SAP issued the following press release this morning SAP and SuccessFactors Accelerate Unified Product Direction which covered their product direction across core HR, Talent Management, HCM Analytics and Integration and I thought I would outline my initial thoughts on each of the main points.

  • 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 Take – Pleasantly surprised as it appears that SAP is going to build out Employee Central and finally have a large enterprise cloud offering to compete with Workday and other cloud based competitors. When you hear “bold investment” I equate that to a major commitment and it will be important to get clarity on the timelines on when customers can expect enhanced functionality. My understanding in talking with industry analysts is that Employee Central has about 100 customers though needs to be built out further to support larger customers. In addition for SAP to truly have a full HCM cloud solution they will have to build out or partner in areas such as Payroll, Time Management and Benefits.


  • 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 Take – Pleasantly surprised and commend SAP for providing clarity that the SuccessFactors solutions will be the “go-forward solutions” as I believe that is the right course of action. The On-premise talent management solutions such as Performance Management, Enterprise Compensation Management (ECM), eRecruiting and Learning (LSO) will  continue with “selected innovations” which makes it obvious the investments and innovation in these areas will be minimal. It is important to note that each of these has had a lot of new functionality released in enhancement packages (EHP1 -EHP6) and are very solid offerings.

  • 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 Take – It is no surprise to see that SAP plans to focus on getting the BizX Suite up and running on HANA especially given the announced plan that the Business Suite will be available to run on HANA by the end of 2012. I will need to get a little more clarity on what the marketing jargon “unparalleled aggregate HR benchmark insights available in the cloud ” really means as it is a important area for 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 Take – As expected SAP will deliver integration from SAP On-Premise to Successfactors and in talking with customers this is one of the most important items and will be a significant undertaking. On a side note it will be interesting to see the direction that is taken with “social soultons” meaning will Jam be integrated with On-Premise and if so what does that mean for StreamWork in context of HCM as it was on the roadmap to be incorporated in certain areas.

Overall I am impressed as it appears some tough decisions were made especially in some of the areas where there was product overlap between SAP and SuccessFactors. I would have expected to see clarity on Career OnDemand as well as some reference to mobility given that it is one of SAP’s core 4 areas of focus but it is not the first time communication has lagged on the mobility side. The bottom line is I think it is a great start given the deal was only made official last week. I would expect SAP to provide customers a more detailed roadmap and timeline at the latest by Sapphire and if you want to stay current on information I would recommend joining the new SAP and SuccessFactors Linkedin Group. One of my favorite quotes is by Walt Disney “The way to get started is to quit talking and begin doing” and many people will be watching to see how quickly SAP can deliver on their promised roadmap.

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19 Comments

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  1. Jon Reed
    Thanks Jarret –

    a good start by SAP and some useful analysis by you.

    I tweeted that in my opinion, the most interesting SAP and SuccessFactors roadmap integration and product overlap areas have yet to be tackled, which are:

    – future of Career OnDemand and (likely) incorporation of those assets and IP into SF

    – future of Jam vs Streamwork (suspect Jam gets incorporated into Streamwork except in some use cases around HR/Learning, perhaps Jam’s feed because defacto feed across SAP’s collaboration products, but this is pure speculation, could be the reverse too)

    – future of SF platform and how it fits into SAP’s evolving PaaS architecture. Vishal Sikka has mentioned that SF fits into SAP’s Java PaaS but this has yet to be finalized in a public manner, and Dick Hirsch has pointed out some potential complexities there in his detailed blogs.

    Some stories to watch!

    – Jon

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    1. Jarret Pazahanick Post author
      Thanks for the comments and I have to give SAP credit as although you brought up some great points than definitely need clarity they made some big decisions around building out Employee Central and focusing the innovation on Successfactors in some of the product overlap on the HCM side.

      Some of my thought on your 3 items.

      Career OnDemand – Several people reached out and told me that Kevin Nix said that “Career OnDemand designs and IP will be moving to SuccessFactors” in a public presentation last week which is no surprise.

      Jam vs Streamwork – This one is interesting as it could be as simple as Streamwork for OnPremise and Jam for the cloud or something more specific by area (ie HCM uses Jam across all onPremise/Cloud/SuccessFactors) which StreamWork for all other. I will be watching this one closely as well as it is a key area.

      Evolving PaaS Architecture – Found this line in the PR interesting “SuccessFactors will continue to support an open approach to connecting with third-party solution providers” as from reading Dick Hirsch’s excellent earlier work I didnt get this impression. Will be important to see how this all fits together in the overall architecture.

