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I had the opportunity to read the Gartner report on the “Impact of SF acquisition on SAP’s HCM strategy”, over the weekend. Just like other anaylst reports, this is well written.
While many of the points mentioned in the report are well known (such as SAP’s go-forward technology for Talent Management will be SF), the report provides recommendations to customers such as, customers should ensure that SF products meet the majority of their needs, customers should consider SF TM modules against other alternatives available in the market. Other observations are, over 60% of SF customers were not SAP customers, concerns of the customers that the acquisiton will slow the progress of SF development.
Later, the report specifically mentions about the integration between SF and SAP HCM. The report mentions that the integration is not as simple as it seems and tighter integration will happen in the next few years time.  To quote from the report “Historically, SAP has marketed engineered integration as a key competitive advantage and it is a cultural loadstone. The acquisition spree is a fundamental shift for SAP …. , in effect , trading integration and technical consistency for usability and speed to market”. 
A customer of mine, who is planning a LSO implementation early next year, looked at SF LMS vs SAP LSO. They decided to stick with SAP LSO primarily for the same reason — how will the integration happen, and how tight will it be.
When SF was acquired, there was tremendous excitement,  but over the past several weeks, we are seeing many queries regarding integration and product roadmaps.
I believe, the first wave of integration (which might be offered as Rapid Deployment Solutions) will involve SAP PI, and later releases will see greater assimilation and tighter integration with SAP HCM. For customers who do not have SAP PI in their landscape, how will the integration look like – any technical developer can write a wrapper and provide the integration. But, a customer who is investing in a new technology will have higher expectation than this. Early this year, a large customer (with a global footprint) mentioned they are planning to do aways with SF Performance Management, because of the integration challenges with SAP HCM on-premise. Later, they did sunset the SF application and went live with the on-premise SAP HCM PM.
Last several weeks, I have been looking at SF and getting my hands dirty. My initial observation about SF is, they do not have same level of functionality that the on-premise solution offers. Where does SF score — better usability, presentable UI and plenty of bells and whistles. It will require large budgets and investments to make SF TM modules offer the robustness that SAP HCM on-premise provides.
In my opinion, the success of the SF acquisition will largely depend on the integration with the on-premise solutions, and increasing the functionality that SF currently provides. The bigger challenge will be, if the excitement about cloud offerings wanes and customers begin to pull their cloud solutions back to on-premise. Technology innovation have always been cyclical and I expect something similar to happen within the next decade.
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  1. Jarret Pazahanick

    Very good article Venki and could not agree more that robust, seamless integration with no additional cost is the bare minimum SAP customers should expect from two companies with the same owner.

    As far as everything coming back on premise from the cloud in 10 years I am not sure I agree with that observation 🙂

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  2. Christopher Solomon

    Nice write up and perspective. I have heard from more than a few folks that integration is a BIG question mark…..down to things even as detailed as “well this field is 12 characters in SAP HCM but 10 characters in SF”. So yes, WE are listening and watching intently. 😉

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  3. Stephen Burr

    Venki,

    I hope you are well. 

    I’m glad that the discussion on SFSF vs SAP HCM is moving away from the rather catchy (but not useful) “cloud vs on premise” argument.

    Customers are really considering and asking; What does each solution offer that will help my business and bring the greatest benefits – now and long term.

    Integration is one of the obvious differences but there is so much more to consider also.  I’m glad your customer took their own look at which Learning solution was best for them – no doubt an approach you encouraged. That is the right and sensible thing to do.

    Stephen

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  4. Venki Krishnamoorthy Post author

    @Jarret, I do not expect everything coming back from cloud to
    on-premise. But the market might have more alternatives and “cloud”
    might not be the only catchy phrase we will be humming. Many customers whould
    like alternatives that provides almost equal functionality in cloud vs
    on-premise. Today, we do not have that. Today when a CIO has to make a decision, he goes with SF not because it is a hosted solution, because it offers greater usability experience compared to SAP on-premise.

    As the market matures and customers gain more experience, we will see this demand more louder.

    @Christopher, It will be nice to hear from customers about their experiences (good and bad).

    @Stephen, Great to meet your here. You are correct, customers and the market are anxiously waiting for the 1st release of the integration adapters (much more than the PI route, which is common thing to do). Even before the acquisition, customers and implementation teams have successfully implemented SF and integrated with SAP on-premise. What we would really like to see is, how easy it is to integrate and has Christopher rightly pointed out, what else it can do.

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    1. Raja Kishore Jogam

      Hi Venki,

      I disagree with you on a few points here. The reason that lot of customers are choosing cloudover SAP on-preimise is not just funcionality but lot of other factors like clound affers fairly costless innovation and innovation without disrution .

      For example. SAP ECM(comp planning) had gone through some major enhancements from EhP1 to EhP6. Like wise SF has also had lot of updates to its ECM features in the its various releases.

      SAP ECM came up with Org unit based approvals while SF calls it Heirarchial based Approvals ( HBA ) ( basically it allows mutiple levels of approvals for comp planning). But for for a client who  was already live on SAP ECM on EHP1, they had to spend extra, for both business and IT,  to upgrade and get these new features  Effectively the TCO ( i hate to use business jargon ) was high. While SF added these features with no additional cost in one of its quarterly releases.

      I can name n number of such instances –  for travel management, the ability to upload travel receipts required an upgrade when concur had done it as free new features.

      I think the pace at which innovation is happening in the talent managent area , i see it hard for lot of stuff to come back to on-premise.

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      1. Venki Krishnamoorthy Post author

        Hi Raj, Glad to hear from you and perspectives. I am as excited as you are about the cloud possibilities.

        If you look at the technology lifeline, they have always been cyclical with new technologies overshadowing the well penetrated ones. My query is after cloud what? Mobility is big, but mobility can support cloud as well.

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  5. Luke Marson

    Hi Venki,

    I hope all is well. I’m glad you finally chimed in on the SF debate 😉 .

    It’s noteworthy that Gartner have picked up on many of the points that have been identified within the community, so it’s clearly not nitpicking by those with a traditional on-premise background. SAP have certainly changed their stance on integration and I think this has caused confusion both within and externally of SAP, especially since many people expect SAP to have strong integration and the non-technical individuals in the ecosystem will not understand – or care to understand – that a flat-file interface is not integration.

    I’m very interested to hear that some customers have switched from SF to on-premise and this will be music to the ears of the large consultancies, many of whom derive large portions of revenue from on-premise that cannot be matched by revenues from SF implementations.

    The invest required to purchase, develop and maintain PI services (on-premise or on-demand) will be fundamental in whether some organizations opt to chose to implement SF on top of their core HCM system. Personally I think organizations without PI are likely to continue to leverage their investment in on-premise, but I’m not so certain that those with PI are necessarily going to move to an on-demand solution.

    It’s an interesting road ahead but I think many will continue to take the on-premise path for some time yet – and many may choose to remain on-premise in the longer-term.

    Best regards,

    Luke

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    1. Venki Krishnamoorthy Post author

      Hi Luke, It is very doubtful if customers will invest in PI just for SF integration. The additional costs are not only for the PI licenses, but also the timeline for PI implementation and additional resources required for the support. I do expect atleast in the short term, customers will go for their project specifc integration process.

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      1. Luke Marson

        HI Venki,

        You make some great points about PI not just being a stumbling block for the license, but also for the implementation and additional resources (hardware, maintenance, scheduling consultants etc). With all of these factors, it will prove difficult for customers to choose PI for integration. However, PI On-Demand will remove some of these aspects and will ease the pain of integration. But time will tell…

        Best regards,

        Luke

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