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The Future of SAP HCM and SuccessFactors Consulting – 2014-2015

It has been an extremely eventful year for SAP HCM and SuccessFactors since a group of us collaborated to write The Future of SAP HCM Consulting and SuccessFactors and a lot of people continue to reach out to me trying to understand what lies ahead in the overall consulting market. My thoughts are we are in the early innings of the multi year shift from client server OnPremise software (i.e. SAP HCM) to cloud based offerings as there are a long list of tangible benefits for HR customers using true Multi-Tenant Software as a Service (SaaS). It should come as no surprise that SAP/SuccessFactors are now leading with their full HR cloud solution (Employee Central/BizX) for all new customers, as well as any customer where they are competing with Workday. 

There has always been delicate balance within the SAP HCM Consulting market and this shift to the cloud is going to have a huge impact for SAP HCM consultants. It will also disrupt many of the traditional consulting companies, which is why some have likened the current environment to the Wild West. While there will continue to be some small pockets of strength in the SAP HCM market, the combination of the product roadmap being squarely focused on SuccessFactors and the cloud, continued off-shoring, faster implementations (RDS) and competitive threats from Workday, who has won several large SAP HCM accounts in the past year, make it very likely the OnPremise SAP HCM consulting market is headed for a real slow down.
I decided to reach out to a diverse group of individuals that I personally know and trust would give an honest and no BS option in their respective areas to get their perspective. They include SAP HCM and SuccessFactors Industry Experts, SAP Mentors, SAP Press Authors, HR Expert authors, well known conference speakers and all around top-notch people I have a lot of respect for. Enclosed were their thoughts on where things currently sit for each of major areas of SAP HCM and SuccessFactors:

Employee Central – I reached out to Jyoti Sharma who is a manager of SuccessFactors/Employee Central at EPI-USE as well as a co-author on a upcoming SAP Press book called SuccessFactors with SAP HCM and she told me “Employee Central (EC) has been a popular subject of discussion in customer and consulting circles due to the rapid pace at which the product is evolving and adapting to customer needs. Working with customers and ongoing implementations I have noticed Employee Central implementations have seen an upward trend following the 1210 and 1302 releases. Position Management, Custom Foundation Objects, Enhanced workflows, and the Metadata Framework (MDF) alongside localizations for SAP Cloud Payroll were the forerunners in amplifying interest from customers. Reporting still remains a sore point unless customers have Workforce Analytics on the roadmap. Operational Data Store (ODS) – which will be integrated with SAP HANA – is awaited with a lot of excitement by EC customers who are currently at the mercy of Adhoc Report Builder alone, which does not really cut the deal where more enhance reporting requirements exist. I am informed this will be on General Availability with the 1305 release.

I met with the product manager for Metadata Framework (MDF) team recently and it was encouraging to see that the team is hard at work to make more functionality available. This means that customers and implementation partners no longer have to deal with CSV files, which are highly sensitive when creating and importing picklists. Customers interested in hybrid implementations have shown a mixed trend. I have seen customers who evaluated EC but decided to implement PA and OM on-premise and the Employee Profile from SuccessFactors (for BizX talent). On the other hand there are customers who are willing to plan their implementations based on the EC release strategy and planned iFlow releases may be a big influencer in deciding the fate of deals in Q1 though overall it depends on the maturity level of the customer and the solution partner they are working with. SAP Cloud Payroll has garnered interest but customers and partners are still apprehensive of the integration with EC. iFlows between EC and SAP. Payroll may emerge as a winner in the immediate future until EC data replication for Payroll is enhanced further. All these developments add to the already exciting career of an Employee Central consultant and make it one of the strongest growth areas within the SAP Cloud portfolio”