      I would expect to see all these answers (and many others) by Sapphire as it is important that SAP moves quickly as none of their competitors are standing still.

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  2. Patrick Brandicourt
    I know my comment is not related to the overall subject of this blog entry (which is great).

    You say :
    Business Suite will be available to run on HANA by the end of 2012

    Are you sure about this statement ?
    Could you be more precised or give a reference to an “official” SAP source ?

    The way I read it : tomorrow (end of 2012) I can run the SAP business suite solution on my premise on HANA (as far as I am aware that’s nor right).

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    1. Jarret Pazahanick Post author
      Hi Partick

      Thanks for the comment and the great it was announced last month that SAP’s HANA in-memory database will gain ability to run ERP this year (2012) although I would expect that to be on a ramp up basis assuming everything goes according to plan.

      http://www.computerworld.com/s/article/9223718/SAP_s_HANA_in_memory_database_will_gain_ability_to_run_ERP_this_year

      It is a big undertaking and one that lots of people in the industry are watching closely.

      Let me know if you have any further questions about it.

      Jarret

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  3. Luke Marson
    Hi Jarret,

    A great insight and nice to see you drive the SF topic in the community.

    It’s interesting to see and I’ve noticed that SAP have effectively confirmed what we have seen with EhP5 and EhP6 – not many Talent Management enhancements. Essentially the current on-premise solution (which includes Nakisa) will remain pretty much as-is. The solution is not bad and I think a number of customers are going to continue to want on-premise for some time.

    There are still not a lot of customers who want to move to on-demand, but the big question for me is “how will the sales teams be incentivised and instructed when it comes to on-demand v on-premise?”. This is really what will spell the continuation or end of on-premise in SAP’s strategy, since if they aren’t selling it then they won’t support it.

    Keep up the great work.

    Luke

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    1. Jarret Pazahanick Post author
      Thanks for the comment and tweet Luke as it is much appreciated. I would expect we will see a lot more content on SuccessFactors and in a perfect world it would be cross-posted back the SuccessFactors website but for now the SAP Community Network doesnt even have a category for them so there is a ways to go 🙂

      It is pretty obvious that the On Premise products where there is overlap with SuccessFactors are for the most part “feature complete” (ie LSO, ECM, eRecruiting, Performance Mgt) but also important to note they currently offer some very strong functionality(in some cases more than SuccessFactors) and will be the right fit for customers that are comfortable knowing they will not be enhanced that much further. Another factor is that some of the products such as ECM and Performance Management are included in the base user license (if I am not mistaken) while there will be additional costs for SuccesssFactors so that could be another selling point for the onPremise products.

      I plan on a follow up article on what this means to SAP consulting in these areas but my initial thoughts are for extremely experienced folks like yourself there will be lots of work for many years as customers will still chose the onPremise offering. That said at the middle and junior level experience this news should have you rethinking and retooling your skill set.

      I will be watching to see how the SAP sales team comes to market but my guess is they will very aggressively push the SuccessFactors offerings once there is minimal integration with Core HR (on Premise) and hard to see the bandwidth (or interest) to have all the worldwide Nakisa specific roadshows for example that they did over the past two years.

