News Analysis: SAP and SuccessFactors Unveil Early Roadmap for HCM

This morning, SAP and SuccessFactors, an SAP company, issued a press release in which their unified Human Capital Management (HCM) product roadmap was unveiled.  The primary message is that SAP has adopted a hybrid strategy for HCM:  the SuccessFactors portfolio for Cloud HCM, and the current SAP ERP Human Capital Management portfolio for on premise. Details on this and other facets of the announcement are discussed below:

Employee Central becomes the HR System of Record for the cloud.

SuccessFactors Employee Central solution is the go-forward core human resources (HR) offering in the cloud. Backed by more than 25 years of experience from SAP in core HR, the solution is poised to grow exponentially as SAP will boldly invest in it. SAP will continue to offer the SAP® ERP Human Capital Management (SAP ERP HCM) solution on premise for core HR, now with regulatory support for 51 countries around the globe and an innovation road map of significant investments in functionality, user-experience, mobile and in-memory technology capabilities in the future.

My Point of View (POV):  Employee Central, used today by about 100 SuccessFactors customers, will be rapidly built out to meet the demands of a fully globalized core HR solution in the cloud.  A significant number of SAP resources will be redeployed to this effort.  It is important to note that an end-to-end cloud HCM offering is still elusive, however, as there is no immediate clarity on how payroll, benefits and workforce Management will be delivered in the cloud. According to David Ludlow, SAP’s Group Vice President of HR s Solutions, “These will all be considered as part of the acceleration within Employee Central. We need to look at what kind of re-use of the SAP payroll [and other] assets can have in the Cloud offering.” SAP will want to leverage the 51 payroll country solutions and 31 partner solutions existing today, but the “how” is still to be determined. The interim strategy is for SAP to deliver pre-packaged integrations between the SuccessFactors cloud offerings and the SAP HCM on premise offerings to bridge these gaps.

Core SAP HR customers will continue to receive support and innovations across many areas,  but with so many SAP resources redeployed or co-assigned to the Employee Central and other SuccessFactors initiatives, the anticipated pace and volume of innovation will decline.  One previously announced advance that is set to continue:  running SAP ERP HCM on SAP HANA for improved processing speeds and analytical capabilities.  Additionally, a brief reference is made to mobile investments but without details. Today SAP has a mobile store, where many SAP-built mobile applications are available for download, including six across the SAP ERP HCM platform; how this will be leveraged and augmented moving forward is to be determined.

SuccessFactors is the go-to platform for Talent Management.

For talent management, SuccessFactors Performance Management, SuccessFactors Compensation Management, SuccessFactors Recruiting and SuccessFactors Learning Management with social learning from SuccessFactors Jam will be the go-forward solutions. Talent management components from SAP ERP HCM will be continued with selected innovations for the next decade.

My Point of View (POV):  With this announcement, the real future of SAP HCM is placed squarely on the shoulders of the SuccessFactors Cloud platform.  SuccessFactors talent management solutions will be positioned to all new HCM customers and to current SAP customers who have not yet invested in talent management.  Current customers of SAP Talent Management products will continue to receive support and “selected innovations” through 2022, but those seeking significant innovation in those areas will need to look to the cloud (and do so expecting a different user experience as well as integration requirements).  SAP will assist customers in migrations or cloud adoption with pre-delivered integration support and services (full details are planned for announcement in May, at SAP’s SAPPPHIRE Now conference).  As expected, and in alignment with this new strategy, development on SAP’s Career onDemand has ceased.

As with the limited data on mobile, the path to social HCM is incomplete: SuccessFactors Jam is the solution for social learning in the cloud, but broader leverage of this or other social networking tools such as SAP Streamwork remains unclear.

Business Intelligence and Big Data are Prioritized

Analytics will continue as an important focus area within both SAP ERP HCM and the SuccessFactors product portfolios, leveraging significant assets such as SuccessFactors Workforce Analytics, SuccessFactors Workforce Planning, the SAP HANA platform and solutions from the SAP BusinessObjects portfolio. People analytics will be revolutionized by putting SuccessFactors Workforce Analytics on SAP HANA. Together SAP and SuccessFactors can make unparalleled aggregate HR benchmark insights available in the cloud to hundreds of thousands of customers. The combination of SuccessFactors software and SAP HANA is one of the key priority areas for development of the BizX Suite, as it will help increase customer value by dramatically speeding existing processes, enabling access to large amounts of data in shorter periods of time and providing real-time access to information tailored to individual requirements.

