Future of SAP and SuccessFactors Consulting 2016 – SAP HCM (Part 1)

It has been another very eventful year in HR Technology and last year at this time, a group of friends and I collaborated to write The Future of SAP HCM and SuccessFactors Consulting – 2015. This year we split the report into a three-part series with the Future of SuccessFactors Consulting – Core HR, Payroll, Analytics, Concur (Part 2) and Future of SuccessFactors Consulting – Talent Management (Part 3) released over the past month. This is the first installment and hopefully everyone enjoys this series.

I have no doubt we are we are still in the early innings of the multi year shift from client server OnPremise software (i.e. SAP HCM, Oracle EBS, PeopleSoft) to the next generation cloud based offerings (i.e. SuccessFactors, Workday, Oracle HCM Cloud). Some have called this a “Once in a Decade Land Grab” which is spot on and Bill Kutik has done a great job of comparing the major HR cloud vendors in this article. SAP has been very aggressive over the past 5 years spending over 17 billion on acquiring cloud companies such as SuccessFactors, Ariba, Fieldglass and Concur and is now predicting that cloud and support revenue will overtake software by 2018.

Given that, it should come as no surprise that SAP is leading with SuccessFactors HCM Suite for all new customers, in most regions worldwide. There has always been a delicate balance within the SAP HCM Consulting market and this major shift over the last few years of HR customers moving to the cloud (with SuccessFactors and to competitors) has had a huge impact on the traditional SAP HCM consulting market. In the SAP HCM market, I am seeing a very little opportunity, billable rate compression, layoffs and it is not a place you want to be longer term.

On the flip side virtually every consulting company is looking to add experienced SuccessFactors resources as well as re-train and certify their existing consultants on new technology. This was one of the reasons I recorded “Becoming and HCM SaaS Consultant and followed it up with “Becoming a SuccessFactors Consultant” with fellow SAP Mentor Alumni Jon Reed and Luke Marson to help people with the transition. For any customers or consultants reading this, the SuccessFactors consulting world is VERY different than the SAP consulting world and would highly recommending watching the video below.

While there will continue to be some very small pockets of strength in the SAP HCM market in various regions and modules, the combination of the product roadmap being squarely focused on SuccessFactors, SAP sales teams leading with the Cloud (for HR), continued off-shoring, faster implementations, the buzz for cloud based HR technology and serious competitive threats from Workday, Oracle Fusion and others guarantee the OnPremise SAP HCM consulting market will continue its downward spiral.

I decided to reach out to a diverse group of individuals that I personally know and trust would give an honest opinion of what they are seeing on the ground in their respective areas. They include SAP HCM and SuccessFactors Industry Experts, SAP Mentors, SAP Press Authors, HR Expert authors, well-known conference speakers and some of the most knowledgeable individuals I know in the industry.  Here are their thoughts.

SAP and SuccessFactors Project Management

I reached out to Steve Bogner, who is Managing Partner at Insight Consulting Partners, SAP Mentor, maestro of the great HCM Podcast Group and he told me:

Sound advice for SAP HCM and SuccessFactors HCM project management is much the same as a year ago. The technical landscape is changing rapidly, so be sure to keep an eye on that as you plan your roadmap and implementation. Integration is still a key part of projects, with more moving to HANA Cloud Integration (HCI). Consultancies are racing to build their practices and win implementations, keeping us in a Wild West environment for now. Address this by being selective with the consultancies and consultants you bring in to your projects, and perhaps by hiring a third party, independent consultant as an advisor.

As you plan projects it is ever more critical to have good, solid buy-in and ownership from each business area impacted. In fact, if the business areas – HR, Benefits, Payroll, etc. – are not willing to allocate resources and leadership then it might not be the right time to start critical projects. And also remember that IT resources are still needed! There is integration work, understanding legacy systems, and system architecture issues (and more) to deal with in the cloud.

SAP Core HCM

I reached out to Steve Bogner, who is Managing Partner at Insight Consulting Partners, SAP Mentor, maestro of the great HCM Podcast Group and he told me:

SAP continues to make some investments in their on-premise HCM software, but the pace seems to have slowed as Employee Central becomes an ever more feature-filled option. This is to be expected and should not come as a surprise to those who have followed SAP’s roadmap for HCM software. Still, there is a lot of life left in the on-premise HCM software – options such as HR Renewal, Fiori, HANA, and the Payroll Control Center. My advice to customers is to start evaluating Employee Central, do what you can to simplify and standardize your existing functionality (making it easier to convert once you decide to), and to make sure your HR technology roadmap is up to date. Start working your way towards the cloud as it makes sense for your company. For consultants, the amount of on-premise consulting work is naturally decreasing, so start sharpening your cloud skills!

