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SAP ERP HCM users contemplate new core HR system

After nearly three decades, SAP ERP HCM has proven to be a sound core HR system. But it might be time for companies to evaluate whether they need to change systems.

For years, SAP ERP HCM has been the foundation of many enterprises' human capital management (HCM) initiatives. But the system is approaching its 30th birthday, and SAP is pushing SuccessFactors Employee Central as its new core HR system. These are two reasons why it might be time to evaluate what the future holds for SAP ERP HCM.

Where SAP spends its core HR investment budget

Until recently, SAP invested in bringing new functionality to SAP ERP HCM, enhancing the user experience and providing continued legal changes. SAP introduced several customer engagement initiatives (CEIs) for on-premises enhancements and partnered with SAP user groups, such as the Americas' SAP User's Group (ASUG), to broaden awareness and accessibility to these CEIs. To date, CEIs have covered time management, organizational management and personnel administration, and learning.

Additionally, in recent years, SAP has enhanced the SAP ERP HCM user experience with functionality, such as HR processes and forms, HR renewal and payroll control center. The much-needed user experience enhancements reduce the need to replace a working HR system.

For SAP ERP HCM, investments will continue in renovations: user experience renewals, payroll, localizations and integrations with S/4HANA. But SAP has made it clear that future investment in core HR will be largely with Employee Central. Software trends clearly show high cloud-based software adoption. Therefore, it doesn't make sense to invest too heavily in an already highly mature system like SAP ERP HCM, which works as-is for thousands of customers. After nearly 30 years, SAP has invested significantly in SAP ERP HCM to ensure its success as an on-premises HR system. The vendor also has ensured that cloud-like user experience renovations are available through HR renewal.

How long have we got?

Currently, the SAP Business Suite -- including SAP ERP -- is under maintenance until at least 2025. However, this date likely will be extended for the fourth time in the coming few years. As long as SAP continues to extend the maintenance date, organizations using SAP ERP HCM may be in no rush to look for a replacement.

Integration with Employee Central

SAP has introduced the side-by-side deployment model, which allows customers to use both SAP ERP HCM and Employee Central for different populations alongside each other. Going forward, SAP will continue to invest in the side-by-side deployment model for customers interested in retaining SAP ERP HCM for some parts of their business, while using Employee Central for others. Migration paths are available to help customers move their data from SAP ERP HCM to Employee Central.

Where does SAP ERP HCM fit with S/4HANA?

S/4HANA is SAP's future ERP system, and the next generation of the Business Suite. Although Employee Central will be the default HCM product for S/4 HANA -- no specific HR functionality will be built into S/4HANA -- SAP ensures customers will be able to install S/4HANA on-premises connected with SAP ERP HCM. For the S/4HANA on-premises edition, SAP will provide packaged integrations to feed SAP ERP HCM data to the S/4HANA employee mini-master. For the S/4HANA cloud edition, packaged integrations with SAP ERP HCM are under consideration. Packaged integrations already exist between Employee Central and S/4HANA -- both cloud and on-premises editions.

Are there reasons to replace SAP ERP HCM?

Whether you should replace your SAP ERP HCM system depends on what you are getting out of it. Many customers who have invested significantly in their SAP ERP HCM system are getting a sound return on that investment. Only if you are facing challenges with the technology -- such as low adoption, a substandard implementation, lack of features, aging processes and more -- or the HR renewal business case proves too costly, should you consider moving to another core HR system.

SAP ERP HCM will soon be 30 years old, but it has every chance to live well-beyond another decade. SAP will continue to maintain the system, and customers who wish to keep their HR processes in SAP ERP HCM don't need to worry about continuing to receive the latest legal and compliance updates and bug fixes. During the past four years, SAP has given SAP ERP HCM significant enhancements and new capabilities, so customers should be busy taking advantage of that functionality for quite some time. However, customers looking to take their core HR system to the next level should consider whether a move to SuccessFactors Employee Central makes sense.

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