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Author's profile photo J. Pazahanick

SAP Payroll Under Appreciated by Forrester

There was recently a very rare opportunity to access a major analyst report for free when a Forrester report called “The Forrester Wave HCM Q1 2012” was included in a Workday press release.  It is not that often that you get another perspective as to how SAP matches up with the other major vendors such as Oracle, Workday, Ceridian, Ultimate Software and ADP.

I could write blog posts from many angles as there was a wealth of information in the analyst report but I personally took issue with the ranking of SAP Payroll.  I have long been of the opinion that SAP Global Payroll is the one of the strongest solutions in the marketplace and although there has been a lot of innovation in the Human Capital Management space over the past several years I don’t see anyone that has the depth and global functionality that SAP offers. A few caveats are that I may be biased as I have been helping customers install SAP US Payroll for the past 14 years and the other is that I am by no means in expert in every competitor in the marketplace.  Let me outline what SAP offers and I will leave it to the readers to determine if the Forrester payroll ranking was accurate.

Global Solution – SAP offers Payroll solutions for 50 countries covering their specific legal requirements and common, local business practices. They have partner solutions which are delivered and maintained by partners for another 33 countries.  Each of those solutions has country specific master data, payroll and reporting and overall SAP supports 30+ languages. Here is a map of all the countries SAP currently has a Payroll solution for with the exception of Saudi Arabia which was released with ECC 6.0 EHP5.

SAP Payroll

Usage – I am a bit believer that customers do their REAL talking with their enterprise software purchases and in speaking with SAP solution management they estimate that worldwide, 7000 customers are paying 45 to 50 Million people using SAP Payroll.  Given the constantly changing tax and legal updates having a lot of customers using the offering is a real advantage especially when these changes have to be made on short notice.  I know firsthand how dynamic this can be in the United States and SAP consistently delivers these important changes shortly after they are announced by the various federal and state entities as if they didn’t many Fortune 500 companies would pay their employees incorrectly.

Functionality – It is difficult to do justice to the highly customizable, robust functionality SAP offers in a short blog post but at the core it provides organizations with comprehensive payroll functionality to support the following:

  1. Essential core payroll functions.
  2. Direct deposit and transfers.
  3. Off-cycle payrolls.
  4. Retroactive adjustments.
  5. Calculation of averages.
  6. Assessment of time data.
  7. Loans.
  8. Garnishments.
  9. Year-end processing.

Competitors – It is commonly known that Workday has a partnership with Northgate Arinso’s euHReka for their Multi-Country Payroll  but what isn’t that known is that euHReka uses the SAP Payroll global solution as their core. Workday does have other global payroll provider partners that they use so it’s not their sole source situation.

The SAP Global payroll solution is very robust and I believe a large competitive advantage for SAP. Given the local rules and regulations along with the high profile nature of paying people correctly it is a complex undertaking to roll out a new country offering that will support mid and large enterprises. I saw this firsthand in the late 1990’s with the US payroll solution. I would highly encourage individuals reading this article to review the Forrester report in detail as I would love to hear your thought regarding the others scores in the other categories.

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      Author's profile photo Former Member
      Former Member
      Hi Jarret,

      disclaimer: i have worked for Gartner, so anything coming from Forrester i view with a grain of salt or two.

      now, i agree with everything you have written and have similar concerns about my immediate area of interest, ie financial reporting. it's not the same as payroll and SAP itself seems to offer a multitude of competing products in that area, but my quest of obtaining some information from Workday has shown no results yet. i wouldn't be surprised if i saw Workday being another wave leader there, too. Workday seems to have a momentum in its runup to an IPO, and being a kind of upstart (not exactly since its founders came from Peoplesoft) it enjoys a spotlight of a challenger.

      SAP has a very broad international coverage not only in payroll or financial reporting with its localizations, but also in sales (VAT) taxes, units of measure, currencies, and many more. i would like to see something comparable from Workday or any other ERP provider, but they are not interested in sole practitioners, so i end up coming back to the source.

      don't get me wrong, SAP can be very frustrating and demanding, but after toiling at it for over 10 years, you can't simply let go, can you?

      thx, greg

      Author's profile photo Jarret Pazahanick
      Jarret Pazahanick
      Blog Post Author
      Thanks for the detailed comments and I understand these analysts reports can be subjective but there were a few scores that I thought were pretty off-base.

      There was also an interesting comment by Lisa Rowan on the HR Tech group that it will be interesting to hear the response on.

      "There are three main categories: current offering, strategy, and market presence. Market presence is weighted at 0%. Market presence is coincidentally where Workday scores lowest. If this category had a weight, well you can figure out what happens"

      I am looking forward to seeing a future article from you on how Workday's FI solution compares to SAP as meeting all the localizations, currencies, legal reporting etc is a major undertaking that SAP has perfected over many years. Workday is doing a lot of things right and has a lot of momentum which I believe may have played a role in the Forrester ranking.

      Author's profile photo Former Member
      Former Member
      I had a couple of comments frpm talking to some friends. 1) Configuring payroll is very complex and often clients don't have the resources to maintain inhouse. 2)Many US based global companies use US payroll but outsource to a 3rd party. 3) Cost-benefit - more companies feel as if payroll is not strategic and easily outsourced. 4) Poster is just envious - probably does not earn the $100+ per hour of payroll consultants 🙂