Skip to Content
Author's profile photo Sven Ringling

A Midsummernight’s Dream: on-premise HR Systems and Competitive Advantage

You want to be able to write like William Shakespeare? That’s easy now: they make replicas of his quill and you can also get paper and ink made to historical specifications. So, sure your next play will be right up there competing with Romeo and Juliet or Macbeth!

No? Well, I often hear SAP on-premise evangelists making a similar argument, when they argue against Cloud solutions in general or SuccessFactors HCM in particular. “If everybody is using the same SaaS solution with no way to put in their own coding, then there would be no way of defending or creating competitive advantage through managing talent” or so the argument goes.

Shakespeare_Laptop.jpgReally? I’ve seen world class HR operating on pretty much plain vanilla systems as well as on heavily customised ones. And I’ve seen my fair share of, say, lower league HR playing on systems with a lot a custom programming just as often as on out of the box solutions.

And thinking back, I’ve done an awful lot of HR ABAP programming myself in the last 19 years – and had even more done by my wonderful team. I may not be the best HR strategy analyst around, but I’d be damned if Mr. Porter would have rubberstamped even 20% of that code as creating competitive advantage. Yes, some of it may have done, some was required due to contractual or regulatory obligations, quite a lot was driving efficiencies. But for sure there was a lot I can’t be particularly proud of: it’s stuff customers insisted on doing instead of change management.

So, yes, I agree that there are cases, where custom programming will add value, but I don’t agree that moving to SuccessFactors at the right time and with the right configuration and transformation will destroy competitive advantage:

  • Most objectives can be achieved with the more modern solution without programming, if process changes are considered and changes of mindsets are possible
  • A solution easier to upgrade allows you to use the latest technology and out-of-the-box tools creatively to be ahead of the competition
  • Where there still is a gap, custom developments are now possible on the HANA Cloud Platform (HCP). But it needs to be done with consideration (and moderation) in order not to shoot down the second point.
  • HCP based apps as well as other apps from the eco-system will allow you to build a quite bespoke solution based on out-of-the-box building blocks.
  • Personally, I believe we are only at the very beginning of what the network economy will be able to achieve. The other SAP cloud solutions Concur and Ariba are indicating, where the journey might take us. If being different cuts you off from this development, it will most likely differentiate your organisation, but what you’ll be reaping along a 5-10 years timeline is – imo – more likely to be competitive disadvantage.

I’m not advocating that every organisation should switch to full cloud HCM within the next 5 years, but the competitive advantage argument deserves a much more considered use. Otherwise, your argument against cloud transformation, which may be absolutely right for your organisation right now, will be remembered as The Comedy of Errors.

Assigned Tags

      You must be Logged on to comment or reply to a post.
      Author's profile photo J. Pazahanick
      J. Pazahanick

      Great job with this Sven and my experience is the same.  The only other angle not mentioned is that many consulting firms liked the revenue with SAP HCM OnPrem customizations and happily "built" vs "pushed back" even if the customer was also paying for "Business Transformation" and Change Management on top of their implementation.

      Author's profile photo Sven Ringling
      Sven Ringling
      Blog Post Author

      I'm afraid you are all too right, Jarret.

      Author's profile photo Christopher Solomon
      Christopher Solomon

      Very well put, Sven. Might I suggest yet another side of the grumbles from the "ON PREM OR DIE!!!!" set? (haha) Like you, I have written my fair share of code and like you, I probably cannot count on one hand how many times I did so for clear "competitive advantage".

      I think another thing that never gets brought up with the reluctance to move to the cloud is that it might just shine a very bright light upon the nasty underbelly of "some" organizations that prefer to have their broken (or poorly documented/executed) processes hidden away (and often enabled by all that "crazy" custom code). "Moving to the cloud" will then force them to "tighten up" and "play like everyone else"....and just to get there may be a very painful look into the mirror. These "hold outs" might just not be ready for such a move....something that could require them to "get their house in order"...which they also likely do not have the time/resources/money to stop and do.

      And to be fair, in many (most?) cases...this is no fault of their own. We know that HR is not seen as a profit center (haha), so with tight budgets and most of the time just "keeping up" with business, it is not their fault alone that they just did "whatever" to make things work and get by so the "machine keeps churning along". More often than not, only when companies do decide that it is time to make HR more strategic will HR be given what it needs to really nail down its processes across the board (recruiting, development, compensation, etc).

