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SAP's acquisition of SuccessFactors in December 2011 was an acknowledgment by the world's largest business software firm of its failure to develop its own cloud-based offering to compete successfully with the likes of Workday and Salesforce. The rationale behind the acquisition can be summed up by the expression "If you can’t beat 'em, buy 'em."
Since the acquisition SAP's SuccessFactors strategy mainly has revolved around one objective: strengthen SuccessFactors in order to prevent SAP on-premises customers from defecting to Workday by offering them a viable cloud HR alternative. That meant SAP has been spending precious development euros on several enhancements.
Making Employee Central more robust
SAP has continued to develop Employee Central in order to turn it into a robust HR system of record available for 60 countries (what is known in the trade as "localizations"). Of course, it is up to a customer to check the quality of the localization ("Do I have all the data, reports and processes needed to onboard new staff in countries as diverse as Poland, South Africa and Argentina?") However, many features that are part of the talent management modules have yet to make it into Employee Central (such as context-sensitive help or the Metadata Framework used to "customize" the system.)
Integration of SuccessFactors components
SAP has worked to integrate the various SuccessFactors components. Let's not forget that SuccessFactors itself is the result of several acquisitions (Plateau, JamBok , Inform, CubeTree, Jobs2Web). Integrating them at the user-experience level has been much easier than at the business-process or data-model level. Some features from the talent management modules have yet to make it into Employee Central.
Still no integrated payroll in SuccessFactors
Despite SAP using the misnomer Employee Central Payroll, this is nothing more than an interface to the traditional SAP Payroll hosted for the purposes of the exercise. In other words, the SuccessFactors platform has no integrated payroll, which is a serious hindrance to customers wanting to move to the cloud and finding themselves with an incomplete offering. When they ran their HR on-premises, customers had an integrated SAP HCM offering; when they switch to cloud HR they get less. Some customers may wonder why they should settle for less, functionality-wise, when they move to the cloud. This explains why several SAP shops such as Sanofi or Rolls-Royce have decided to forego SuccessFactors and move to the cloud with Workday. Unless and until SAP makes the right product strategy decision, it is likely the trend will amplify.
Important components missing in the cloud
Related to the previous point, many companies that selected SAP HCM had done so because of the tight integration with other corporate functions such as finance and CRM. As SAP encourages them to move to the cloud with SuccessFactors, these customers find themselves without the equivalent products for the other functions. For cloud-based procurement SAP offers Ariba, for expenses Concur, for contingent workers FieldGlass. However, these products were built on a different technological stack than SuccessFactors. Where is the integration value that an ERP system brings? Wasn't this something that SAP popularized and turned into a competitive advantage? If it was of such high value in the on-premises world, how come it no longer is in the cloud? Just because two applications were built for the clouds doesn't make them suddenly talk to each other without any need of interfaces. SAP has yet to come up with a cogent value proposition for why cloud integration is less important than its on-premises counterpart, or with a compelling product strategy that will show how the different bits and pieces it has acquired will fit together. HANA-enabling components have yet to win over the hearts and minds of customers.
On-premises functionality hasn't translated to the cloud
SAP has yet to fully translate its robust on-premises functionality to SuccessFactors/Employee Central, like for like. To take one example, the time management functionality available in SuccessFactors (such as absence management or timesheets) is a poor cousin to the SAP HCM product. Again, why should SAP customers settle for less, functionality-wise, when they move to the cloud?
If you already run SuccessFactors for your talent needs, are happy with it (especially the performance part), are not too bothered with integration issues among its component parts, have a good rapport with SAP, don't mind having to forego some HR features, have a license credit you can use toward moving from the on-premises product to the cloud HR system, have few integration points with payroll or other corporate functions, then using SuccessFactors as an HR system of record may be a good solution for you. But if one of these "ifs" is not covered, you won't be able to escape the chore of looking at alternatives.
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