Is SAP SuccessFactors Managed Payroll a Really Fit for my Organization?

In August 2016 SAP announced a new offering for customers who wished to keep their SAP Payroll ‘as is’ without a reimplementation via a new offering called SAP SuccessFactors Managed Payroll, see more here: https://www.linkedin.com/pulse/keep-your-sap-payroll-while-you-journey-cloud-danielle-larocca?trk=mp-author-card.

The most challenging concept for customers making the journey from SAP to SuccessFactors is that it is not a ‘like for like comparison’ between solutions in SAP and SuccessFactors. The best way to describe this is to say that SAP HCM systems are often designed based on elaborate implementations with detailed blueprints including customizations and modifications as opposed to SuccessFactors systems that do not require blueprints and do not permit modifications or customizations, rather they are designed based on best practices. Listen to the Mike Ettling, President for SAP SuccessFactors describe how it is not simply a swap of modules using the link http://sapinsider.wispubs.com/Assets/Videos/2015/March/Mike-Ettling-HR-2015-Keynote.

With that said, there are some areas of overlap as depicted in the graphic below.

Another big area of confusion is that SuccessFactors does not offer a new payroll solution, rather they leverage the world class multinational SAP Payroll in at least two different ways as depicted below.

SAP SuccessFactors Employee Central Payroll

The first option, SAP SuccessFactors Employee Central Payroll, allows customers to reimplement a simplified version of the SAP Payroll based on best practice standardization of a traditional SAP Payroll in a hosted “Cloud” environment by SuccessFactors. To move to this model customers are required to do 5 things:

1.      Choose from two options for deployment Customer Managed or Partner Managed

2.      Purchase a SuccessFactors Employee Central license

3.      Purchase a SuccessFactors Employee Central Payroll license

4.      Re-implement and simplify (remove customizations) in their existing SAP Payroll

5.      Build integrations (as needed) to partners for Time and or Benefits processing

SAP SuccessFactors Managed Payroll

The second option, SAP SuccessFactors Managed Payroll, allows customers to ‘lift and shift’ their current SAP Payroll (warts and all) into a cloud hosted environment by a selected SAP Partner. To move to this model customers are required to do 3 things:

1.      Purchase a SuccessFactors Employee Central license

2.      Select a Partner (i.e. EPI-USE)

3.      ‘Lift and Shift’ the Payroll

This offering was well received by SAP Payroll customers who were wedded to keeping their SAP Payroll systems and leverage the large investments that they made in them. Prior to this offering SAP Payroll customers were told that as part of their migration strategy to the cloud they would be required to re-implement and simplify (remove the customizations) within their SAP Payroll. This new model allows for a "lift & shift" of their SAP Payroll from on-premise to the cloud without requiring a reimplementation and/or simplification. This is by far one of the most innovative ways of managing payroll systems through a cost-effective pathway to the Cloud, whilst retaining the functional richness of the client’s existing systems.

What are the Benefits of SAP SuccessFactors Managed Payroll?

• Clients can stretch their existing investment in their on-premise SAP Payroll. This solution doesn't require a payroll re-implementation as it would with SuccessFactors Employee Central Payroll.
• Clients may significantly decrease the cost of running payroll in-house, eliminate the need for costly HR IT infrastructure, and they have the opportunity to move from a CAPEX to an OPEX model.
• Managed Payroll costs may replace the continued cost of maintenance, hosting, AMS and other related IT costs (integration, audits, analytics, etc.).
• It's lower risk option than a complete re-implementation.
• It gives clients a way to move their on-premise SAP HCM into the cloud at a managed pace. They can move their whole SAP HCM installation and turn off functionality as they implement the equivalent SuccessFactors Employee Central functionality.
• Clients don't have to manage the SAP/EC licensing, hosting, basis or functional support with different vendors, as it will all be under one SAP contract.

The business case may be different per client. If you consider the vast majority of companies using the SAP platform have multinational operations, the pressure remains to gather data in real time for processing across multiple jurisdictions. Organizations need to consider the very real challenges of managing payroll and what role cloud technology can address in the evolving disconnects between data privacy, privacy, finance, HR, payroll and tax compliance.

To learn more about Managed Payroll and understand why it may be a good next step for your organization and your journey to the cloud, please visit: http://www.epiuselabs.com/en/cloud-solutions/services/sap-successfactors-managed-payroll.  

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