SAP ERP HCM implementation projects often are not estimated and planned correctly from the outset. If you don’t cover several key areas at the beginning, you may find yourself unable to deliver what is required. The purpose of this article is to provide a complete solution plan for SAP ERP HCM projects. The key elements of a successful solution plan include a release plan, a process scope, the total number of customizations required to meet the business and technical requirements of the solution, a detailed staffing plan, and the overall price for your solution. Understanding and determining these elements early on helps stakeholders create a plan for a successful SAP ERP HCM implementation.

In the manufacturing world, for example, knowing where inventory lies, what the product numbers are, and what the sales channels are is a relatively straightforward concept. However, in the world of SAP ERP HCM, each person has a unique set of characteristics. Life events change the way companies provide benefits (e.g., married versus unmarried, children versus childless, and so on). Work events change the way companies pay or provide certain compensation. The point is that teams must factor in these variables when implementing SAP ERP HCM from the outset, and consider all the variations at the personnel level that are required to make an organization operate.

As part of the estimation process here are the six major areas that need to be thought through and discussed when preparing for a project, whether it be an implementation, upgrade, or addition of new HR functionality such as employee or manager self-services.

1. Get your solution plan right — taking into account business factors — in the beginning
2. Create a roadmap — decide which modules to start with
3. Determine what factors affect the estimation of the implementation project (complexity matrix)
4. Create a resource plan
5. Determine how to blend all these factors in with an existing, larger SAP program
6. A sample list of implementation dos and don’ts (implementation best practices)

I will discuss each of these steps in detail.

Get Your Solution Plan Right —Taking Into Account Business Factors — in the Beginning

The solution plan is made up of what you intend to implement, when you will deliver it, and what factors drive those decisions. Project estimation is about getting squared away — up front — what you are trying to accomplish first and foremost as an HR department and not as an IT department. Many companies understand the need for a robust HCM solution but then only consider the basics, such as replacing disparate IT systems that no longer function in your environment. Companies should think through their business objectives and how HR can help meet some of those key goals. Executives should review organizational level key performance indicators (KPIs) to determine how HR can help achieve those in developing the business case.

Also consider things such as outsourcing and insourcing functions, the total cost of ownership in running benefits and payroll, time to hire, turnover, and who in the organization is responsible for performing administrative HR activities. The first step in the project implementation planning process is for project leaders to come up with a vision and scope for the project. Also, you need to establish quantifiable goals in each step of your project implementation so that you can measure the ultimate success of the project.

There are many business case value levers that should be reviewed as part of establishing your SAP ERP HCM solution or implementation plan that support the cost of doing the project. When first coming up with your solution plan, consider the following three key HR business case elements.

• Ideal time-to-hire: Many companies have inefficient processes in place for hiring employees. This is a key area for which you can realize dramatic cost savings by filling key revenue-making positions more quickly. For example, if your staff is largely made up of sales associates who are selling products that are producing revenue for the company and you are able to fill those positions five, 10, or 15 days faster, your company sees the results of those employees faster, which affects overall revenue and potential growth. You can also lower the costs associated with your department by reducing repetitious activities (for example, dual entry in your recruiting application and then your HR system of a record once the employee is hired). Consider the savings by implementing integrations between these two applications or bringing them onto a common platform. By reviewing this concept during your solution planning process, your team can identify business case levers that will support the overall need and cost of the implementation.  
• Accurate attendance and overtime reporting: In cases in which there is a large hourly or union workforce, accurate time keeping is critical and another potential lever to support the cost of your implementation. This can be achieved by using time clocks or an automated system to track attendance and absences in conjunction with SAP time management and evaluation. This helps eliminate fraudulent time reporting for things such as overtime and also allows you to administer your policies in an accurate way.
• Outsourcing benefits: Determine whether outsourcing benefits administration can provide significant operational savings and allow you to focus on your primary functions related to HR. This also decreases the complexity of your software implementation because of the reduction in the number of interface files for benefit vendors. I’m not suggesting outsourcing in this case, but rather use this opportunity to explore the pros and cons of outsourcing. When you administer benefits internally there can be significant internal administrative costs as well as vendor integrations that must be included in your technical implementation. If culturally and financially it makes sense to outsource, then review it as another means to support the cost of your implementation. Finding areas where you can save money like this helps bolster your case for the SAP ERP HCM implementation to executive leadership and creates support at the corporate level.