SAP Payroll

I reached out to Jarret Pazahanick, who is Managing Partner at EIC Experts, an SAP Mentor Alumni and has been part of 20+ SAP Payroll and SuccessFactors Employee Central Payroll implementations and he told me (couldn’t resist a formal intro) 🙂

I am still seeing demand for SAP Payroll (mostly for production support) but there are definitely not as many new implementations as there has been in the past. It will be interesting to see if SAP can convince their roughly 7,600 Payroll customers to make an investment to implement the Payroll Control Center, which is a solid offering by SAP but currently has very low adoption, as that could drive some additional consulting demand. The good news is the Payroll Control Center helps address long standing complaints around overall usability and reporting but the bad news is SAP can’t control if and when their OnPremise customers deploy or use it plus it requires a technology “upgrade” (EHP7 FP4) for many customers.

SAP Talent Management and Enterprise Compensation

I spoke with Jeremy Masters, who is the author of six SAP PRESS Books, and Managing Partner at Worklogix, a boutique HR technology firm, who told me:

Like the rest of SAP on premise, SAP’s Talent Management solutions will be supported through the year 2025. Although modules such as Performance Management, Succession Planning, Career/Development Planning, and Qualifications Management are still in wide use today from customers, many are considering migrating theseprocesses to the cloud. Some companies continue to leverage their investment by beautifying the user experience with a “skinned” front end, using technologies such as SAP Fiori or Java. I have had the opportunity to do this with several different customers and the results have been overwhelmingly positive when done with the right team.

Enterprise Compensation Management (ECM) is still being implemented with customers for (mostly) two reasons. First, some customers are not yet sold on storing their compensation data in the cloud. Data such as salary, bonus, equity awards, and other highly confidential compensation information is not something that all customers feel comfortable putting in the cloud yet.  Second, many customers have already implemented complex logic in the calculation of their bonus awards.  Depending on the complexity of the bonus plan design, this process may or may not lend itself easily to the cloud.  Some customers are opting to keep bonus planning on premise and perform their salary (merit) increase planning in the cloud. For focal review planning, this is not optimal since the approvals are oftentimes gathered at the same time. Some customers are opting to number-crunch using their on premise system (to calculate Bonus Targets, for example), and perform the compensation planning in the cloud.

For both SAP Talent Management and Enterprise Compensation Management (ECM) functionality, SAP is still running its Customer Influence program (see Figure below from the SAP website).  This program is designed for current SAP customers to provide their inputs on what improvements should be made to the modules. Go to https://influence.sap.com/ and navigate to Projects by Lines of Business > Human Resources.  You can look at projects newly registered (“Get Involved”), projects currently running (“In Progress”), and projects completed (“Benefit”).

SAP HCM Fiori, ESS/MSS, HR Renewal

I spoke to Justin Morgalis, who is a Principal with M7 Solutions and SAP Press Author, who told me:

The heavy cloud messaging from SAP cannot help but have a downward effect on the market for self-service consultants.  With that said, it is an interesting year ahead for Self-Services and Self-Services consulting.  It used to be very straightforward to be a Self-Services consultant.  “Here is the portal and off you go” and that sort of thing. The introduction of SAPUI5 technologies changed that by offering (too many?) options for customers to choose from when trying to determine a path forward for Self-Services.

With each wave of Fiori apps that SAP releases, SAP is getting closer to filling in all the gaps that have existed for using Fiori as a full-featured platform for Self-Services. Prior to these latest waves, Fiori had existed in a niche where it was a very nice application set for what it did, but given its holes, it was hard to commit fully to it for HCM. However, with the latest wave of apps, as well as SAP’s release of new Overview pages to go along with the Fiori Launchpad, SAP is showing its commitment to support any customers that might want to use Fiori as the foundation for end users’ online interaction with HCM. Being able to recommend a fully Fiori base will be a benefit, but will also carry challenges for the Self-Service consultant as there are fewer configuration options available at this time. There may or may not be a sign in there somewhere. 

