staffers led by Bill Norris had come to fear that their careers would dead end in a company then called Sperry Rand.

Norris colleagues including Willis "Bill" Drake and Arnold "Bud" Ryden got a company called Control Data going, including drafting the prospectus of a soon-to-be legendary stock offering — 600,000 shares to be sold at a buck each. Norris was named president and a company birth announcement of sorts ran as a sophisticated help-wanted ad in a September 1957 issue of Electronic News.

"Control Data Corporation has just started," it read. "We're going to grow."

Within a couple of years, the company raised capital at $16.25 per share. In about 10 more years the company's revenue had passed $1 billion and it employed more than 40,000 people.

Most of those details came from an archive that included a celebratory employee newsletter from the late 1970s. Looking back at the economic history of the Twin Cities, it's certainly possible to exaggerate how important Control Data turned out to be, but by any measure it was a big deal.

In addition to its own big footprint, Control Data alums moved on to launch other companies like DataCard Corp. and Data 100.

Regional economies are far too big and complex to suggest one company made all the difference, but until that first full decade of Control Data's explosive growth, Minnesota had been an economic laggard.

That period is when Minnesota's economy finally caught and then surged past Wisconsin's by measures such as per capita personal income. The gap remains wide today.

"What Control Data did was really help build the engineering talent in this town," said Nick Roseth, a Twin Cities technology executive with SWAT Solutions, Inc. and the creator of a 2016 documentary film on the Twin Cities technology industry. "And they helped build the ecosystem, a lot of those elements critical to business clusters like component manufacturers, educational programs, all of those things."

Along the way CDC became a big player in the business of providing services to employers, too. The service bureau model that CDC and International Business Machines Corp. had adopted even looked a little like these new cloud-based systems like Dayforce.

In both cases customers could use new and costly technology, maybe a Control Data mainframe computer for a payroll batch in the old days, without having to purchase the machine or know how to run it.

CDC's biggest move in the service bureau market came in a most unusual way — by settling a lawsuit with IBM.

Back then Control Data, along with everybody else in the computer industry including Honeywell here in the Twin Cities, was looking uphill at IBM. Control Data had sued IBM for anti-competitive behavior that included scaring off potential Control Data customers by talking up a hot new IBM computer that IBM hadn't even built yet.

As part of the early 1970s settlement, CDC acquired IBM's service bureau business to fold in with its own network of offices.

Success for Control Data didn't last, of course. By the time of its 30th anniversary, it had already been through job cuts and financial losses. The company renamed itself Ceridian in 1992 and what was left of the commercial computer business was soon gone. Here we have to fudge the corporate genealogy a bit because the employer services businesses were spun off in 2001 into a new company called Ceridian.

When that Ceridian was taken private in 2007 by private equity investor Thomas H. Lee Partners and an affiliate of Fidelity National Financial now called Cannae Holdings, it had a fraction of the employees Control Data had at its peak.

In 2012, Ceridian acquired Dayforce Corp., a Canadian company that had built the Dayforce product. Dayforce founder David Ossip became CEO as the company once again slimmed down, this time to focus on Dayforce software.

Since the end of 2014 the company has doubled the number of Dayforce customers to more than 3,000. By one measure of sales growth, annualizing the monthly revenue from cloud-based software, revenue grew from $210 million in 2015 to almost $400 million last year.

Ceridian HCM has a big presence in Canada, too, but here's hoping that Ossip chooses to grow its staff here in the Twin Cities. It's a place as good as any to find the talent necessary to grow a company. One reason for that, of course, is it's also the hometown of its own corporate grandparent.

lee.schafer@startribune.com

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