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Making Sense of the SAP HR Landscape in 2015 Part 2: Is this Cloud Strategy Cloudy Enough?

Ah, yes – the Cloud!  The image of wispy nimbuses floating care-free in the heavens plucking away all of our technological sorrows is enough to make any tech sales rep’s heart flutter.  We’ve all been exposed to the dream.  So what’s the reality?

What is the cloud?

Here’s my brief and unofficial history of the Cloud.  First there was hosting: Don’t want to build or order computers yourself?  No problem!  We’ll buy and maintain them for you and you put whatever you want on them. Then there was Software as a Service (SaaS): Why buy and install expensive software yourself when you can rent just a little at a time?  Meanwhile things like service-oriented architecture had been creeping into the internet, web 2.0 made it more popular, and Smart Phones that preferred this world full of fat servers full of APIs that supported skinner clients started to become the most popular way to internet.  Finally, someone said, “You know what?  We need a nebulous name to categorize all of this stuff together so we can sell all this to people more easily –and what is more nebulous than a cloud?”  Thus, the Cloud was born.

My description of the Cloud isn’t precise and that’s the point.  Lots of companies are slapping a cloud-shaped logo on whatever they can and this is often confusing people and deflating the tangible benefits of the cloud.

What are the tangible benefits of the cloud?

The below are common to most cloud products, but as I promised in Part 1 of this series, let’s use SuccessFactors as our pertinent example for all of these points:

  1. It is Fast!  Cloud implementations are a lot quicker than on premise.  As an SAP consultant, when a customer wants a new SAP on-premise system I have to give them a time and cost estimate for how long it will take to procure the hardware, install the baseline software, and then bring it up to current patch level and turn on all the appropriate business functions before I can even start configuring.  As a SuccessFactors consultant I say – “OK, let me open a request – they should have it up tomorrow and we can start configuring”.
  2. Time = Money.  Therefore, Faster Time =  Faster Money. You didn’t decide to implement a new HRIT project because you had money laying around.  Chances are you’ve got a business problem big enough to attract the attention of your senior executives and every day that ticks by until your new solution is up, you are losing more money.
  3. You pay only for what you need.  SuccessFactors allows you to buy individual or bundled modules.  Contracts are based on a per module and per user annual subscription fee. The more you sign up for at once, the better deal they usually cut you on the per user/module rate.  Usually you are signing up for 3 years.
  4. It is convenient. No more bridge line call at 2AM trying to figure out what went wrong in the system patch.  Instead if you are a SuccessFactors admin for your company, you get alerts from SuccessFactors describing what the service interruption is and how they are working to resolve it for you.
  5. It changes rapidly.  You get patches and enhancements every quarter.  Some you get automatically without doing anything.  Other enhancements that may effect your business processes and require more change management you will have to elect to turn on. The details of thes enhancements and patches are normally spelled out in documents available on the SuccessFactors customer community but they are also showing quick highlights of these on YouTube Videos so the general public can get an idea of what’s included.
  6. It brings the latest technology to the little guy – Can’t afford a multi-million dollar SAP project?  That’s OK! You can sign up for SuccessFactors and only pay for your small number of users without prohibitive startup costs.

Will it really pluck away all of our technological sorrows?

There are very real benefits to cloud solutions such as our SuccessFactors example, but nothing’s perfect:

  1. It is highly configurable, but not customizable.  There are some exceptions here where SuccessFactors will write you a custom program, but these are rare.  If your requirements do not fit into one of the configurable templates you may find yourself back at the drawing board.  I’ve found that customers who are newer to big IT projects have an easy time adapting their processes whereas those who have been on SAP for years have are used to writing custom programs to solve are all their business process challenges have a tougher time.
  2. It may not be the most cost effective for you right now.  If you just implemented SAP, you may want to want to wait out your return on investment before launching another project.  While implementation costs are much lower than on-premise, there is still an initial cost.
  3. You get what you pay for.  What you are paying for is a Cloud service where you are one of millions of users.  If you have a problem common to the millions of others, your problem will get attention quickly.  If not, well….  Also worth noting—your consultants are charging you less per project which means they are now making less money per project.  This in turn means they have to support multiple projects at the same time. You are not always going to be the center of attention every day like on a traditional SAP project.
  4. It changes rapidly. Yes I realize I listed this as a benefit before, but it catches some organizations off guard. All of those new quarterly enhancements coming in ends up being too rapid for some larger companies that have been following a model where they control the flow of patches and enhancement pack projects into a slow annual release (or sometimes even longer).

What functionality does SuccessFactors Offer?

SuccessFactors has continually made a name for itself as a market leader in Talent Management software. Talent Management usually refers to systems that track employees as “Talent”- focusing on their skills, the development of those skills, and their value to the company.  The basic business pitch here is to attract top talent (Recruiting), organize your talent by assigning and tracking their achievement of business goals (Goal and Performance Management), and then reward your talent accordingly (Compensation).  Then you can also analyze where your talent gaps are now or will be in the future (Analytics and Planning), develop your talent to fit those needs (Career Planning and Development) and make decisions about who is developing into top leadership or into key positions in the company (Succession Planning).