SAP Core HR (Payroll, Time, Benefits, PA, OM) - I reached out to Steve Bogner who is Managing Partner at Insight Consulting Partners and he told me “From a core-HR perspective we continue to see investment in SAP HCM, particularly with the HR Renewal effort and HANA. SAP HCM is a mature product and it will continue to get more incremental improvements and companies who are looking for a core-HR system that ‘does it all’ will find it remains a good choice. Though the long-term trend for core-HR is towards the cloud, it will be a long transition since SAP has thousands of clients on HCM, some with significant customization and complexity. Replacing core-HR is a lot of work and, in many companies, getting it ‘above the line’ in the IT portfolio planning process might take a few years. For SAP Payroll consultants, Cloud Payroll will become more of an opportunity since SAP positions that as the payroll solution for Employee Central clients and its essentially the SAP HCM Payroll product, requiring all the same skills as an on-premise implementation. For now, consultants who are experienced in the core areas of SAP HCM – OM, PA, BN, PT, and PY – will continue to have opportunities, but the market will shrink. 

As always, consultants must focus on how they can provide value to their clients, regardless of the technology.“

SuccessFactors BizX – I spoke with Chris McNarney who is the owner of McNarney Consulting, was recently profiled in How to Transition from a SAP HCM to SuccessFactors, and he told me “Consulting in SuccessFactors BizX is obviously evolving pretty rapidly. The transition of both current and would be on premise customers has definitely created a consulting market where demand outweighs supply. While this is certainly a good thing for job seekers, there is no denying that the barriers to entry for SuccessFactors consulting are greater than they are to SAP. Access to training as well as the access to tools like Provisioning (which I refer to as the backbone of SuccessFactors implementations) and integration support mechanisms like JIRA are not as easily achievable as their peers in the SAP on premise world.  For individuals that are able to get beyond those things there are definitely opportunities available.  In the next few years specifically, I believe there’ll be a lot of opportunity for crossover consulting from SAP HCM on premise to SuccessFactors as companies implement hybrid solutions with core on premise and BizX talent.  Consultants with implementation skills in both SuccessFactors and SAP HCM will be a valuable commodity as they help their customers work between the two different data models.

For both customers and consultants, a great deal is discussed about the difference with SAP and SuccessFactors where there is no customization in SuccessFactors and implementing SuccessFactors BizX is a simple matter of flipping some configuration switches.  It’s true that in a BizX today, the era of functional specs/customization/etc is largely behind us but the more I think about it the more I believe that as BizX grows to have more customers, more configurations will inevitably have to be written into the application to accommodate so many of the unique customer requirements throughout their customer base.  

It would be impossible for SuccessFactors to maintain a customer base that they wouldn’t listen to, and it would be impossible for SuccessFactors to listen to their customers without creating configuration scenarios that will have complex implications.  As those configurations continue to evolve, the consultant’s software aptitude will be critical so they may properly explain the risks and benefits to customers of making various configuration decisions.  This dovetails into a broader point I see with BizX consulting, which is that there is tremendous value as a consultant in knowing what functionality is coming each release and how your customers could/will be affected – or – how your customers could benefit.  Consultants used to on premise SAP HCM were able to get fairly comfortable with available features between releases as the schedule was slower.  With the quarterly SuccessFactors releases, consultants and customers alike need to be much more frequently on their toes for new functionality”

Talent Management and Nakisa - I spoke with Luke Marson who is a well-known Talent Management Expert, fellow SAP Mentor as well as a co-author on a upcoming SAP Press book called SuccessFactors with SAP HCM and he told me “Well, it’s been a year now and things have begun to settle down. There are still confused customers, but I think many customers are looking for a single direction from SAP who are determined to allow customers to choose their own path – even if one path is not going to see many innovations. From an overall Talent Management perspective there has been a lot of interest in SuccessFactors in the growth territories of USA and APJ, but Europe is still largely on-premise with the exception of the UK. 