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  4. Hong Taing
    Good points Jarret. I have mixed feelings as someone who makes a living as a TM On Premise consultant but this certainly can’t be that big of a surprise to anyone. I do feel there will always be some customers who don’t want a cloud solution and agree with your comments on the latest Enhancement Packs. I’m currently working on an EhP5 implementation and think the compensation functionality compared to what’s in SF is actually superior. And in my opinion, if you’ve got core HR or TM in place, then the additional overhead to maintain some of the components in TM is minimal (at least for Performance Management and Compensation). Will that cost be greater than implementing a SF solution?
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    1. Jarret Pazahanick Post author
      Thanks for the comment and I plan on a follow up article on what this means to SAP consulting in these areas but my initial thoughts are for extremely experienced folks like yourself there will be lots of work for many years as customers will still chose the onPremise offering. That said at the middle and junior level experience this news should have you rethinking and retooling your skill set. As far as SAP ECM goes it was recently rated in the Forrester Wave report as the best solution among the major 7 vendors with 5.0 score which I agree with and lets not forget SAP has invested heavily in the last 3 years on bringing new functionality to their Talent Management/Performance Mgt/ECM/LSO/eRecruiting OnPremise products. You bring up a great point about the overhead and a lot will depend on how “seamless” the standard integration SAP builds with SuccessFactors is to determine the option that makes the most sense. The last point is cost/licenses as some of the products such as ECM and Performance Management are included in the base user license if I am not mistaken while there will be additional costs for SuccesssFactors so that could be another factor.
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    2. Jarret Pazahanick Post author
      Thanks for the comment and I plan on a follow up article on what this means to SAP consulting in these areas but my initial thoughts are for extremely experienced folks like yourself there will be lots of work for many years as customers will still chose the onPremise offering. That said at the middle and junior level experience this news should have you rethinking and retooling your skill set. As far as SAP ECM goes it was recently rated in the Forrester Wave report as the best solution among the major 7 vendors with 5.0 score which I agree with and lets not forget SAP has invested heavily in the last 3 years on bringing new functionality to their Talent Management/Performance Mgt/ECM/LSO/eRecruiting OnPremise products. You bring up a great point about the overhead and a lot will depend on how “seamless” the standard integration SAP builds with SuccessFactors is to determine the option that makes the most sense. The last point is cost/licenses as some of the products such as ECM and Performance Management are included in the base user license if I am not mistaken while there will be additional costs for SuccesssFactors so that could be another factor.
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      1. Hong Taing
        Another factor I think we need to take into consideration is how customizable are SF solutions?  While I was quick to brag about ECM, I will admit I’m fairly ignorant about most things around SF.  Maybe they are great, flexible, and highly customizable but that’s not typically what I think of when I’m considering cloud solutions.  Does anyone know if there is a SF version of SDN where there are tons of helpful resources/experts helping each other out?
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        1. Jarret Pazahanick Post author
          That is a good point Hong and my understanding is that customer like SuccessFactors because it is more customizable than your typical SaaS vendor but highly unlikely it has all the customization options SAP does. I am personally looking forward to doing a deeper dive on all their products.

          I reached out to Mark Yolton who is VP of the SAP Community on that very topic and his response was “Will take a look how and where to house SuccessFactors content with SAP SCN + links for findability” so it appears it is on the radar.

          On a side note I wont be in attendance but heard there will be 3 sessions on SuccessFactors at the HR2012 show in a few weeks which include http://bit.ly/waFhTo, http://bit.ly/ymoQHg, http://bit.ly/zgoCK4

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        2. Jarret Pazahanick Post author
          That is a good point Hong and my understanding is that customer like SuccessFactors because it is more customizable than your typical SaaS vendor but highly unlikely it has all the customization options SAP does. I am personally looking forward to doing a deeper dive on all their products.

          I reached out to Mark Yolton who is VP of the SAP Community on that very topic and his response was “Will take a look how and where to house SuccessFactors content with SAP SCN + links for findability” so it appears it is on the radar.

          On a side note I wont be in attendance but heard there will be 3 sessions on SuccessFactors at the HR2012 show in a few weeks which include http://bit.ly/waFhTo, http://bit.ly/ymoQHg, http://bit.ly/zgoCK4

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      2. Michael Pappis
        Hi Jarret / Hong and SAP HR community,

        Great article and good discussions. 

        I am not so worried about work availability for the typical senior HR consultant.  At the end of the day consultants are always needed because there are always problems that need solutions from people who know answers. 

        While there are many pros of the cloud solution, my biggest concern is that SAP has spent decades developing the ABAP technology stack, and this will largely be irrelevant with Success Factors product now owning TM space. 

        The SAP abap technology stack has a market leading ability for customers to tailor their solutions to their business needs, while the customer is still on the “standard product” and getting continuous product improvements (i.e. Enhancement Pack Strategy).  

        If for every time the customer needs to change how a guideline calculation works, a custom eligibility rule, or change a workflow routing logic, they need to have a full-out contract negotiation with Success Factors development team, at the end of the day it will hurt their product. 

        They will need to find a way to allow their product to be customized (development) per customer.  This means the customer’s implementation partner is not simply there as an advisor / communicator / tester that calls up Success Factors people every time a development change is needed.  This will turn into full blow contract negotiations every time a change is needed, will lead to project delays, and when the customer specific solutions have bugs in it from the success factors developers, it will ultimately lead to a poor perception of the product. 

        The “cloud space” for that specific customer customizations (development) can be handled by the “premier” implementation partner (success factors themselves) or be handled by Success Factors’ / SAP’s strategic vendors as a lower cost / alternative for the customer to choose from. 

        This service strategy is how SAP works today with their on-premise solution, and is what has made SAP one of the most successful software company’s in the world.  It offers win-win for the customer and consultants firms, which ultimately drives long-term adoption of the product (licensing) – win for SAP.

        Jarret – any chance you can share that market report on the compensation tools? 

