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Choosing SAP HR module complicated by S/4HANA, SuccessFactors options

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A SuccessFactors consultant explains the benefits and challenges of adding to or replacing on-premises SAP HCM with the newer ERP and cloud platforms.

Five years ago, SAP made a major addition to its human capital management portfolio by buying SuccessFactors, one of the biggest vendors of HCM software as a service. But with human resource features starting to appear in SAP's next-generation ERP system, S/4HANA, what's the right SAP HR module to buy?

In a podcast, TechTarget contributor Luke Marson, who co-founded a consultancy that specializes in SuccessFactors implementations, offers advice on choosing an SAP HR module.

"If you're looking for core HR with S/4HANA, Employee Central would be the HR system you would look at," Marson says. "They're designed to integrate together and work together, and that's the long-term roadmap for SAP."

The choice is different, however, for organizations that are already running the on-premises SAP HR module, SAP HCM. They can still use S/4HANA with the on-premises HCM, he says.

Integration issues vary, too. Marson says the integration tools for sharing data between S/4HANA and Employee Central are better than those for Employee Central and SAP ERP (part of Business Suite, S/4HANA's predecessor). In contrast, the on-premises SAP HR module and finance module are "very tightly coupled," and run in the same software instance.

"This is how technology has evolved in the cloud," Marson says. "Modules are more decoupled, and then they have these integration points and places where you can store your master data to use with those processes within a specific system, like with S/4HANA."

Marson says he has seen serious interest in S/4HANA pick up among his clients in the last six months. Companies that couldn't justify on-premises ERP in the past decade have decided the cloud version of S/4HANA is much more accessible and affordable.

Running an SAP HR module as software as a service has advantages beyond the usual lower cost of ownership and lack of hardware, according to Marson. Quarterly releases and faster access to new functionality "are really enabling you to continue to grow as the system grows, and vice versa."

In the past, companies using an on-premises SAP HR module often put off upgrading for 18 months, and were not able to take advantage of new features when they first became available.

Next Steps

Get advice on integrating core HCM and talent management

Learn the five keys to choosing HCM software

Decide if an all-SuccessFactors HCM system is right for you