A number of companies are currently anticipating new functions. These exist in the range of Cloud connections to incorporation of Artificial Intelligence. Others are developing a fear of high adjustment costs. To give an overview on these developments, we are launching a three-part blog series on “SAP HXM Strategy”. It is meant to tackle the current industry changes. The series is a gateway to understanding SAP software for human resource management, which our brand is focused on.
The first part will focus on the current developments observed in SAP. The second part will deal with the programs, HXM Move and the Rise with SAP. These were developed to enable effortless transition. Finally, we discuss the viable options of actions for your company.
This serves as the first part of the series, presenting the recent developments in SAP solutions for HR digitisation.
SuccessFactors: The path that leads to the clouds
Like many software systems, SAP has opted for a cloud strategy. The US cloud provider SuccesFactors takeover paved the way for it, since 2011. The user count for the on-premise solution SAP HCM is quite significant, with more than 10,000 users. However, the cloud-based SAP SuccessFactors HXM Suite has successfully caught on over the years. The purpose of both are the exact same, yet the latter is preferred by 7,500 companies.
The apparent answer is that SAP prefers the cloud. In fact, most innovations do. An example of such would be the use of Artificial Intelligence. It facilitates precise prediction in numerous areas, placing your business decisions on a solid foundation. Nevertheless, these innovations aren’t constricted to technical aspects. Additionally, SAP has developed an entirely new concept, which has already been evident from its name. HCM is an abbreviation for Human Capital Management, providing a clear business approach. However, HXM stands for Human Experience Management, shifting the focus on employees. For instance, the SAP SuccessFactors HXM Suite offers numerous choices to measure employee satisfaction. These are not available with SAP HCM.
Innumerable services from SuccessFactors integrated into HCM
The on-premise solution also allows innovative methods of SuccessFactors to be used. SAP systems have been designed such that you can integrate your choice of services. This allows you to continue the usage of your proven systems. Along with that, it also supplements them with practical functions that are provided by SAP solely via the cloud.
End of SAP HCM maintenance from 2027
One of the vital points to keep in mind is the end of SAP HCM maintenance from the year 2027. Although the on-premise solution is preferred by thousands of companies, the brand is keen to take their customers on cloud. This also means that as a user of this software you will need to completely switch your systems soon. Hence, it is advised that you run through the customisable options if you are a customer. Thinking this conversion would be possible right before the end of support, means it is already too late. The conversion process takes up a considerable period. This stands as a reason why HR transitions are recommended at the earliest. This way you are ensured to be fully prepared, making the changeover completely stress-free.
Extended support till 2030
Although maintenance is limited till 2027, SAP is offering extended support for SAP HCM until 2030. The statement might push you to delay the required adjustments – after all three years should seem enough to switch. Yet, this is a risky strategy. First, SAP does not offer this extension to all its customers. There are prerequisites applied and are strictly controlled. And second, you might not be able to enjoy the same support as before. Hence, this strategy, despite being a tempting one, should be avoided as a HR strategy.
SAP S/4HANA – new system for the ERP software from SAP
In 2015, an impactful development took place – the launch of SAP S/4HANA. The S stands for “Simple”, while the number 4 represents the fourth generation of the SAP systems. And HANA aptly stands for “High Performance Analytic Appliance”. It is an innovative database technology that underlies all S/4HANA products. The S /4 HANA is designed as a cloud technology. However, SAP has developed its on-premise alternative. Subsequently, making it efficient to install the system on your IT infrastructure.
Nevertheless, this changeover is taking place only in recent years for personnel management. The on-premise solution SAP HCM is still based on older technology. The introduction of SAP HCM for S/4 HANA is only occurring for the course of the current year. Yet, SAP doesn’t necessarily foresee the S/4HANA as a successor to the previous HCM solution. In fact, it is an alternative solution. You can continue to use SAP HCM, and later choose a completely different option.
In case you intend to use this new system, you are required to be attentive to your database. The use of HANA databases is permitted with previous solutions. The use of alternative systems is also possible. However, if you choose to switch to SAP HCM for S/4HANA, you must use the HANA database. You will need to prioritise larger adjustments if you have been using a different technology so far.
You are guaranteed a support from the manufacturer’s side for the SAP HCM for S/4HANA until at least 2040. This means you can implement a long- term solution. This proves as an advantage for companies that do not wish to or cannot migrate to the cloud. If you wish to operate your systems on-premise in the long-term, this is a sensible solution.
Reduced range of functions for SAP HCM for S/4HANA
Although, this might also reflect the way SAP is to the cloud. Compared to SAP HCM, some of the functions have been removed with SAP HCM S/4HANA. You cannot use them on-premises from 2027. Hence, you would have to look for alternative solutions. This case applies to the Employee Interaction Centre and Travel Management. Similarly, the SAP Learning Solution Java is also affected. However, the reduction in function has turned out to be lesser than initially expected. SAP had originally announced that it would significantly reduce the functions. But due to the pressure from users, they were retained largely.
Hence, you should hardly expect divergent innovation from SAP HCM for S/4HANA. The developers will mostly care about preserving the user-favourite functions. Unless it is a legally bonded innovation, you won’t have to worry about new functions affecting the on-premise solution. On the contrary, innovation is expected in other areas of cloud solutions.
Transition from HCM to HXM
Now, we would like to acquaint you with the meaning of HCM and HXM. We have already mentioned these when introducing the SAP SuccessFactors HXM Suite. This is a fundamentally new perspective on HR strategy. Therefore, we want to go a little deeper and speak intensively on it. At HCM, the focus is processing operational data. Such software products are almost exclusively preferred for HR solutions. While HXM is focussed on the workforce. It offers the possibility to record their emotions. This allows you to analyse their personal needs. This software is often used to determine reasons for termination, hence preventing the loss of specialists. This is not possible at HCM; however their surveys can enable the positive experience for your employees using HXM.
These play an increasingly important role in contemporary companies. At times of skilled-worker shortage, it is not only necessary for you to manage the staff, but also provide a positive experience to avoid talent churn. Subsequently, you can prevent a position from being vacant and save talent replacement cost. You should not limit such a solution only to employees under the HR department. Instead you should give other employees direct access to it. They will help build a positive employee experience. Resultantly, you can not only create a positive effect on employee turnover, but also uplift the working atmosphere! This would effectively lead to an increase in productivity.
Summary of the development in SAP HR solutions
When we summarise the developments in SAP software in recent years, two trends are evident. The first insight that we gain is that SAP wants more customers to the cloud; with the announcement of support end for key on-premise product; unavailability for cloud-less on-premise alternative, it is quite evident. It has a smaller range of functioning, hence more and more customers would transition to their cloud-based solutions. The second trend observed is the magnitudinous focus on the talent in the company. The software changes its perspective on talent. It perceives them more as individuals with emotions and personal needs, rather than business objects.
Adjustments are necessary for many companies
The developments at SAP bring with them a variety of innovations. These concern both the technical and the content level. Technical developments in particular mean that many companies are under the pressure to convert their systems. Support for the previous solutions is only guaranteed until 2027. As a result, you must decide which alternatives you want to use in the future. There are various ways to choose from. We will present these to you in part 2 and part 3 of this topic special. In any case, it is important to tackle the planned changes at the earliest. For you to implement them without any problems before the end of support for the former products.