The Future of SAP Payroll

I've been working with SAP's payroll since 1993. When I was trained, R3 didn't really exist so I was trained on R2 payroll - oh, those were the green screen days. And I was around to see and participate in the development and roll out of R3 payroll for the US. Oh, those were some days.... So now with the end of R3 coming in 2025 (as announced so far), and everything moves to SuccessFactors except payroll (I don't count EC Payroll as a cloud offering since it's a dressed up R3 Payroll), people wonder just what is up with the he future of SAP Payroll. It's a good question.

Jon Reed of diginomica has an article where he interviews Rob Enslin, SAP's Cloud chief, on a number of HR-related things. One for those is the future of SAP Payroll. Rob acknowledges SAP has to have a clear message on it, and says they will have that in the next six weeks. Currently that puts it around early October. As a long time Payroll guy, this is interesting for me and for many of my customers. But I think I already know the broad view of the future of payroll. I've known it for a while now. 

R3 payroll will be around for a long time. There are just too many customers on it to fully move off the platform by 2025. Payroll projects are a big deal - complex, longer than we want and more complex than imagined projects. And payroll systems tend to stick around for a long time because of that. There are notable organizations still using green screen payroll systems on the mainframe. 

Any new payroll system with the depth of complexity and scope to satisfy R3 Payroll customers will take a long time to develop and stabilize. If I remember correctly, the development on R3 Payroll for the US started in earnest around 1994 and it was barely stable enough to go live in 1998 (I have stories to tell). That is just for the US, so the large companies using R3 payroll for several or a couple dozen countries? Well, it will be a while before SAP can come up with a 100% replacement for them. And I'm sure that they will replace it with something that is really great (if SAP wants, I'm glad to collaborate, again).

So my prediction - SAP will announce a new payroll product in October, or whenever, because R3 won't last forever. I don't really know or care because whenever they do we will have years to prepare for it. If they can announce and deliver a stable global payroll system in something less than a couple years then great - but I'm not counting on it. In the mean time, SAP has so many - in the thousands, I'd bet - of customers using R3 payroll who are not all that interested in going through another payroll implementation any time soon that there will be a sizable base of customers for SAP to support there. And with EC Payroll and a few large BPO firms using that same R3 payroll engine, it will take a long time to turn the customer base to something new. 

So I think we can all relax. This will all play out over a period of years, giving us all time to plan. Until then, let your R3 Payroll crank through each pay period as always. Of course, as always, stay informed and influence SAP directly and via your SAP user group.

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Do you know if SAP has announced anything on this?

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SAP will keep and support payroll functionality in HCM beyond 2025. Customers already on premise will stick to HCM. In my point of view new customers will benefit more from starting with EC Payroll if they have a global approach. Do you have any new statements from SAP?

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