In fact, Lego swapped SuccessFactors Performance & Goals for SAP Performance Management and won a SAP Quality Award for the implementation but this is the exception rather than the norm. One interesting point is that some of the SuccessFactors solutions have a data foundation similar to Employee Central (EC), such as Recruitment and Succession & Development, so customers can really benefit if they also implement EC to manage their enterprise. Quite interestingly EC has been more popular in the USA than I think it was expected to be and with some big customers coming on board, such as PepsiCo, then innovation is going to be driven harder and further than it might have been otherwise. This will have a big impact on not only EC but also on the uptake of Talent Management solutions from the BizX suite.
One thing that I saw with Nakisa implementations was that if customers went with SOVN OrgChart

, it was a natural progression to go with STVN SuccessionPlanning for their succession management process. I think we will see the same with SuccessFactors and EC and this will really accelerate the market. From a Nakisa perspective it has been up and down. Last year Nakisa managed to beat their aggressive sales targets, which was a year that SAP were not able to hit their HCM targets. However, this year has started slowly, and the number of leads in typically strong markets like the UK and USA have fallen sharply, though APJ remains strong, but this is also the second largest market for SuccessFactors. The Middle-East is a possible growth area and Cloud is not going to make many in-roads into this area until we see data centers in each of the major territories – and even then adoption could be low because of the business and IT culture. There doesn’t seem to be any risk of Nakisa being taken off the price list so customers should be reassured that any investment will be protected and supported by SAP and Nakisa’s new OrgModeler capabilities have proven popular this year.

Performance Management – I spoke with Jeremy Masters who is the author of five SAP Press Books and managing partner of Worklogix who told me “Consultants supporting performance management projects are already experiencing a dichotomy within this functional area. Most of SAP’s on premise customer install base using SAP Performance Management (Objective Setting and Appraisals) realize that only “selective” innovations will be made going forward in this area from SAP. Those customers not wanting to go to the cloud with their Performance Management process/system will need to enhance their current implementation using in-house IT staff, or via their SAP software partners. It is now common for consultants to be involved in these kinds of enhancement projects, where the existing on premise solution is enhanced with additional backend configuration (standard PHAP_CATALOG), as well as an enhanced user interface. Common UIs include Web Dynpro ABAP, as well as Java and HTML5 technologies. Especially with these later two options (Java, HTML5), a consumer-grade experience can be achieved, especially when accompanied by native spell checking and mobile options. SAP consultants in this area should continue to understand the later functionalities within the SAP appraisal configuration, but also should take time to understand some of the user interface options available for their customers.

For those customers bringing their performance management process/system in the cloud, SuccessFactors offers a robust choice. It is the most mature of the SuccessFactors modules, since it was their original, flagship product. Because the module has been around since the company’s beginning, it is also the module with the most trained, experienced consultants in the field. For the SuccessFactors Training for this module, your firm needs to be a member of the partner program. As part of the training, you are required to take the “Introduction to Mastery” course as a pre-requisite for any other Mastery courses. There are actually two separate Mastery classes within SuccessFactors Performance Management: “Performance Management and Goals: Core Topics” and “Performance Management: Additional Topics”. 

As with the on premise solution, those consultants who are familiar with the performance management process will need to broaden their understanding of some of the more current themes important to businesses today including mobility and analytics. SuccessFactors has recently released a goals application for the mobile device, where employees and managers can update goals “on the go”. In summary (and as stated in last year’s report), those consultants who can focus on the business critical issues such as integration, security, master data management, data flow, reporting (and I will add, mobility!) will be the most successful with their customers.”

