On-prem returns for SAP HCM deployments

SAP ERP HCM

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To cater for customers not willing to move their human capital management (HCM) solutions to the cloud, SAP has announced it will offer a new on-premise HCM option from 2023.

In a product note, the company conceded that while increasing numbers of its SAP ERP HCM customers are migrating to the cloud-based SAP SuccessFactors suite, some SAP customers have expressed “a desire to deploy their HCM solution in an on-premise environment for the foreseeable future”.

The solution will be based on SAP ERP HCM with a “comparable functional scope”, except for the SAP E-Recruiting application and SAP Learning Solution, and integrated with SAP S/4HANA. A license conversion program will be offered when the new solution is available, and maintenance on this solution is planned to extend to at least 2030.

“It is planned that customers running an integrated ERP and HCM deployment in one instance today can move to a partitioned deployment model and run the offering on a separate instance,” the product note stated.

The company noted that the bulk of its planned HCM innovations will be focused on SAP SuccessFactors solutions.

The announcement has been met with some surprise in the ecosystem.

Prominent SAP HCM consultant and commentator Jarret Pazahanick has described it as a “major mistake”: “This will be a messaging nightmare for SAP, will confuse many customers, will create conflict and mixed messages in the partner and sales orgs, and will be another thing competitors such as #Workday and #Oracle will use against SAP/SuccessFactors to win business,” he wrote on LinkedIn.

Constellation Research vice president and principal analyst Holger Mueller is amongst those responding more positively (in a detailed analysis here), concluding, “This is a great lesson learnt that customer adoption ultimately dictates product investment and road maps. Vendors can only move and entice customers on a value based proposition so far… with the bulk of S/4HANA being on premises the writing was on the wall that SAP needed an on premises strategy for HCM.”

In the meantime, SAP has also announced a new program to help customers move their HCM solutions to the cloud.

The Upgrade2Success program is, according to SAP, the first in a series of initiatives to be announced this year. The program will offer a set of services and tools to simplify the migration process and reduce risk, such as predefined configuration accelerators, process libraries, and integration and data migration tools; the creation of a personalised road map for digital HR transformation; business case support that demonstrates the ROI for the company; and “attractive commercial terms that reflect existing investments”.

As at the third quarter of 2017, SAP SuccessFactors had 6400 customers around the globe.

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