SAP Payroll

What Is SAP Payroll?

Payroll is such a vital component to employee satisfaction that many companies are hesitant to make any changes — even if there are potential benefits to updating processes or technologies. This is reflected in SAP Payroll offerings — the traditional on-premise SAP Payroll and the cloud-based SAP SuccessFactors Employee Central Payroll. The cloud offering is essentially identical to the on-premise offering, except for where the servers are hosted.

SAP has hinted at plans to build a next-generation payroll solution, but that often takes a backseat to investments in other areas of its human resources (HR) technology suite.

Making an error on an employee’s paycheck is one of the fastest ways to receive a notice of resignation, so the reticence to change payroll at many companies, and the motivation for SAP to build a new payroll system, is explainable.

What Is SAP Payroll?

Payroll is such a vital component to employee satisfaction that many companies are hesitant to make any changes — even if there are potential benefits to updating processes or technologies. This is reflected in SAP Payroll offerings — the traditional on-premise SAP Payroll and the cloud-based SAP SuccessFactors Employee Central Payroll. The cloud offering is essentially identical to the on-premise offering, except for where the servers are hosted.

SAP has hinted at plans to build a next-generation payroll solution, but that often takes a backseat to investments in other areas of its human resources (HR) technology suite.

Making an error on an employee’s paycheck is one of the fastest ways to receive a notice of resignation, so the reticence to change payroll at many companies, and the motivation for SAP to build a new payroll system, is explainable.

Vendors such as Deloitte offer SAP Payroll and SAP SuccessFactors Employee Central Payroll implementation and consulting services. There are companies, such as Alight, that also administer payroll services for an organization partially or completely with the option to use technologies like SAP Employee Central Payroll.

Many SAP customers also use non-SAP payroll systems that integrate with SAP systems such as ADP or Paychex.

Key SAP Payroll Considerations for SAPinsiders

• Mainstream maintenance for on-premise SAP Payroll is scheduled to end in 2027. Current SAP Payroll customers will have to consider the option of moving to SAP SuccessFactors Employee Central Payroll in the cloud, which currently has no end-of-maintenance date, or a non-SAP payroll product. Staying with on-premise SAP Payroll beyond 2027 will require extra maintenance fees or third-party maintenance services.
• Payroll has slower cloud adoption than other HR technologies. In our recent HR Technology State of the Market report, among surveyed respondents that indicated they were using payroll technology, 18% indicated that the system was currently deployed in the cloud, the lowest cloud adoption rate of any technology mentioned. Cloud payroll adoption is rising, with another 19% currently implementing a cloud payroll solution. However, nearly 11% of respondents indicated having no plans for payroll in the cloud, more than double the proportion of any other technology.
• Payroll accuracy is a top HR objective. In the same HR Technology State of the Market report mentioned above, reducing errors in time and payroll was the top HR technology strategy objective among respondents, which were predominantly HR professionals. Getting payroll right isn’t just a concern for the finance and compliance departments. Those in HR know the importance it holds to their ability to retain talent.