SAP Enterprise Compensation (ECM) - I spoke with Brandon Toombs who is a well know ECM expert (along with other areas) and owner of Toombs Consulting who told me “It was surprising to me that Compensation Management was part of the first SAP Integration Add-On (1.0) since it is the area with the least amount of demand from SAP customers so far from what I have seen.  SAP’s Enterprise Compensation Management includes a lot of ability to customize and perform calculations that aren’t as easily replicated on the SuccessFactors side—at least not yet.   That said the customers I’ve talked to find the SuccessFactors UI much more appealing (colors!) and it isn’t plagued by the performance issues we see with on-premise SAP Compensation.  I haven’t seen customers canceling existing ECM projects (I was on a big one this past year), but I suspect that the bulk of new Comp module implementations will all go to SuccessFactors within the next 18 months. This is assuming that customers see to enough additional value to be willing to pay for SuccessFactors Compensation licenses despite the fact that SAP Compensation (ECM) is included in the base HCM license that they’re already paying for. This is one area where a consultant would be well served to become “hybrid” themselves: learn the SuccessFactors product but also continue to deepen on-premise ECM knowledge as well.”

ESS/MSS – I spoke to Martin Gillet who is the author of two SAP Press Books and a fellow SAP Mentor who told me “Now that some time has passed, customer, vendors and consultants have gathered the different options to empower employees and managers through the self services. Today, I still see two major open challenging questions, where do we consolidate the Human Resources data and which user interface do we put in place. Customers and the eco-system are answering these requirements in many ways and are still gathering, as well as building the ‘best practices’, for setting up the primary layer and foundation and the Master Data either through SAP ERP, in the cloud, through HANA, through Employee Central and SuccessFactors. In my humble opinion, once this question is answered, we can focus on the end user experience though self-services. SAP has done a good job catching up on the HR renewal thanks to the Enhancement packages concept and its add-ons and on the other hand, SuccessFactors has a very compelling user interface. I look forward to the coming months and SapphireNow announcements and functionalities deliveries. In conclusion, I would say that regardless of the technology and the channel used (SAP Self Services vs Successfactors User Interface for example), customers and end users expect besides a great end user journey, functionalities and services that could be really useful and not only used once in awhile.

SuccessFactors Workforce Analytics – I spoke with Rana Hobbs who is the Senior Director of Workforce Planning at Aasonn and she told me “While many organizations still struggle with disparate data sources and a difficulty to even get basic headcount numbers, more and more have matured into being truly data driven. It is not so much about just being able to consistently report out on workforce trends but rather about being able to divine what the drivers and ramifications of workforce initiatives are so as to better prioritize efforts for maximum results. Software has become an enabler as integrated talent management suites, such as SuccessFactors, have broken down the business function walls of data and decision. I typically spend equal time educating HR and the business leaders on how to interpret workforce data as much as I do on the technical data aggregation and business logic component of SuccessFactors implementations. True advanced analysis will remain a specialized skill, usually existing within a small team working on answering more discrete questions, issues, data-mining activities. However, there are workforce trends captured and disseminated in increasingly available reports and analysis across the business via SuccessFactors and other software solutions. With that the onus falls on leaders more than ever to act and communicate accordingly to what the data is telling them. Workforce Analytics is no longer an ad-hoc discretionary activity but rather a way of doing business and making decisions that set leading organizations apart from their competition.

I have specifically seen an increase of activity around Workforce Analytics and Planning within the SuccessFactors customers. The SaaS platform of SuccessFactors has allowed for large comprehensive implementations to be completed faster, thus addressing the data issues that have hindered advancement for so many functions. Now organizations have the data they need and can move along the maturity continuum to do more value add work within their organization with Workforce Analytics & Planning. The core competencies and skills of the HR and business teams I work with have also shifted over the years. Today I tend to see more blended teams with employees coming from Finance and from the business as well as from more traditional HR functions. This has brought a new awareness of how workforce analysis drives business execution and is not just there to serve HR specific needs. Workforce Analytics & Planning is enabling SuccessFactors customers with a scalable solution that serves to not only their current needs but is also able to match the pace and requirements as their analytic and planning activities mature over the years.”