        Thank You,
        Mike

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  5. Sean E. Mallons
    Jarret,

    In regard to HR 2012, I would be very interested to hear your post show comments on the SuccessFactors and SAP HCM “coming out party”.  They say “what happens in Vegas stays in Vegas”.  But in this particular case, I believe once the conference ends, the word on the new marriage will spread like wildfire amongst the end-users, leaving the HRIS folks excited, the CIO indecisive, and the CFOs holding on to the company checkbook with a sign on the door, saying “delaying HCM projects, until further information on SaaS and Cloud Technology is gathered and presented”.
      
    As consultants, we could be looking at a year of new SAP Talent Managements projects being put on hold until the integration between SFSF and SAP is fully developed, BETA tested, and presented to users (e.g.,at HR 2013 in Orlando).   We (me especially) can all speculate as much as we want, but I believe the true answer will NOT be coming out of the mouth of an MGM Lion in March of this year, but through the halls of Mickey Mouse’s corridors in March of next year.

    I don’t mean to sound negative because I am actually truly excited about the potential system landscape between SFSF and SAP and all its wonderful offerings.  However, I am worried for the time being because there really is only so much we can tell the clients without going down the slippery slope of spreading false hopes on design and rumors on development.

    In the meantime, we will continue to rely on your wonderful blogs, which I know are only going to get better and better and more informative as time rolls on.  Keep up the good work and writing because the SAP and SFSF world is seriously going to need it over the next few months and beyond.

    Thx,

    Sean Mallon
    Independent SAP HCM Consultant and VAR

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    1. Jarret Pazahanick Post author
      Sean – Thanks for the kinds words and great comment as I very much agree that 2012 will be a year of excitement but customers might be wise to wait until a more detailed timeline is released. Seems probable that 2012 will be a major year of work for SAP on the integration front and lots of projects starting up in 2013.

      Unfortunately I wont be in attendance at HR2012 as I have client commitments but heard there will be 3 sessions on SuccessFactors which include http://bit.ly/waFhTo, http://bit.ly/ymoQHg, http://bit.ly/zgoCK4 so you are right that there should be some great buzz.

      I will be at Sapphire in May though and hearing in some back channels that SAP is planning some major announcements so it is great to see things moving fast.

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  6. Michael Pappis
    Hi Jarret / Hong and SAP HR community,

    Great article and good discussions.

    I am not so worried about work availability for the typical senior HR consultant. At the end of the day consultants are always needed because there are always problems that need solutions from people who know answers.

    While there are many pros of the cloud solution, my biggest concern is that SAP has spent decades developing the ABAP technology stack, and this will largely be irrelevant with Success Factors product now owning TM space.

    The SAP abap technology stack has a market leading ability for customers to tailor their solutions to their business needs, while the customer is still on the “standard product” and getting continuous product improvements (i.e. Enhancement Pack Strategy).

    If for every time the customer needs to change how a guideline calculation works, a custom eligibility rule, or change a workflow routing logic, they need to have a full-out contract negotiation with Success Factors development team, at the end of the day it will hurt their product.

    They will need to find a way to allow their product to be customized (development) per customer. This means the customer’s implementation partner is not simply there as an advisor / communicator / tester that calls up Success Factors people every time a development change is needed. This will turn into full blow contract negotiations every time a change is needed, will lead to project delays, and when the customer specific solutions have bugs in it from the success factors developers, it will ultimately lead to a poor perception of the product.

    The “cloud space” for that specific customer customizations (development) can be handled by the “premier” implementation partner (success factors themselves) or be handled by Success Factors’ / SAP’s strategic vendors as a lower cost / alternative for the customer to choose from.

    This service strategy is how SAP works today with their on-premise solution, and is what has made SAP one of the most successful software company’s in the world. It offers win-win for the customer and consultants firms, which ultimately drives long-term adoption of the product (licensing) – win for SAP.

    Jarret – any chance you can share that market report on the compensation tools?

    Thank You,
    Mike

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    1. Jarret Pazahanick Post author
      Thanks for the kind words and detailed comment. I agree with you that your typical senior consultant who has a firm understanding of both SAP and the underlying business will always be in demand.

      It is my understanding that customer like SuccessFactors because it is more customizable than your typical SaaS vendor but highly unlikely it has all the customization options SAP does. It will be interesting to compare the two ECM offerings for example to see what is considered a major change.

      I will say that innovation is easier for customers in a multi-tenant SaaS environment and SuccessFactors throughout their history has delivered in quarterly which has helped it stay best of breed in specific areas as well as not have all the customizations that some SAP customers have had to build.

      The Forrester report link for ECM is enclosed in this article and will be curious to get your thoughts on it.

      SAP Payroll Under Appreciated by Forrester

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