In addition to these three basics, listed above, there two additional factors to consider when creating your solution plan:

• Customizing the implementation: Determine whether to undertake process re-engineering of the solution or make your existing processes fit the solution. I recommend that you make your process fit the application to the point at which it meets your overall department goals. This can significantly reduce your overall software implementation costs. Don’t perform your HR design before understanding the system’s capabilities, as you may have to redo this activity once you gain a better understanding later on in the process.
• Determine the HR department’s framework: Decide if your HR department is to be centralized in a shared-service center or if it is to be decentralized. Making this determination before starting the blueprinting process for an SAP implementation is critical. This decision impacts a variety of things, such as self-services, processes, and forms; the HR administrative presence in your field locations; and the size and facilities that are required for decentralized or centralized support. In general, the best option is to centralize all HR activities and allow the field HR representatives the ability to focus on HR activities and partnering with the business. If you do choose the decentralized set-up option, your HR department is relegated to being a highly paid data entry organization. Whereas the centralized option enables HR to focus more on strategic HR activities, especially around performance and career management, which ultimately assist in reducing turnover. This reduction in turnover also results in additional cost savings, which helps your company’s bottom line. The reason this assists with bottom line numbers is if turnover is reduced you save money by not having to recruit and train new employees, and you don’t have to spend additional money to replace the knowledge that previously existing employees possessed.

Create a Roadmap — Decide Which Modules to Start With

Creating your SAP ERP HCM roadmap is not a science. It depends on your business and IT priorities and the scope of your project, which are based on the items discussed previously. However, there are general options to evaluate and agree upon regardless of the uniqueness of your implementation. Assuming that the scope of your SAP ERP HCM implementation includes all elements of HCM, here are some basic recommendations to help you determine whether to go global:

• Stick to your blueprint: During the project implementation, stick to your blueprint as closely as possible. Often groups choose to do a global blueprint and then years later have to revisit it as they roll out the various regions. What does this mean?  In some roadmaps, companies determine to perform a global blueprint at the beginning of the project and release the functionality by regions or countries. In these cases, it could be years before you get to the realization of a set of countries that you blueprinted years ago. If this is the case, either hold off on doing the blueprint for that set of countries or stick to what you blueprinted at the beginning, only making changes for legal or regulatory changes. Don’t deviate from well-thought-out decisions made at the beginning unless there are legal reasons to do so later.
• Come up with permanent solutions, not temporary ones: Generally, the ideal method is to build your roadmap to eliminate as many temporary interfaces as possible. For example, in some roadmaps, companies determine that they will do a functional-based release, meaning implementing their core HR first and then adding in payroll or benefits at a later point in time. With this type of roadmap, the team creates a temporary file from the new SAP Personnel Administration (PA) modules to foster the processing of payroll or benefits in these legacy applications. Think through your roadmap carefully, because changing it later can result in additional, unanticipated costs.
• Create a roadmap with the right durations: When planning my implementation projects, if I have to factor in payroll, time, and benefits in scope, I like to include the same amount of testing time for the blueprint stage as I do for the building stage. Ideally, the length of the blueprint stage is the same as your realization period. In most instances, you need at least two months to perform both phases separately. When considering payroll, benefits, and time management as part of your scope, an extended testing period is required. This period should include the additional effort associated with payroll parallel testing.
• Determine a roll-out strategy: You must decide which roll-out strategy to use. There are two common types of roll-out strategies. The first is a wave-based release rollout and the second option is a big-bang rollout (the estimating factors you should consider for each are listed in Figure 1).
  • Wave-based release rollout: With this type of roll-out strategy, basic SAP ERP HCM modules such as Organizational Management (OM) and Personnel Administration (PA), are priorities, followed either by the implementation of the talent management module or the Payroll and Time Management modules. First you start with OM and PA, then continue with Payroll, Time Management, and self services, and then onto your talent management areas, such as Performance Management, Succession Planning, and Learning Solution. The wave-based approach may be based on region or module depending on the complexity associated with other factors (Figure 1).
  • Big-bang release rollout: If you decide to take a big-bang approach for your implementation, one would hope that either the number of modules is low or your global scope is limited. Implementing for a global scope in a big bang fashion could be disastrous and will only be successful if your organization is comfortable with change. If your implementation covers a small number of modules or it has a limited global scope, a big-bang rollout strategy is another option. Figure 1 lists the various estimating factors that you should consider when determining which approach is the best one for your implementation.

In Figure 1, the x-axis lists the SAP ERP HCM modules and the y-axis lists the factors that make up a company’s HR complexity.

Figure 1

Factors to consider when determining which roll-out strategy to use

Identify where you fit on the chart and keep in mind that it is likely that you fit with only some of the factors. The point is that the more factors that fit with your company’s plan, the more you should consider doing a wave release approach versus a big-bang approach. The big-bang approach would be used only if the environment is relatively simplistic. Here are two scenarios to illustrate the approaches:

1. Your company is global, it has multiple legacy systems, it is unionized, and you intend to implement only OM and PA. In this type of scenario, using the factors in Figure 1, you should first consider doing a big-bang release approach.
2. Your company is global, it has insourced benefits, it is unionized, it is converting from multiple legacy systems, it is part of an SAP multi-tower project (i.e., supply chain, finance, or customer relationship management), and you intend to implement OM, PA, Time, Payroll, US Benefits, self-services, and recruiting. In this scenario, you should first consider doing a wave release-based approach either by SAP functionality or geographic releases.