My Point of View (POV):  Both SAP and SuccessFactors have significant business intelligence assets, some overlapping, and all of which can be bolstered by the SAP HANA platform.  Unfortunately the good work done to date on SAP’s Strategic Workforce Planning (the first HANA-enabled SAP HCM solution) has been stopped, and those efforts will shift instead to augmenting the SuccessFactors Workforce Planning solution. Customers can expect a hybrid BI model moving forward, accessing different capabilities through a combination of on premise and on demand offerings from a combination of SAP and SuccessFactors-led technologies.  Leveraging SAP HANA to improve performance and enable real time analytics within the SuccessFactors BizX suite makes complete sense, and aligns to SAP’s plans to run SAP ERP on HANA by the end of 2012.

Open Integration for All Customers

SuccessFactors will continue to support an open approach to connecting with third-party solution providers. Approximately fourteen percent of SuccessFactors customers currently run their systems side-by-side with SAP. In addition to providing enhanced value for joint customers, SAP and SuccessFactors will accelerate the development of integration solutions with third-party solution providers. For SAP customers, the two companies intend to deliver integration packages between the two offerings: Cloud-based talent, core HR, recruiting, learning and social solutions, and workforce planning and analytics solutions from SuccessFactors; and On-premise core HR from SAP.

My Point of View (POV):  Integration is a key focal point, not just for SAP and SuccessFactors, but also across an increasingly complex HCM landscape, and so accelerating offerings in this area is paramount.  The planned integration packs between SuccessFactors and SAP are obvious requirements.  In keeping with their fist comment about openness and interoperability, and in recognition of the complex HCM landscapes of most organizations today, SAP would be well served to productize these 3rd party connectors as well; ease of interoperability is really the secret sauce in software (and platform) as a service.

One approach SAP has used in the past to manage rapid implementation, migration and integration is through their Rapid Deployment Solutions  (RDS), which consist of pre-packaged software, services and content.  Today there are three RDS solutions for SAP HCM, and new RDS solutions should follow quickly in support of those customers using solutions spanning the SuccessFactors cloud portfolio and SAP on premise HCM products.

Bottom Line:

Acceleration has been the consistent theme of this acquisition, from the first day it was announced, to the “Day 1” customer letter from Lars, to the press release issued this morning.  Acceleration of SAP cloud offerings.  Acceleration of synergies between SAP and SuccessFactors technologies.  Acceleration of customer value. The strategy articulated today by SAP and SuccessFactors provides a clear and immediate path forward for HCM customers and prospects.

For SuccessFactors customers, it’s all upside,  with accelerated investment across the entire portfolio. Where gaps exist in the portfolio (such as the current lack of a  cloud based offering in global payroll or benefits), integrations will be fully supported by SAP.

For SAP customers, the communicated strategy presents a more complex result. To their advantage is SAP’s commitment to supporting both on premise and cloud HCM, offering customers choice between the two or a hybrid model;  a SAP-supported path to best of breed talent management from SuccessFactors; and improvements across in-memory processing and business intelligence (although some of this may be available only in the cloud). The obvious downsides include reduced pace and volume of innovation across the current  SAP on premise solutions and the fact that the clock has started ticking on SAP on premise talent management.

There are still many questions (pricing, depth/quality of the integration and RDS solutions, specifically which “targeted innovations” will find their way into the on premise offerings, to name a few).  As SAP writes at the end of today’s press release, “Execution is the Difference.”  SAP will need to execute quickly, especially in the area of integration, to ensure this is a winning strategy for all of its customers, not just customers of SuccessFactors.


3 Responses

  1. Excellent analysis Yvette as you really nailed what the roadmap announcement means for both SAP and SuccessFactors customers.

    I applaud SAP for being decisive in their roadmap and also making what I believe are the right long term decisions in building out Employee Central though as you said execution will be the key.

    It will also be interesting to see the mobility strategy on the cloud side as many of the SaaS based HR technology vendors are including mobility with their subscription which is quite different than what SAP is currently offering for their On-Premise HCM customers.

    It was also great to see some information shared on Strategic Workforce Planning and Career OnDemand (that I would have included in my analysis but thought was under NDA) 🙂

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