Wednesday, July 29, 2015

S/4 and HCM cloudy relations

A few months have passed since the official announcement of S/4 HANA, and during SapphireNOW 2015 SAP executive held the Cloud Edition to baptism. Guides, reviews have been published, and analysts offered their opinions. Then in June, during the HR2015 conference in Nice, a specific announcement covered S/4 HANA and HCM platform(s) options and go forward offerings.
But I still wonder: from the HCM point of view, is it hype, or is it real?

Understand what is S/4 HANA

After more than 40 years of focused, continued developments to bring to reality what is arguably today the most complete suite of Enterprise Business Software on the market, SAP has taken a hard look at two issues:
·         on one side, the massive amount of data accumulated in storage has turned accessing and extracting it into a true challenge
·         on the other hand, process complexity has reached a zenith, requiring very extensive deployment projects and deep expertise – technical and business alike.  
While the original SAP’s value proposition was being an integrated suite (with all pieces built in the same data format and structure), this was lost with the addition of multiple mySAP  complementary modules, such as EIC, CRM, SCM and others - outside of the “ECC” core; in fact, from the HCM perspective, even the Organizational Management (“OM”) module introduced the need for an internal integration that made many data manipulations complex and required extensive expertise.
With the launch of HANA, the recent in-memory database brought forward by SAP and heralded by SAP’s founder Hasso Plattner, a new generation of  applications has become possible. HANA is the foundation of the new version of the ERP, first with the development of Simple Finance, and now with its extension into a full suite of functional applications, with more to come in the future.
R/3 was a new product compared to the mainframe-based R/2; S/4 is also a completely new tool. It carries through much of the same data semantics existing in the SAP Business Suite we well know, with a simplified data model, eliminating the complexities related to the previous database performance and technical limitations.

What about HCM?

Unlike all other functional parts of the Business Suite, SAP’s HCM has found its next generation tooling set in the SuccessFactors Suite. It is a pure-cloud, SaaS product that will not be made available on premise; similarly, there doesn’t seem to be a place within the S/4 suite for the complex and never ending tables and data structures that made SAP HCM infinitely flexible and complex.
HR data fields exist in S/4 HANA, and are able to support the integration of tools as well as the end to end processes to Finance and other functions – leveraging the popular concept called a “mini-master”, but it is important to understand that there is no HR Data Management, nor any HR Processes built in S/4; in other words, no transactional layer.

Adding to the situation is the fact that ECC 6.0 mainstream maintenance has been extended multiple times  - most recently until 2025, giving a good visibility and planning time.

So when we look to the options customers have to choose from in SAP landscape, we can only outline:

Option 1: Move to the public cloud with your HCM requirements by leveraging the SuccessFactors modules. The solution set provided is extensive and growing every quarters with multiple developments; the missing functionalities are being considered for development and prioritized, while being covered in the interim by strong partnerships with external providers. From the Cloud HCM solution, extend the set with productized integration available to S/4 HANA cloud edition; an alternative productized integration with S/4 HANA on premise is being finalized, expected availability before end of 2015. It remains a fact that in this case, a separate solution will have to be found for Payroll, either by using the EC Payroll (hosted, single tenant SAP HCM), or by outsourcing the process.

Option 2: Decide to remain on premise, knowing that the cost of support will grow after 2025, and keep informed on the solutions made available by SAP. Productized integrations connecting S/4 HANA to the traditional on premise HCM are announced and should be available in Q4 2015. In SAP’s mind, this step is only taken to help customers needing more time to migrate to cloud solutions, so only as an intermediate step in your eventual move to the cloud.

Participation in User Groups and associations (such as ASUG, DSUG and many others, full list: can support you in keeping aligned to the product roadmap and possibly influence it; it has never been more relevant than in times of change.

Important points

  •  User Interface is being harmonized across all systems. Fiori was launched in 2014 as a set of design guidelines for applications, and was quickly adopted as a harmonization tool. First the On Premise tool was “fiorized”, the SuccessFactors’ applications alignment is announced for this year, and S/4 has been built on these principles from the start. So independently from the tools that will best fit each customer’s landscape, the user EXPERIENCE can be end-to-end.
  • Choice of delivery. While SuccessFactors is offered only as a public cloud solution, S/4 HANA is available today in both on premise (so on customers’ hosted premises, with yearly innovation packages) and Cloud Edition, benefiting of the accelerated quarterly release cycles. 
  • Integration packages developed for SAP On Premise have been designed around the mini master record concept, and will remain the basis of the integration of SuccessFactors to S/4 HANA.
  • SuccessFactors solution to payroll – EC Payroll, is strongly based on the original on premise powerhouse. I am not aware of any plan to introduce an S/4 HANA payroll… although one can only hope. 
Interestingly, there is no HR sitting at the board on this capture: is that for lack of graphic space?

For more information

Harvard Business Review: Making the Real-Time Enterprise a Reality (Feb 2014)
S/4 HANA FAQ (May 2015)
Constellation Research review of SAP S/4 HANA
David Ludlow's own blog on the S/4 HANA HCM options