A 180-degree turn!

In December 2011, the American branch of SAP signed an agreement with SuccessFactors for an acquisition valued at approximately 3.4 billion dollars. This acquisition is in line with SAP’s strategy to turn towards cloud technologies, which was adopted earlier for products such as “SAP Business ByDesign” and “SAP Sales OnDemand”.

 

Spurred on by its competitors ever increasing presence in the cloud, SAP remains ahead of the pack with its corporate brand and is moving quickly to announce the availability in the near future of the entire HCM (Human Capital Management) Suite on its new SuccessFactors BizX cloud platform… including payroll!

 

“Cloud is at the heart of SAP’s future growth” and the combination of advances made with SuccessFactors and SAP technology will let us position ourselves as a power cloud player. This acquisition will help us respond to all the major priorities of directors—managing people and talents,” said Co-Director of SAP, Bill McDermott.

 

While no one really understands how such a transformation can apply in practice to all HR and payroll business processes, the “cloud” quickly becomes “cloudy” for many managers and users of HCM solutions.

 

Keeping things under control…

Are we seeing the demise of the SAP ERP HR/Payroll solution?

 

Although the response from the German company is in itself not clear, the market is getting carried away with all kinds of speculation. Everyone has an interpretation and brings to the public stage readings of the future from their crystal ball…

  • “Cloud is the IT of tomorrow”
  • “On-premise solutions are a thing of the past!”
  • “Consumers are changing their habits.”
  • “They purchase or rent their music online.”
  • “Companies no longer want to have cumbersome technological infrastructures.”
  • “SAP ERP has no future!”

 

The only ones to benefit from this confusion are SAP’s competitors, such as Workday, who, given this, no longer have to demonstrate the ability of a cloud solution to meet customization requirements. All they say, without substantiating their argument, is that they are running ahead of SAP and its SuccessFactors solution.

 

Panic is sweeping through many organizations who hesitate or even cease HRIS initiatives until the dust settles. The most intrepid have a go at conquering the cloud. All service providers and integrators are announcing their new strategy strictly using cloud solutions… all, except IN-RGY!

 

Adapting the vehicle

It is perfectly clear to us that the vehicle must be adapted to the road ahead. Cloud solutions definitely have their advantages and place on the market. However, they also have their weaknesses, which is why traditional solutions are here to stay.

First of all, there is confusion between three concepts that arise when the word “cloud” is used:

  • The licence model (purchase versus leasing)
  • Hosting mode and ownership of infrastructure and databases
  • The ability to customize the solution and the client’s access to configuration/customization
Cloud Traditional
License model
  •  Rental only
  • Monthly billing
  • Operating expense (OPEX)
Purchase with regular updating costs; capital expense (CAPEX)
Hosting Fully controlled by the solution supplier Many options (on client’s premises/on provider’s premises; dedicated/shared; internal management/outsourced)
Customization
  • Limited customization primarily for solutions/platform shared between clients
  • Limited customization based on editor’s preference
Highly customizable, varying levels of customization and access to the source code

Learning

In light of this information, it quickly becomes clear to us that cloud and traditional solutions will exist and co-exist for a long time to come.

 

Cloud solutions, which are often more sophisticated and dynamic, will be perfectly suitable for processes that do not require much customization given their simplicity and homogeneity. They would also be a good choice for organizations with a low transaction volume and some manual processes.

 

Traditional solutions, for their part, are ideal for automating complex business processes that require a high level of customization. Traditional solutions are best for automating collective agreements, including managing the allocation and evaluation of time, and calculating pay when the sheer volume of transactions makes manual calculations prohibitively expensive.

 

Lastly, one way to benefit from the advantages of cloud solutions while using traditional solutions is to choose private cloud.

Private cloud enables you to:

  • benefit from environments that are entirely managed by your service provider, including infrastructure deployment, hosting and maintenance
  • have access to the advanced expertise needed to integrate the latest functions into your solution while maintaining control of what, when and how these new functions are integrated
  • remain the owner or have the ability to retrieve your licences, your infrastructure and your databases, which assures your independence with respect to your service provider

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