Determine Which Factors Affect the Estimation of Your Project (Complexity Matrix)

There are many factors that drive the complexity of estimating an SAP ERP HCM implementation. Figure 2 lists the factors that to consider when estimating the scope of your implementation. It also includes the increased complexity that comes with SAP ERP HCM modules and various other inputs.

Figure 2

SAP ERP HCM implementation estimation factors

On the x-axis, the SAP ERP HCM modules are ranked from least complex to most complex. The rankings are based on my experience leading these sub-modules and being the overall process delivery lead for them. It is difficult to rank these sub-modules because each has their own areas of complexity and OM can be difficult to understand. This complexity also makes it difficult to explain to non-technical stakeholders why this type of rigorous data management is required.

The ranking on the y-axis lists the various factors that affect the days of estimation when scoping out an SAP ERP HCM project. Finding where your implementation is on this chart helps the estimation team to scope out the implementation and determine the difficulty of a project.

Create a Resource Plan

In order to ensure the success of your implementation, the bottom line is that your company’s business side has to be on board. Without the sponsorship and support of stakeholders from the outset, your implementation will not get the necessary input, which can result in project delays, and even with cancellation altogether.

It is also important to stress the fact that areas such as payroll, benefits, and time management each require leaders who have experience in that particular function and the SAP system. To ensure success, these leaders should come from middle-level management and should be recognized experts in their field. Not having strong, knowledgeable team leaders results in project delays and, in some cases, resource replacements.

In addition, in today’s market a significant amount of work is performed offshore in order to save money. In light of this outsourcing trend, it is imperative to have someone on site with local expertise. It is crucial to the success of your implementation to have a key player who knows the local laws and regulations concerning payroll, time, and benefits administration. It is possible to do all of your development offshore, but I always recommend that there be at least one experienced SAP ERP HCM ABAP resource on location.

SAP ERP HCM ABAP is different and requires a unique set of business knowledge and technical skill to make custom programs. A majority of the configuration and RICEFW — Reports, Interfaces, Conversions, Extensions, Forms, and Workflow — build can be handled by an offshore center. Ensure you have the right mix of SAP and module expertise in your team.

Determine How to Blend All These Factors in with an Existing, Larger SAP Program

It is less common to have standalone SAP ERP HCM implementations these days (e.g., an SAP ERP HCM implementation that is done independent of any other SAP modules). Most are blended into larger, existing programs and, more often than not, the leadership on those projects has never done an SAP ERP HCM system implementation.

When combining an SAP ERP HCM implementation with another type of SAP system implementation (i.e., blending two types of implementation projects), my recommendation is to make sure you have a seat at the table and ensure that SAP ERP HCM viewpoints and concerns are heard. Usually the other SAP modules can accomplish more work and testing offshore. In SAP ERP HCM, having to implement things like payroll, time, and benefits can be complicated and require thorough testing to include your parallel payroll testing.

Ensure this is factored into your roadmap calendar and is a part of your critical path. If benefits administration is part of the implementation, don’t forget to factor in the interface with external vendors, which requires quite a bit of coordination and extra effort. I usually find that benefits alone, when it is a sub-module within SAP ERP HCM, can have as many interfaces as most of the other SAP modules combined. Be aggressive when testing your interfaces and have it well planned out as this can create many issues for your project down the road.

A Sample List of Implementation Dos and Don’ts (Implementation Best Practices)

Throughout my career, I’ve estimated and planned the start of many SAP ERP HCM implementations. Here are my recommendations of what to do and not do:

• Do find your value proposition and understand as a business what you are trying to accomplish. Revisit this at least quarterly.
• Do get your implementation solution plan right at the outset and determine what and when you will implement.
• Do have a seat at the table when planning — and determine if the implementation timeline should be longer as a result.
• Do educate co-workers who are not HCM professionals about the complexity of and requirements for a successful SAP ERP HCM implementation.
• Do understand the importance of putting together the right team and identifying the people with the right experience, and budget accordingly.
• Do take into account the complexity associated with testing benefit interfaces. The cycles that need to be performed with your vendors can be time consuming and are often dictated by their availability and not your testing schedule.
• Don’t underestimate the complexity of SAP ERP HCM implementations.
• Don’t underestimate the importance of running a payroll parallel run test early on — schedule it to run soon after your first cycle of product testing.
• Don’t expect RICEFW to stay consistent with what is originally estimated — expect and plan for changes after the blueprint stage is complete and once you have identified the custom system gaps that need to be developed to meet your requirements.

Don McCurdy

Don McCurdy is a graduate of DePaul University and has worked at Accenture for more than 11 years. During his time there he has done many large, full-scale HR implementations, including all elements of the SAP ERP HCM suite of tools.

You may contact the author at don_mccurdy@hotmail.com.

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