SAP HCM on HANA Overview and Roadmap

In January, SAP announced a major accomplishment of offering the Business Suite on HANA for Ramp Up customers and much was written on the topic. Unfortunately there were no details provided on what this would mean specific to SAP HCM so our podcast group got together shortly after to record SAP Business Suite on HANA – An HR Focus to provide our initial reaction. Over the past month I have pulled together more insight around how HANA is going to impact HCM and I thought I would share with the community. At the core SAP plans to use the real time data access and speed of SAP HANA to set the foundation for reporting/analytics, embedded intelligence, forecasting, improved user experience, modeling, planning and simulation. SAP shared this planned roadmap around SAP HCM on HANA at HR2013 a few weeks back.

Here is some more detail around several of the HCM specific HANA solutions that SAP has already released or are under consideration to be delivered over the next 18 months.

HANA – Enabled BW Solutions (Currently Available)

SAP BW for HR – At the core the biggest benefit is accelerating load times and query response times so there is “right time” availability of information for HR users. This will allow the ability to browse and correlate across a wide variety of HR data and piece together important information on the fly. I know several HR customers that are currently analyzing BW on HANA and have overall the reaction has been positive.

Executive HR Analytics – This Rapid Deployment Solution(RDS) will allow customers to discover trends across 40-key HCM metrics and drill down along the org structure/cost center hierarchy to zoom in on key trends. Some of the benefits include the ability to monitor workforce KPIs, assess performance against benchmarks and proactively manage the workforce based on “hard” data across the organization. 

Advanced HR Analysis – The Rapid Deployment Solution(RDS) will offer the ability to analyze workforce KPIs to fulfill ad hoc requests using real-time data as well as search workforce information by using natural words and simple visualizations. This will offer customers the ability to better support their business by delivering analytical answers to HR questions, reduce the workload of HR IT and analyze workforce data to arrive at root cause of problems.

Operational Headcount Planning – Will help align corporate workforce demand with operational planning by offering cascading headcount and salary throughout the organization. It will allow aggregated views with the ability to drill down to details and predefined reports delivering insight into workforce composition and cost.  Some of the business benefits include:

• Simplify the budgeting process.
• Improve business user satisfaction and visibility into the planning progress.
• Improve the quality and accuracy of the salary and headcount planning process.
• Assess the impact of new hires and promotions on workforce cost.
• Avoid hiring that is not aligned with the skills the company needs.

HR Core (Under Consideration)

Hierarchy Traversal – This will bring significant improvement to overall application performance of structural evaluation paths, which has long been a pain point for SAP customers. The performance improvements of existing functionality in structural authorization, structural search and data inheritance is pretty exciting for an older timer like me.

Operational Reporting – Will enable real time operational reporting for core HR, including headcount, org management, time management, skill and competencies, and talent management. Need to get more specific details on this one, but it seems promising.

Payroll Reporting (Under Consideration)

In order to fully utilize the benefits of HANA, SAP has built functionality to “de-cluster” the time and payroll results. This de-clustering functionality is currently available for China and Austria with the United States planned next.

Reconciliation Reporting – This will leverage SAP’s in memory platform to decrease processing time of reconciliation report, which is one of the most important and commonly used SAP payroll reports. 

Garnishment Order Fulfillment –Will analyze garnishment order fulfillment at the company level and drill down to employee/order level as well as review historical data for employee’s disposable income and analyze employee’s medical benefits. It is important that SAP US Payroll customers review their garnishment configuration along with enabling this report, as I know many customers are not following the updated 2013 American Payroll Association garnishment rules.

Compensation Reporting – Will provide historical trends in compensation based on master data, time data and actual payments stored in the payroll results. This will allow the payroll department to reduce the time needed to identify the errors and inconsistencies.

Overtime Payments – Will offer historical trends in overtime payments by pay period/earnings/taxes/deductions with drill-down functionality to employee level, which includes any master data and time management data stored in payroll results.

Payroll Analytics (Under Consideration)

Payroll Audit – Will compare and analyze payroll results by pay period/earnings/taxes/deductions with drill-down capability to the employee level.  This will be a very popular addition as many of my customers have built a custom report or used a 3^rd Party tool such as spinifexIT (they offer much more) to help with their balancing.

Retroactivity Analyzer – Will analyze retroactive calculations for pay period and compare across the pay periods as well as offer drill down capability to help identify the reason of retro calculation on any level from the tax company to the employee. The retroactive functionality is extremely powerful and valuable part of SAP payroll that is often misunderstood. Any report that helps provide more insights into those calculations will be very popular.

Simulation Analyzer – Will compare the payroll results of a simulation run to the previous pay period’s production runs and analyze the differences on a pay period/earnings/taxes/deductions perspective with drill-down functionality to employee level. There is no doubt this will help payroll department be proactive be more proactive, ensure payroll errors are caught early and reduce the number of claims and retroactive processing that occurs.

Flexible Analyzer – Will analyze and compare payroll results for selected group of employees based on certain master data criteria stored in payroll results.

Modeling (Under Consideration)

Benefits Modeling – Will focus on different employee groups by analyzing the benefits historically offered, and evaluate how the demographics and geographies are changing, evaluating how engagement and satisfaction of workers are impacted by the provided benefits, performing what-if and negotiating with providers to determine best options and price for short and long term. Some of the benefits include better insight to get the best rates, which provider(s) to choose, what benefits to provide to which group of employees, what 401K, retirement, or pension plan to offer and what’s the cost to the employee and employer.

Compensation Modeling – This will enable linking of compensation plans with detailed employee performance to get visibility into the impact on the financial plan. It will enable HR to perform simulation analyses as well as economic and reward scenarios to distribute a budget / hike across a company based on performance, compensation ratio and other factors. Some of the benefits include:

• Improved efficiency in compensation planning and budgeting.
• Edge in company competitiveness and attraction/retention of best people.
• Simulation and what-if enables recommendation of most effective scenario.
• Quickly identify unusual cases.
• Provides transparency of the process to the line of business manager.
• Better visibility into employee “true costs” and performance impact.

Organization Modeling – This will allow customers to model alternative organizational structures, taking into account impact of on related organizational and financial KPIs, and automate the implementation of the organizational changes. It will provide deeper insight into the composition and skills of the workforce in the new structure to ensure a balanced workforce.

Analysis (Under Consideration)

Social Media Analysis – Will integrate social media channels into company brand management, recruiting, and employee sentiment analysis. One of the benefits includes building a high performing and engaged organization.

Social Network Analysis – Will provide the ability to analyze social media and make recommendations for new connections (i.e. SAP_Jarret 🙂 ), filling a learning gap, finding expertise, identifying mentors to help build a high performing organization. Some of the benefits include improving the understanding and reach into talent and job candidates and Identifying issues in social media that could lead to negative employee sentiment.

At the core I think the SAP HCM team did a very good job in identifying key use cases for their initial investment, as it will address many pain points I have seen at my On-Premise customers over the years.I am a big believer in the benefits of in-memory technology and where I see the true potential for disruption is if SAP can unlock the 3^rd Party developer ecosystem to start building applications that most HR departments don’t realize they need until they became available.

I was pleasantly surprised to hear that a majority of the applications listed above will be available for no additional cost for customers that have their Business Suite on HANA or Side by Side (ie BW on HANA, Industry Solution on HANA). While I think it will be challenging for SAP HCM customers to make a business case on their own to move to the Suite on HANA it is important that they are aware of the SAP HCM roadmap so they can partner with other groups within their organization as it is pretty obvious the Suite on HANA is the future for SAP On-Premise customers.