For anyone involved in the SAP HCM software, the SAPInsider conference HR2014 is a must-attend event. This year’s conference was, once again, very good and informative. More than ever, we heard a lot about Successfactors and Cloud HR. There are a lot of good blogs that will review what was done at the conference – and we should all read them – but in this blog I’m going to share my vision of the future of SAP HCM because that is on everyone’s minds at this conference.
So the future is cloudy – it’s inevitable that SAP customers will adopt cloud HR technology, in this case mostly Sucessfactors because it’s from and supported by SAP. I’ve said before, and I still believe, the move to Cloud HR is undeniable. What is often forgotten is the pace at which various customers will adopt Cloud HR technology.
SAP has a challenging situation with their HCM customer base. Some want Cloud HR now – even yesterday – and if they don’t get it from SAP they will go elsewhere. Some are very content with their on-premise HCM software and don’t see much need to change. And then there is a big group between those two extremes that is going with hybrid solutions – it’s not ‘either/or’ for them but ‘both/and’ when it comes to on-premise and cloud. And these hybrid solutions can get fairly complex.
So SAP, if they hope to preserve their customer base, need to provide options for all these scenarios. In my view, they are doing a good job at that. Sure, some of the solutions need to mature and settle down, and the number of choices can be daunting. From what I’ve seen though, SAP is offering plenty of choices to satisfy customers at most all the various stages of that on-premise – cloud lifecycle.
At the conference David Ludlow of SAP mentioned a concept of ‘virtual integration’ where there are various discrete HR systems working together as one larger system. It works so well that at a higher level you see an integrated whole from all the various parts. I like the concept, but it requires a fair level of complexity in the underlying connections between systems that have different data and process models. I can see how it will work, and I like the direction, but early adopters might find more than a few rough spots at this point. Maybe for the next couple years.
This ‘virtual integration’ model also reminds me of the old days, when we had different systems for HR, payroll and benefits on the mainframe. We stitched them together via interface files. If you looked at that mess from a high level, it looked pretty good. Then we moved all that to integrated HR technology with on-premise SAP HR. Then master data, org data, time, payroll, benefits, recruiting, comp, talent, etc was all in the same place working with a common data model. No more interfacing issues, data model inconsistencies, redundancies. And now, ‘virtual integration’ is, it seems to me, reminiscent of the old days of interfacing various HR modules to achieve the whole HR system. Today we use faster and fancier integration than flat files (most of the time), so the gaps are smaller and less noticeable. But we’re still stitching together different systems.
I understand why ‘virtual integration’ is needed. It enables customers to digest the change from on-premise to cloud HR in ways that make sense for them. There are all kinds of factors that impact how a customer will – or can – adopt cloud HR technology. This ‘virtual integration’ is a method for them to move functions to the cloud as they are ready for it. But be realistic and understand this integration is not yet complete and it will take another year or two, in my opinion, to be functionally complete and stable. There is a lot of work remaining for SAP in this area.
And innovation in on-premise SAP continues. We saw more about HR Renewal, HANA, Fiori and so on. Of course not as much is changing on-premise as in cloud becase on-premise is functionally more mature, and both customers and market forces are demanding more development in the cloud. But for clients who have built-out their on-premise SAP HCM and are satisfied with it, I can see a long life ahead for it. The on-premise world doesn’t end in 2020.
However, every SAP HCM customer would be wise to start adopting Cloud HR technology. Adopting the Successfactors system is a good choice, not only for functionality but also for supported integration scenarios (particularly back to the non-HR SAP modules you are probably using). But why start adopting Cloud HR now? Why invest in the complexities of that ‘virtual integration’ if you like what you already have? Because at some point, the on-premise client base will become small enough to the point where you won’t get innovations and support will get expensive. It’s called a ‘burning platform’ at that point, and trust me – you don’t want to be on a burning platform for critical HR technology.
So go learn about Cloud HR, learn about Successfactors and all the ways SAP is delivering integration scenarios. Build your business case for moving functions to the cloud, be honest about your ability to change and retool your HR technology, and then start moving when you have a case. Often I tell my clients that the most difficult steps are the first few, but once you find your gait it becomes much easier. Everyone takes those first steps at times that are right for them. Just don’t forget to start the walk.
I'd love to get your perspective on this - feel free to continue the discussion on the SAP HCM Insights LinkedIn group!