The rise of Fiori almost inevitably means the decline of HR Renewal UI5 as a solution base. While the HR Renewal application offerings remain strong and valuable, in the “SAPUI5 Wars”, the HR Renewal landing page technology clearly has come in second. This is not the worst thing in the world as we are able now, as consultants and advisors, to make more clear recommendations to customers, as SAP’s direction has gained some clarity of its own. 

As for the portal, Self-Services consultants will be faced with questions from customers this year about the role of the NetWeaver portal moving forward. The portal is no longer a requirement, this is true, but consultants will need to make sure that “cutting the cord” is viable given any current commitments to the NetWeaver portal.

One thing I always like to tell my clients however is that there is much value to be gained in upgrading your Self-Services, even if you do not go “all the way” to SAP’s latest vision. An iPhone 5 is still an awesome device to someone with a flip-phone.

SAP E-Recruiting

I spoke with Mark Ingram, who is a co-owner of Ingram Talent and in a past life both had product management roles at SAP and he told me:

The death of SAP E-Recruiting is slightly exaggerated. The HCM E-Recruiting 2016 Customer Influence project was kicked off at the beginning of February. Though enhancements are small incremental improvements to existing functionality rather than new features, the first project delivered 28 improvements. Since an improvement request has to be voted for by five customers before being evaluated by SAP. This means that there are at least five E-Recruiting customers remaining! In all seriousness this is a good sign that E-Recruiting is still being supported. This is important for clients whose recruiting processes are not supported by SuccessFactors Recruiting Management and who do not plan to migrate in the future. On a side, I can only speak for the US but I haven’t seen a single E-Recruiting implementation opportunity with the exception of upgrade project in public sector two years ago, though I have colleagues that have worked on system subletting activities.

SAP Learning (LSO)

I spoke with Sharon Newton, who was a co-author of SAP Enterprise Learning, a fellow SAP Mentor, and the CEO at hyperCision and she told me:

As I noted last year, there is a steady migration of SAP customers adopting SuccessFactors Learning, the SAP Cloud Learning Management System (LMS). With that being said, there are still many customers who have either a strong investment in on-premise Learning or have determined that the Cloud is not for their organization. For these customers, it’s important to note that the on-premise SAP Learning Solution (LSO) is still going strong globally.

In 2014/2015, ASUG’s Learning Solution Influence Council, which consists of 25 North American on-premise LSO customers, partnered with other influence groups globally and was able to push through 19 key improvements to the LSO, focused on both usability and functionality. In addition, SAP delivered and enhanced robust integration in 2014/2015 as well as some minimal improvements as part of HR Renewal. Currently, SAP is committed to supporting all on-premise functions through 2025, and on-premise HR will be supported in conjunction with S/4 HANA.

Some customers who have chosen to stay on-premise are exploring the option of building their own enhancements or purchasing off-the-shelf add-ons (examples include SPRING, the new Fiori-based UI; SAP AG Services’ enhancement to support Kirkpatrick’s levels of evaluation; and integration with QuestionMark to support enhanced certification needs). While SAP has been very clear that there will be no major enhancements to any of the on-premise Talent solutions, if you have a need to stay on-premise near-term or for the foreseeable future, I encourage you to educate yourself about the standard integrations and add-ons available and to partner with your local influence organizations, as the customer voice can still make a difference.

Wrap Up

There is an excellent quote from Naomi Bloom who is a HR Technology thought leader that I like to share every year as I find it very relevant.

“Consultants, at least in my world view, are individuals who are able to study a business problem and, regardless of any particular technology choices, guide the client to the best possible approach to achieving the desired business results.”

At the end of the day, if you are a consultant that is able to provide that type of value for your customers then it won’t matter the HR technology, you will be have the head start at being successful. That said, it is very important whether you are a customer or consultant, that you are aware of where the technology is headed and in HR the future is the cloud. If you trying to break into HR Technology I don’t see any scenario where learning SAP HCM as a “fresher” in 2016 and beyond is going to serve you well in the long run.

I am a big believer that being a lifelong learner is a key competitive advantage given the rapid pace of change in HR Technology, and in order to stay current on all the major news and developments I would recommend joining the 26,000 people in my Global SAP and SuccessFactors and Global SAP HCM and SuccessFactors Linked Groups.