SAP eRecruiting - I spoke with Mark Ingram who owns Ingram Talent and in a past life was the Product Manager of eRecruiting at SAP and he told me “For consultants with a passion for recruiting, strengths must include an understanding of the complex recruitment process issues and how to translate them into results using an assortment of integrated solutions. This may be SuccessFactors Recruiting Marketing, SuccessFactors Recruiting Management, third party services such as background checks, etc. One holistic view of outcomes needs to be available using using Advanced Analytics that were added with the jobs2web acquisition or through SAP Business Intelligence. For a small number of clients SAP E-Recruiting may still be the only viable option. Certain industries or highly regulated organizations will never be supported by SuccessFactors Recruiting Management but may still be served by SuccessFactors Recruiting Marketing and Advanced Analytics. In addition to understanding the right tool/feature to solve a business problem, understanding of the integration dependencies between the various solutions and various data models will serve consultants well. SAP HR consultants will have an advantage over consultants with a background only in SuccessFactors, because of their deeper knowledge of integration issues. This is especially true of recruiting, where clients have been integrating non-SAP recruitment solutions with SAP HR since the mid to late 90s. For consultants with existing experience in SAP E-Recruiting, a hybrid approach of supporting E-Recruiting customers while at the same time investing in development of SuccessFactors skills is the best one. Recruiting Management has matured since SAP’s acquisition of SuccessFactors and will continue to do so. The deployment of SAP E-Recruiting by customers is becoming the exception, and several existing SAP E-Recruiting customers are making the switch or currently considering switching to SuccessFactors for recruiting.”

Learning Solution (LSO) - I spoke with Sharon Newton who was a co-author of SAP Enterprise Learning and the CEO at hyperCision who told me “No doubt it’s been an interesting year for our team members who have chosen to focus on learning and learning management systems (LMS). We’ve continued to support our existing on-premise customers and kick-off new SAP Learning Solution (LSO) implementations.   Customers appreciate the flexibility of the on-premise system and the new functionality delivered with EhP6 is a strong incentive to stay on-premise.  Many customers still have regulatory drivers to keep their data on-premise or just are not ready to move to the Cloud.  In addition, a robust Influence Council which is focused on working with SAP to deliver yet more enhancements keeps the LSO a viable option.  My understanding is, LSO sales are still strong and that correlates with what we see in our business. We’ve also had a lot of good discussions with existing and prospective LSO customers as well as new LMS customers regarding the SuccessFactors LMS (SF LMS).  Those team members who have completed SF LMS implementations appreciate the flexibility of the solution and really enjoy the opportunity to grow their solutions and implementation expertise with an additional LMS.  Both solutions stand up well, with SF LMS delivering more great ‘out of the box’ functionality and with SAP LSO delivering the great flexibility that allows customers to align their talent vision with the solution implementation.  From a timing perspective, for customers able to implement a simple LMS vision, SuccessFactors is a hands-down winner, with a very quick time to implement.  Our customers who chose to migrate from SAP’s LSO to the SF LMS have had a longer implementation life-cycle, as have those organizations with a federated governance structure, which is most common (some learning processes are centralized but each business stakeholder may have different business drivers that have to be met with unique LMS processes and functions.)  This is no surprise. Regardless of the technology used, every organization must ensure that it’s LMS drives value for each stakeholder organization and supports their unique business requirements. We are always asked by customers, partners, SAP and SuccessFactors to compare the two solutions.  Both are robust and, if all bells and whistles are implemented (and purchased), the functional differences are not huge.  In the end, it’s the customer’s satisfaction with their current solution; their comfort with a SaaS LMS; their integration needs; their talent roadmap; and of course, their functional requirements, that will drive their purchase decision, and thus their consulting support needs.”

There is an excellent quote from Naomi Bloom who is an HR Technology thought leader that is very relevant to this discussion and it reads “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 if you are working with SAP, SuccessFactors or any other HR technology, you will be successful. One of the most important ways to provide value is staying current on all the major news and developments and would recommend joining the 5,500 people in my SAP and SuccessFactors group or follow me on twitter at SAP_Jarret.


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