Understand your four choices if you use on-premise SAP Payroll.
Key Concept
SAP has approximately 9,000 active on-premise Payroll customers today. In 2012, it was announced that support for on-premise SAP HCM would be guaranteed through calendar year end 2025.
The goal of SAP SuccessFactors is to transform its on-premise SAP HCM and Payroll customers to cloud-based solutions leveraging not only the software-as-a-service (SaaS) platform but also the latest technology available. While the option for core HCM is obvious (Employee Central), the options for payroll can be a bit less clear. I introduce the four main options available today for existing on-premise SAP Payroll customers.
Option 1: Keep Your Payroll On-Premise
This is a do-nothing approach. Companies have invested a large amount of time, money, and resources into their Payroll systems to get them to work just the way they want them to. These users are concerned about the looming 2025 end-of-support date, but are unconvinced that there is an urgency to move as they believe adoption has been slow and that there may be a change to that published date. It is worth noting that this date has been extended twice already and even if it is not extended again, there will be additional support models available for SAP on-premise payroll customers beyond year end 2025. Companies can still leverage the Payroll Control Center in this approach to innovate their processes.
Option 2: Employee Central Payroll
SAP SuccessFactors does not yet offer a new payroll solution. Rather it leverages the multinational SAP Payroll in a hosted cloud environment by SAP SuccessFactors called Employee Central Payroll.
To move to this model companies are required to do five things:
- Choose from two options for deployment: Customer Managed or Partner Managed
- Purchase an SAP SuccessFactors Employee Central license
- Purchase an SAP SuccessFactors Employee Central Payroll license
- Re-implement and simplify (remove customizations) their existing SAP Payroll
- Build integrations (as needed) to partners for Time and or Benefits processing
Why do you have to reimplement and simplify to move to Employee Central Payroll?
SAP has long been a system that is completely customizable, wherein each customer has designed the system (including its time and benefits functionality) to support its unique business processes and needs. SAP SuccessFactors, however, is based on a best-practice methodology.
Option 3: SAP SuccessFactors Managed Payroll
SAP SuccessFactors Managed Payroll is an offering, added in 2016, that addresses the needs of companies that have made a large investment in their SAP Payroll and do not wish to change it. This model allows customers to make no changes to their system or its processing. They simply allow a certified partner to host it on its server.
To move to this model, customers are required to do three things:
- Purchase an SAP SuccessFactors Employee Central license
- Pick a vendor from a list of two selected by SAP, EPI-USE Labs or NGA
- “Lift and shift” the Payroll from the customer’s server to the partner’s server
The ideal customers for SAP SuccessFactors Managed Payroll are those with complex time or benefits configuration.
Option 4: Outsource Your Existing Payroll
If the three options above do not meet your needs, you can consider outsourcing your existing SAP payroll. There are many choices available for outsourced payroll.
Table 1 shows the four options for Payroll.
|
Employee Central Payroll |
Keep on premise Payroll |
Outsource Payroll |
Managed payroll |
| Designed for |
Best for customers who do not currently have a complex Time implementation |
|
|
|
| Support guaranteed until calendlar year end |
|
2025 |
2025 |
2025 |
| Who processes the payroll |
Customer |
No change required to current process |
Partner, vendor, or customer |
No change required to current process |
| Who manages the hardware |
SAP SuccessFactors |
Customer |
Partner, vendor, or customer |
SAP SuccessFactors selected partner |
| Who applies the patches/updates |
SAP SuccessFactors |
Customer |
Partner, vendor, or customer |
SAP SuccessFactors selected partner |
| Who does the compliance updates |
SAP SuccessFactors |
Customer |
Partner, vendor, or customer |
SAP SuccessFactors selected partner |
| Who manages the infrastructure, hosting, and backup and disaster recovery? |
SAP SuccessFactors |
Customer |
Partner, vendor, or customer |
SAP SuccessFactors selected partner |
Table 1
The four options
Danielle Larocca
Danielle Larocca is currently the Senior Vice President of Human Capital Management for EPI-USE Labs. Previously she was the Executive Vice President of Operations/Chief Knowledge Officer at a technology start-up. She has more than 20 years of strategic leadership experience in multi-national business, business process re-engineering, and project and people management. Danielle is an expert on SAP Human Resources (HR) and reporting and has authored four best-selling books on SAP. She is a regular speaker at numerous conferences around the world on topics such as HR, technology, change management, and leadership. She is an official SAP Mentor, a global designation assigned to less than 160 professionals worldwide, who serve as influential community participants in the SAP ecosystem. This group is nominated by the community and selected by the SAP Mentors’ Advisory Board to keep SAP relevant. Danielle also serves as an expert advisor for
SAP Professional Journal.
You may contact the author at
me@daniellelarocca.com.
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