      But yeh....very nice blog! 😛

      Author's profile photo Sven Ringling
      Sven Ringling
      Blog Post Author

      Thanks for your comment Chris. Yes. Patterns you raise sound very familiar.

      I wonder what the next generation will write in 20 years time about customers resisting Warp2 migration but instead sticking to messed up cloud1.0 systems where a horde of ancient HCP developments on one side and private / subsector clouds finally succumbing to coding changes destroyed the once sacred multi tenancy - one coding base principle to hide broken business processes.

      Ha! I will read that on my way to the spaceport, where I start my well deserved retirement with a 2h flight to Australia to explore that part of the world conferences and customers never allowed me to visit 🙂

      Author's profile photo Christopher Solomon
      Christopher Solomon

      Pssshhhhh Warp2 is so 2033. You sound as ancient as those "virtual digitalization" dudes. Dinosaur holograms! hahaha

      Author's profile photo Matt Fraser
      Matt Fraser

      Chris and Sven, I fear the paint in your picture far too closely resembles that with which we are brushed here. Our custom code would (will eventually) be a problem for a cloud migration -- hell, it'll be a problem for an S/4 on-prem upgrade -- but that pales into insignificance compared to our processes. On paper, changing the processes is easy -- we've already done it, several times in fact. Adoption is another issue. It is the culture that is hard to change.

      Author's profile photo Sven Ringling
      Sven Ringling
      Blog Post Author

      Hi Matt,

      I buy culture as an argument every time, but not competitive advantage.

      Except for the rare cases, where a "making things bespoke at all cost"-culture is part of competitive advantage (say, a luxury car outfitter, who makes everything possible, even if it's customers, who want the inside of the tires gold-plated).

      If culture stand sin the way of a change, we still need to make the call, whether it's the right strategy to make that change or not. But we know for sure: it's not going to be fast, because not only do we have to allow culture to change, we also need to preserve the right piece of it.

      by the way: whatever they tell you, SAP will be having that culture issue themselves and it will hurt like hell right now. On premise software with arguably the highest tolerance of customisation/modification in the market has made them extremely successful for a long time. That will sit deep in basic values and assumptions.

      And that also tells me that they are not making that change just for fun. They see that they're hitting a brick wall with innovating further based on the old model.

      Anyway: if the post suggests that I argue for quick cloud transition for everybody, I haven't made myself understood very well.

      What I just can't care to hear anymore is talk about "competitive advantage" to justify the most complex paths of a leave request workflow.

      thank you for that very good point bringing in organisational culture!

      Author's profile photo Matt Fraser
      Matt Fraser

      Oh, I don't think anyone here sees our culture as a competitive advantage! For one thing, being public sector, we aren't exactly competing with anyone -- yet. With charter schools that could change. No, it's just ingrained practices that have been passed down over time without anyone really knowing anymore why they do things the way they do -- they just do them that way "because." Effecting any change is like chipping away at a mountain with an archaeologist's rock hammer. Sometimes a practice is actually mandated by external compliance requirements, and sometimes people just think it's mandatory when it isn't really. Either way, we end up having to support these practices with custom code, but the code isn't really the root of the problem.

      What is interesting is there is a lot of interest in our HR department for cloud-based solutions, especially SuccessFactors, and some of their management get the scope of what's involved, but for some others there isn't a lot of understanding about the level of change required to adopt these solutions. Some think it's like flipping a light switch and don't understand a) why IT should even be involved, b) why they can't have it by next month, and c) why it won't work with the way they do things today.

      Author's profile photo Luke Marson
      Luke Marson

      I agree Sven and I think HR suffers from a lack of clearly defined industry standards, which I know SuccessFactors would like to push through their design of EC. Thomas Otter knows world-class HR organizations and technology better than many and his vision for EC is a driver for this standardization, simplification, and harmonization which drives the efficiency that gives competitive advantage. Being complex doesn't mean being better - rather the opposite.

      Of course, there are always examples where some form of unique functionality is required - and that is possible in the Cloud - but organizations need to think clearly about what they really need versus what they want.... they will probably find what they want isn't always a differentiator outside of the desk at which they sit.