Opinion Piece: On SAP On-Premise’s Extension And What It Means To Our Customers
SAP HCM beyond 2025
SAP recently announced that the on-premise SAP HCM Module will have its maintenance period extended from 2025 to 2030, hence giving existing SAP HCM customers a new option for continuing the use of their SAP HCM Module past the current 2025 deadline. The announcement also gives customers a new option to migrate to the S/4HANA solution that supports the HCM environment. This new environment will be based on the existing SAP landscape for easier migration, and the new solution will be based on the HANA database. SAP have indicated that they will provide additional tools to help with the migration to this new environment, which is planned to be made available in 2023. This new environment will be supported until 2030. Details of the SAP announcement can be found here.
Initial reactions to the announcement
At the time of writing this brief article, there have been some documented comments to this news. Generally the announcement has been seen as positive, although there are questions about the need for new licensing and the migration to the S/4HANA environment. It will be interesting to see whether this announcement might make customers reconsider delaying their move to some of the SuccessFactors Modules such as Employee Central, as this potentially gives customers the option to do nothing until they can see further details around SAP’s direction.
For more information on the comments, please see some of the following blogs.
A longer roadmap option for Payroll
In my opinion, the key item that I believe SAP HCM customers have been grappling with is the most suitable long term option for their SAP Payroll System and Payroll Processes considering the benefit in moving to SuccessFactors Employee Central.
As this point, customers have the option to move to SuccessFactors Employee Central for their HR Master Data Management and core HR Processes, and keep their SAP Payroll on-premise system or have the option to migrate to SAP’s cloud based Employee Central Payroll Solution. The other options available is to “lift and shift” to an SAP Managed Payroll Service which is offered by a limited set of SAP HCM Partners. What we are currently seeing, the uptake to Employee Central Payroll is still in early stages and the same can be said for the “lift and shift” SAP Managed Payroll option.
Therefore, most SAP HCM customers have left their SAP Payroll system in current state (Generally in an on-premise ECC environment). Some customers have migrated to SuccessFactors Employee Central and integrated it with their ECC Payroll, but from what we have seen, the majority of customer have done little at this stage.
How do you plan to manage your payroll processes?
The migration to SuccessFactors Employee Central is certainly in the minds of many customers today as it certainly represents positive business benefits and with the latest announcement of their program Upgrade2Success makes it a compelling strategy to consider. With many customers in the early stages of planning for this move, it will be interesting to see whether this latest announcement from SAP makes such customers put their move on hold for the time being.
At least this gives a longer term roadmap for SAP Payroll, and customers can then independently decide whether they take up SuccessFactors Employee Central for the management of the Employee Master Data and core HR Processes or continue to use the SAP HR On-Premise solution.
It will also be interesting to see if further announcements will be made over the coming months in relationship to a next generation payroll, as speculated by Steve Bogner in the following article.
Whilst SAP have only mentioned this new upgrade option in the article, it would be surprising if another longer term future based option for Payroll is not being considered by SAP.
What do we believe this upgrade / conversion will mean?
Here at SpinifexIT, from what we can understand from the announcement, the new proposed S/4HANA solution will be based on the existing SAP HCM solution, so this is good news and should minimise the work that customers would need to do to convert to this new solution. Customers who have a large amount of custom functionality such as reports or interfaces, there should be minimum changes to their existing solution.
The good news is that customers can look to invest into some of the newer technologies that SAP have recently released such as the Payroll Control Centre and have the peace of mind that this should be upgradeable to the new solution.
What does this mean to SpinifexIT Customers?
Our many SpinifexIT customers across the globe leverage a number of our solutions to address various SAP HCM use cases, including such use cases as it relates to Payroll operational reporting and reconciliation, Payroll Control Centre reporting, Employee and Management digital document, generation and distribution, Employee cloning across SAP systems, hence we see this as a promising announcement from SAP!
This topic has been a constant discussion with customers over the last 12 months with many of them seeking advice on what to do with their SAP Payroll system. Whilst we have the majority of our customers still using just the SAP ECC versions, we also have numerous customers who have:
- implemented the Employee Central Payroll Solution,
- implemented S/4HANA
- upgraded their database to HANA,
- adopted Payroll providers such as ADP or NGA (Still running SAP Payroll as the solution).
All of these customers have had a questions about the fate of SAP Payroll past 2025, so at least there is a direction for these customers.
In terms of the SpinifexIT solutions, we will ensure that our solutions continue to work on the new S/4HANA proposed solution. As the announcement from SAP indicates the new solution will be based on the existing SAP solution. Hence we would not anticipate any upgrade issues, just as we have not seen any concerns with our customers who just recently implemented S/4HANA.
In addition, regardless of what our customers decide to do today with their core SAP HCM System (Stay on Premise, or Migrate to SuccessFactors Employee Central), we have options to cater for use cases that they might encounter. In all scenarios, SpinifexIT has the SAP user base covered with proven, tangible and productive HCM and Payroll solutions that augment the SAP Roadmap, now out to 2030.
More information about SpinifexIT
For more information about SpinifexIT solutions, please visit our website at www.SpinifexIT.com, and if you have any questions or if you wish to request a demo, we can be reached at info@SpinifexIT.com.
Please join our webinar on the 18th of January. We’re featuring our cloud-based Document Generation Solution for SuccessFactors and SAP HCM (best for cloud or hybrid systems). Click here to read more about the topic & register.
SpinifexIT Global Solutions Architect
Darren has been developing business-optimising solutions for SAP HCM and SAP SuccessFactors for more than 20 years. Darren’s leads the SpinifexIT solution team to develop innovative SAP HCM solutions that maximise the value of the SAP HCM Customer investment and help enrich the SAP HCM Customer experience.