Celebrating 5 Years Since SAP Purchased SuccessFactors – Looking Back and Looking Forward

The journey of Employee Central as core HRIS

It’s hard to believe that it has been five years since the SAP HCM world was turned upside down. On December 3, 2011, SAP purchased SuccessFactors and set in motion a worldwide transformation of HRIS from on-premise to cloud HCM. In those five years, there has been tremendous innovation and a constant, methodical evolution in the way we plan, implement and administer our HCM systems. After all, the on-premise mindset was not going to change overnight.

As we mark this anniversary, there have been a number of articles and posts on the topic. For example, Mathias Iversen wrote a thought-provoking piece last week where he discussed the pace of cloud HCM adoption and considered some of the reasons why it may be slower than some initially thought. His article elicited some very good responses from a variety of viewpoints. While the adoption numbers and some of the rationale used in Mathias’ article are definitely subject to speculation, I wanted to offer my own thoughts on this on-going cloud HCM migration.

Moving Core HCM to the Cloud : It’s a Marathon, Not a Sprint

When we look back at the progress made in the last five years, it’s easy to take a narrow view and assume that not enough migration has been made to the cloud or that the SAP SuccessFactors solutions are not a viable alternative to core SAP HCM. I think that type of thinking is flawed. For example, let’s consider the on-premise HCM technology that is being replaced. SAP took 20-30 years to build out its SAP ERP HCM solution set and customers have used it and improved it for many years. Replacing that doesn’t happen overnight.

There is little argument that the conversion of customers from SAP HCM to Employee Central is underway and the tide has begun to shift. In my opinion, that process will take 5-10 years at a minimum. This increase in Employee Central adoption is due, in part, to the following:

1. Product innovation

If you looked at the SuccessFactors solution set in 2011 and compared it to the offerings today, you will see a tremendous amount of technical, design, process and integration improvements. In software lifecycle terms, Employee Central in 2011 was merely past the conceptual phase. It is growing and, as Mike Ettling pointed out at SuccessConnect in Vienna last week, it will continue to evolve at a rapid pace. Customers are beginning to see the real value in these innovations, as well start to look at the potential complications that are inherent in a cloud transition such as interfacing with other core systems (payroll, time, benefits), data conversion, privacy, etc.

One of the legendary strengths of SAP HCM was its localisation in terms of both core HR and Payroll. It’s easy to forget that the acquisition of SuccessFactors meant merging SAP’s on-premise mentality and expertise with the “built for the cloud” culture of SuccessFactors. Matching the localisation that SAP HCM offered is going to take some time. I also think it’s fair to say it was never SAP’s intent to replicate the capacity for and levels of customisation that existed in SAP HCM into Employee Central.

2. Geographic differences

It’s no surprise that many early adopters for cloud HCM came from the North American market where language and business culture are more homogenised. But guess what? The Europe, Middle East & Africa region (EMEA) is not the US. As I noted in an earlier blog, languages, cultures and laws differ from border to border across the patchwork of nations called “Europe”. You either love these challenges or you hate them (Full disclosure: I happen to love them), but regardless of your feelings, they are a reality for doing business in EMEA.

There are many other factors to look at, when comparing cloud adoption across regions. The size of their local presence, the number of years they ran HCM on-premise, and even the size and maturity of the SAP organisation itself in each region can impact the growth of SAP SuccessFactors. I strongly believe that Employee Central has the perfect DNA for pan-European companies that have a sizeable, dispersed workforce across many different countries.

3. Leading with Employee Central

In its current form, Employee Central is still a young product. It is maturing with every update and as it does, we are seeing an evolution in how companies choose to adopt it. In the first few years after the acquisition, we saw many companies “dipping their toes in the water” by adopting one piece like a specific talent module. The rationale was to start with something manageable in the cloud and then expand your cloud footprint. What has happened over the last couple of years is that companies are realising the importance of having a solid core HCM foundation in the cloud before branching out. This means the adoption of Employee Central first as a base to the cloud landscape. The mentality is that if you get the foundation right, you will have a much easier time from there.

Employee Central Will Drive Adoption

As I mentioned in the previous paragraph, Employee Central is increasingly driving cloud HCM adoption and will continue to do so. The solution is maturing nicely and the new features of the overall SAP SuccessFactors solution set have truly made it much more than a transactional system as we have been predicting.

Payroll continues to be a hurdle for some companies in their Employee Central decision-making  process, but it’s great to see that customers now have several options from which to choose. EC Payroll is expanding into more countries, increasing its potential customer base. As Daniela Lange from SAP mentioned at last week’s SuccessConnect in Vienna, outsourced payroll solutions like the iXerv/Celergo EC-to-Payroll Connector are also a great new option for global companies with multi-country payrolls that are looking to integrate payroll processes and data with Employee Central.   

Finally, using Employee Central as a foundation allows multi-country companies to sequence their rollout properly to address regional, cultural and language issues. Establish the base and build upwards. It’s how the pyramids were built and it works very well here as well.

So, let’s all wish SuccessFactors a very happy 5th anniversary under SAP's wings. Looking at Employee Central, kudos for the innovation and localisation achieved so far. I’m very optimistic about what the upcoming years will bring for SAP SuccessFactors.  Let’s raise a glass and look at the future, for the best is yet to come.

Luc Bossaert has a long-standing passion for Global HCM & Payroll. He is co-founder and CEO of iXerv,  a SAP/SuccessFactors Partner, focusing on EC & ECP as core HRIS to mid-market multinationals: migration, deployment, support and integration of Employee Central with SAP HCM, 3rd P Payroll,  Time. To find out more about iXerv, visit www.ixerv.com.