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:

1. Choose from two options for deployment: Customer Managed or Partner Managed
2. Purchase an SAP SuccessFactors Employee Central license
3. Purchase an SAP SuccessFactors Employee Central Payroll license
4. Re-implement and simplify (remove customizations) their existing SAP Payroll
5. 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:

1. Purchase an SAP SuccessFactors Employee Central license
2. Pick a vendor from a list of two selected by SAP, EPI-USE Labs or NGA
3. “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