A bit newer to the scene for SuccessFactors is Employee Central.  This serves as a “Core” HR transactional system – much like what SAP HCMPersonnel Administrator (PA) and Organizational Management (OM) modules do. While the product is newer, it is maturing rapidly.  SAP has shifted a lot of resources to developing this product.  SAP has long been considered a market leader in “Core” HCM so the idea that SAP can make this a robust product is not illogical.

What HCM Functionality does SuccessFactors not offer?

As of today, SuccessFactors does not offer other “Core” HCM functionalities like hourly time entry management, payroll, or benefits. However, there are clever solutions for integrating SuccessFactors with SAP on premise or hosted instances that contain these functionalities.  SuccessFactors partners with other vendors as well to fulfill these needs.

Is SuccessFactors the only Cloud product offered by SAP relevant to HR?

It is central to SAP’s cloud HR strategy, but not the only cloud product. If you take a look at this SAP HCM Cloud page, you will see most of the page dedicated to various SuccessFactors modules.  But if you scroll way down to the bottom you see links to “Related” products like HANA Cloud Platform or HANA Enterprise Cloud.  These are relevant options to look at and often get underplayed! For example, I’ve been helping work on a benefits solution that runs on the HANA Cloud Platform and can integrate with SuccessFactors Employee Central or SAP On Premise.

What the heck is HANA?

It is SAP’s flavor of an in-memory computing database.  It stands for High-Speed Analytical Appliance.  It is basically a database that holds data in RAM so that it runs faster.  SAP now slaps the name “HANA” on anything that runs on this database.

What is HANA Cloud?

Essentially this term is used for any SAP applications that run on top of the HANA database that are offered as a service.  For example, HANA Cloud Integration (HCI) is simply an instance of SAP Process Ingetration (XI for us old schoolers) that uses HANA as a database (as opposed to MSSQL or Oracle) and is hosted by SAP (making it “Cloud”).  HANA Cloud Integration (HCI) is a great option for Core SAP HCM customers who want to integrate with SuccessFactors Talent management but don’t have PI. This gives them an option to rapidly get a PI instance up and running to use many of these standard integrations.

Next in the series, I will cover some of the newer on-premise technologies like UI5 and HR Renewal and also show how these may be sneaking their way into the cloud

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  • Another good blog Michael.

    I just wanted to let you know that SAP HANA Cloud Integration doesn't actually run on HANA (which you may find surprising!). HANA is in the name for marketing purposes. It is also not an instance of SAP PI in the cloud, rather it is a newly designed middleware that shares many of the same features as SAP PI and other cloud-based middleware applications like Dell Boomi AtomSphere.

    • Hi Luke.  Thanks again for the good comment and for keeping me honest!  It appears HCI includes more than just a replacement for PI in the cloud.  In my experiences with customers wanting to integrate SAP and SuccessFactors, this has been the main purpose.  People can read more about the full capabilities of HCI and its architecture on the SAP help portal here.

      • You're welcome Michael. For the cloud, HCI is offered as an alternative option to PI for those customers that don't have PI and want a cloud-based middleware. From a customer and consultant perspective there is not too much difference in the technologies, only that HCI should be easier to use as it is based on modern software standards.

    • Also Luke - I am curious - is there a specific example you've seen of where a "HANA" product does not run on the HANA database?  I have suspected the same might be true, but have been hesitant to say anything until I have seen a specific case.  Thanks!

      • HCI is the main one that I am aware of. But SAP HANA Cloud Platform applications don't necessarily run on a HANA database (although I understand the platform itself does).

  • Great post Michael Wellens. I have a couple of questions: Is HCI only recommended for SFSF to SAP HCM integration or a customer can use it to integrate with a 3rd party payroll application as with Boomi AtomSphere? I understand that when the customer buys EC it comes with Dell Boomi included. What would be the business reasons to go for HCI then? Do you know if SAP offers the customer the possibility to choose which middleware to acquire?


    • Hi Ivan,

      Great question!  HCI is very flexible.  It can connect SAP Cloud applications to SAP on-premise, 3rd part on-premise, or 3rd party cloud applications.  There is a great blog with a diagram depicting this here.  As for business reasons, there are some customers running SuccessFactors without EC that need to connect to SAP and third party applications because they do not have Boomi.  It also makes sense for them because many of the standard integrations between SuccessFactors Talent products and SAP on-premise HCM require the use of either PI on-premise or HCI to operate.  There are also other SAP cloud products besides SuccessFactors that do not come with a middleware solution like Boomi - so it makes sense for those customers to use HCI as well.  Hope this helps!