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IT department decisions seldom create change in a vacuum. This is particularly true when IT makes a decision to divest in supporting on-premise enterprise solutions. CIO magazine sited this as a key area of divestment in 2016 and beyond. For large scale, global payroll implementations, particularly in highly regulated markets and regions, the question of divestment in on-premise support requires consideration of delivery models that do not force a compromise in highly complex functional performance requirements.

This quarter, SAP SuccessFactors announced its Managed Payroll Offering. As part of a three-part Q&A, I interviewed Mary Sidlauskas, or Mary Sid as we all call her, to talk us through the who, what, when, where, why, and the how (implementation and maintenance) of Managed Payroll. This series kicks off a mixed media approach where we will share key insights with you through including blogs, video interviews, and radio shows. Our goal is to pick Mary’s brain on all things payroll so that you can make the best decisions for your payroll implementation.

Let’s start with getting to know Mary Sid a bit better. To say she lives and breathes payroll is an understatement. Mary has spent her entire adult life in payroll. In 1979, she started as a payroll practitioner before holding strategic advisor, implementation consultant, and product roles at ADP and SAP. She has spent the last 19 years as SAP’s resident payroll guru.


As I learned from Mary, there is no one size-fits-all approach when it comes to payroll. The question is: what is the right solution for you?

Question: Why did SAP SuccessFactors create the Managed Payroll Solution offering?
Mary Sid:

We saw a need, within our customer base, where there had been a company directive to diversify their IT infrastructure of their HR and payroll systems. Many of these customers could migrate to Employee Central and Employee Central Payroll, but there were many that had complex Time Management, unsupported country version, complex Benefit needs, and/or had made modifications to their ERP system, and could not move to Employee Central Payroll.

By migrating their SAP ERP HCM and Payroll to the Managed Payroll Solution clients get to significantly decrease the cost of their HR IT infrastructure and they can move from a CAPEX to an OPEX model.

Question: Couldn’t your customers have reached out independently to another company for these services?
Mary Sid:

Yes, they certainly could have and some have done this in the past. The difference with our Managed Payroll Solution is that the contract is written on SAP SuccessFactors paper and the partners we have chosen must meet the Service Level Agreements that are in place. This eliminates the need to manage their SAP SuccessFactors EC licensing, hosting, basis or functional support with different vendors. I like to say it gives our customers a “Single throat to choke”, not politically correct but I think you get the message. It eliminates the finger pointing that comes with multiple contracts.

Current SAP ERP payroll customers are paying maintenance, infrastructure costs, and application management cost. With the Managed Payroll solution these costs will now be exchanged for a single per-employee/per-month model. Our customers will continue to operate their payroll, but will be able to shut down their infrastructure, application management costs, along with their on-premise license maintenance fee.

Question: Should all SAP ERP HCM payroll customers move to the Managed Payroll Solution offering?
Mary Sid: No, customers need to first determine their digital transformation strategy. When looking to move payroll to the cloud Employee Central Payroll (ECP) should always be the first option to consider. For some customers, the best immediate course of action would to keep payroll on-premise and start an Employee Central implementation for their HR needs.  If the customer has complex time management, benefits or core modifications then they should consider the Managed Payroll solution.
Question: Does the Managed Payroll solution mean that I will be outsourcing my payroll processing?
Mary Sid: No, it does not. Your payroll managers and administrators will process payroll the same as they do today. With the Managed Payroll offering you are merely hosting your infrastructure and application management to a 3rd party. Managed services for legal change support and maintenance of payroll are provided by the partner based on SAP SuccessFactors Managed Payroll Service Catalog.

Question: What partners has SAP SuccessFactors collaborated with to deliver the Managed Payroll solution?
Mary Sid:

Currently we have two partners signed, EPI-USE and NGA-HR. However, we are in negotiations with additional partners to add to this program. Selecting the right partner is an important strategic decision and you should work with your SAP SuccessFactors account team to determine the correct partner to engage with. You may wish to consider factors such as geography, the size of your employee population, your preference for a partner and the partner’s experience. You should work closely with your SAP SuccessFactors account team to determine the best partner for your requirements.

Question: What is included in the Managed Payroll solution offering?
Mary Sid: The solution includes SAP ERP HCM Payroll as well as personnel administration and organizational management, negative/positive time management, compensation and benefits, to match the customers’ needs based on their current on premise deployment. In other words, the subscription includes the on premise components necessary for a successful migration.

  • Standard packaged integration to Employee Central is included as part of the offering
  • Version updates
  • Legal changes
  • Application Management Services
  • Backup and Recovery
Question: What is not included in the Managed Payroll solution offering?
Mary Sid:

The Managed Payroll offering includes management of the customer’s payroll environment but it does not include full-service Business Process Outsourcing, which would involve running the Payroll for the customer. These services can be added on and contracted between the Customer and Partner directly as required.

The following is not part of the subscription fee:

  • Migration implementation services are contracted directly between the partner and the customer as a typical services engagement
  • Implementation of Employee Central
  • Business Process Outsourcing
  • Optimization, technical upgrades or new functionality
Question: Mary, you have shared a lot of great information… any final thoughts?
Mary Sid: There is a lot of misinformation regarding our Managed Payroll Solution offering and I am hoping that this helps to clear that up. SAP SuccessFactors offers many options to meet your payroll needs.   It’s important to first determine your company’s IT strategy and then decide what the best direction for your company is. Payroll is not a one-size-fit-all solution and neither is the deployment strategy.   Work closely with your SAP SuccessFactors account team to determine the best course of action for your specific needs. Regardless of your specific strategy SAP SuccessFactors has a solution to meet your needs.

On Monday November 21, Mary and I will dissect implementation of Managed Payroll, followed by a discussion about maintenance on November 28.

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3 Comments

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  1. Jarret Pazahanick

    Nice job with this Mary as well balanced which is not the perspective some of the initial partners are providing in the marketplace on this offering.   Here are my view as well as an FAQ that will hopefully help customers as move forward in their decision making.

    https://www.linkedin.com/pulse/why-sap-managed-payroll-good-option-most-customers-jarret-pazahanick?published=t

    On a side note, I am also at 19 years in the SAP Payroll world and how time flies 🙂
     

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  2. Jarret Pazahanick

    “If you’re just going to redeploy your legacy on-premise processes in the cloud, why do it? You’re going to get no value if you’re not going to transform your processes as part of the exercise” from Mike Ettling is spot on in his recent article below.

    http://diginomica.com/2016/11/30/saps-mike-ettling-on-the-cloud-haves-and-have-nots/#comment-33119

    Something else to keep in mind for any customers is they are considering “Managed Payroll” as you are obviously doing none of that on the Payroll side (and potentially time/benefits etc).

    Highly recommend customers read this as also so great tips on how some SI’s are “getting the cloud consulting model” while others are not and that is a very real issue in the ecosystem and something Luke Marson, Bill Kutik and myself discuss here.

    https://www.youtube.com/watch?v=G2QcHN1_fW0 

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