HCM: On-Prem Or Cloud?
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HCM: On-Prem Or Cloud?

Cloud First: SAP wants HCM to migrate to the cloud. From 2026 onward, all its HCM solutions are supposed to operate in its Software as a Service solution SuccessFactors. Furthermore, SAP is currently evaluating if SuccessFactors can also operate in private clouds.

From 2023 forward, SAP offers an on-prem version of HCM, HCM for S/4 Hana, with maintenance guarantee until 2030. Despite this option, the German-speaking SAP user group DSAG has constructively criticized SAP’s SuccessFactors strategy in a new position paper.

According to a recent DSAG survey, there are concerns among existing SAP customers. Especially public administration users have to ask themselves how they can map their personnel management processes with SAP software in a legally secure, compliant manner.

Three HCM pain points

The DSAG survey on the future viability of SAP solutions in public administration also found that many respondents have reservations about the following three aspects:

  • Legal frameworks. In the case of clouds with international reach and that extend across countries outside the EEA, customers require a legal framework for the transfer of personal data to third countries. Among other things, they fear that access to cloud user data by government and private bodies will become possible and unmanageable.
  • Functional obstacles. Users’ concerns revolve around the lack of opportunities to extend and modify SAP SuccessFactors as well as the lack of critical functionality for the public sector. These include, for example, personnel cost planning and travel management. The latter is now part of ERP as an on-prem version. However, it is not part of HCM for S/4, because SAP strategically relies on the Concur cloud solution here.
  • IT security concerns. As far as the use of public cloud solutions is concerned, around half of all public clients and employers surveyed expressed IT security concerns regarding the requirements of the German Federal Office for Information Security (BSI).

“Uncertain legal conditions, lack of expansion possibilities and functionalities of the public cloud solution SuccessFactors as well as data protection concerns are obstacles on the way to the cloud for our member companies in public administration”, explains Hermann-Josef Haag, DSAG board member for Human Resources and Public Sector. He adds: “As user association, we therefore demand support from SAP so that customers in the public sector can continue to map their HR processes with SAP software in a legally compliant manner.”

Public or private cloud for HCM?

More than 67 percent of public clients and employers surveyed believe that changing to a public cloud deployment would have negative impacts. However, 43 percent of all respondents rated a possible private cloud as positive.

The high proportion of users who opted for the answer “no information” (around 34 percent) seems remarkable. For DSAG, this suggests that a considerable proportion of SAP customers have not yet made up their minds about cloud models or that there are gaps in knowledge or information.

Respondents in public administration are therefore less than thrilled about SAP’s “Cloud First” strategy. DSAG will try and work with SAP to resolve this issue.

“Cloud Only” not an option for public administration

On-prem solutions will continue to be an important part of future IT architectures in HCM.

Private cloud solutions as private deployment could help here if SAP offers more technological possibilities for customer development, and if legal frameworks allow for the use of a private cloud. However, the topics of modification and maintenance are still unresolved in that regard. Furthermore, there is currently no suitable SAP licensing model for this scenario.

Customers demand comprehensive SAP HCM roadmap

To change to alternative HCM software solutions, customers usually need five to seven years, depending on the scope and size. Consequently, decision-makers in public administration demand clear and reliable information about SAP’s long-term strategy as early as possible. Current roadmaps are not comprehensive enough.

DSAG will continue to try to ensure that future SAP HCM solutions meet legal and functional requirements, including those of customers in public administration. Offering on-prem solutions but clearly favoring cloud deployments is not a sustainable long-term strategy for SAP HCM.

E-3 Magazine July/August 2019 (German)

About the author

Peter M. Färbinger, Editor-in-Chief

Peter M. Färbinger is Editor-in-Chief and Publisher at E-3 Magazine, B4Bmedia.net AG, Munich, Germany. He can be reached at pmf@b4bmedia.net

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