Success Factors

Successfactors HCM MiNdLiNkS Training Material

MINDLINKS R&D IT LABS, 4TH FLOOR, ADITYA ENCLAVE, AMEERPET, HYDERABD January 1, 2014 Authored by: Praveen Reddy

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Successfactors : An Overview

SaaS and Successfactors: KEY CONCEPT Software-as-a-Service (SaaS), also known as On-Demand, is the next generation of enterprise software offered as services in the cloud. SaaS provides access to enterprise software on a subscription basis without the need to own or maintain hardware or software. The software, and your data, is hosted remotely and accessed on demand from any location using the unique login credentials of your organization. SaaS software is multi-tenant, which means that many instances of the software are accessed and are on the same application version. Users can choose which features and functionality to use in the standard solution and in the regular releases that are introduced by the vendor. Cloud, in this context, refers to any software or service that is hosted remotely and accessed over the Internet. On February 23, 2012, SAP acquired the Software-as-a-Service (SaaS) HCM and Talent Management software vendor SuccessFactors for $3.4 billion. This acquisition turned SAP into a vendor of both onpremise and SaaS HCM software and a major player in the competitive SaaS HCM market. It also brought the experience and expertise of SuccessFactors founder Lars Dalgaard onto the SAP Executive Board, to bring what was termed “Cloud DNA” into the organization. SaaS is considered to be the next-generation platform for providing enterprise software. While many people feel uncomfortable with the concept of cloud computing, they may not understand that they are already using cloud-based software for everyday activities, such as email (e.g., Hotmail and Gmail) or document storage (e.g., Google Drive and Dropbox). Almost any piece of software offering a service over the Internet is SaaS and these offerings are now touching our daily lives. The next step for SaaS is enterprise software. Originally many of the SaaS vendors started with talent management systems, following the growing trend seen in the 1990s and 2000s. As many of the vendors grew, they began to expand their portfolios and offer other HCM services. Now, SaaS vendors are also pioneers of social collaboration software for businesses and mobile solutions. SuccessFactors is considered a leader in SaaS talent management and social collaboration software and was recently named as a leader in Talent Management by IDC. In Gartner’s 2011 Employee Performance Management Magic Quadrant, which covers performance management, succession planning, and compensation management capabilities, SuccessFactors came out head and shoulders above all other vendors; unsurprisingly, many of the closest challengers were SaaS vendors.

One of the key strengths of SaaS software is its Web-orientated user interfaces. The evolution of Web 2.0 has enabled applications with rich features and user interfaces to run over the Internet, which was not possible before. For more information on SaaS and its pros and cons, see the sidebar, “Why SaaS?”

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Why SaaS? SaaS software is not just software accessed via the cloud; it is a new model of delivery. SaaS offers a number of features not available in on-premise software, such as:

• • • • •

No hardware or maintenance required Subscription-based licensing model Multi-tenant platform Regular releases, updates, and enhancements Access from anywhere

Since the software is accessed from the cloud, there is no need to host any software and thus hardware is not required. Consequently there are no systems to maintain and users can reduce their IT overhead and costs significantly. This also means that users can access the software via a URL with most Web browsers from any location that has an Internet connection. The subscription model means that customers only pay for exactly what they use (i.e., per user), on a yearly basis. This means no large capital expenditure up front for perpetual licenses and, in addition, subscription-based licenses can be classified as an operational expense. From a financial or accounting perspective, there can be many reasons why an organization might not want to have large capital expenditures or own and maintain assets that are not directly related to their core business. This type of licensing also makes managing expenditure much easier, since the upgrade, maintenance, and support costs are fixed in the subscription fee for an agreed period of time. On the other hand, some companies may not be able to justify the expenditure on enterprise software that they cannot put on their balance sheet as a fixed asset. SaaS software is multi-tenant, meaning that all customers use the same instance of the software. Each licensee has its own tenant (set of configuration) running on the instance. This means that new releases and updates can be applied to the instance and all tenants have access to the enhancements or bug fixes introduced. Secondly, it means that customer systems are stable and each new Successfactorshcm.com and MiNdLiNkS

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implementation can benefit from beginning with a stable system. Quite often many new SAP implementations face a number of product issues that must be resolved throughout the project and often afterwards. When a project begins on an earlier Service Package or Enhancement Package version that is available, many of the issues faced are already known and fixes are available that must be applied and tested. In the case of SaaS, this is not as common an occurrence since the system is always the latest version and it is kept current. In the case of SuccessFactors Workforce Analytics, for example, it means that the software can offer analytics benchmarks based on the aggregation of the data in each tenant. This functionality cannot be provided with on-premise software. SaaS software is considered to be more standard or a best-practice solution and has fewer customization possibilities. This provides frequent releases and updates without causing disruption, so customers can add new functionality regularly, but it also means less flexibility in meeting complex customer requirements. On the other hand, it means that customers can avoid having heavily (and sometimes poorly) customized systems that require greater effort to maintain and modify or enhance. Data is stored in a remote location, which legislation in some countries specifies must be stored within that territory. Legislation within some countries has other facets that might act as a barrier to adoption. For example, data held in Swedish-based data centers is subject to legislation that allows the government to access this data without a court order. Safe Harbor between the US and the European Union means that US companies should address EU members’ data privacy laws, although there is no validation of this program to ensure that it is being operated correctly. There are also rumors and inaccuracies that have been circulated about some laws, such as the USA PATRIOT Act giving federal security agencies within the US the right to access data stored in data centers of US companies without a valid court order or subpoena, which is untrue. While there is a shortage of global cloud regulations, it is inevitable that harmonized standards and regulations will be introduced in the future. Cloud and SaaS are still in

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their infancy and so it takes time for the foundations for global cooperation to be realized. Since SaaS software is, in effect, rented, then ending an agreement may have implications over how data is, if at all, returned. Some agreements state that data is simply provided in a spreadsheet, without providing any proprietary information around format, medium, or time frame. Organizations should carefully review the terms and conditions for cancelling subscription-based contracts prior to signing any agreements.

Who Is SuccessFactors? Prior to the acquisition, SuccessFactors was a vendor of SaaS “business execution” (BizX) software for the Human Capital Management (HCM) market. SuccessFactors was formed in 2001, by Lars Dalgaard and Aaron Au, and is based in South San Francisco, CA. The company has offices in more than 35 locations worldwide, including several countries in South America, Europe, and Asia–Pacific. It went public in November 2007 on the NASDAQ stock market, under SFSF, but in 2011 moved from NASDAQ to become the first company ever to be triple-listed on the New York Stock Exchange, Euronext Paris, and Frankfurt Stock Exchange. Its business is focused around providing SaaS software services covering core HR, workforce planning, talent management, social collaboration, and analytics. Talent management, social collaboration, and analytics are particular strengths of SuccessFactors. Social collaboration underpins a lot of the processes in the SuccessFactors HCM suite, while its vendor-agnostic analytics solution provides more than 1,500 out-of-the-box analytics that cover all solutions. Its talent management suite comprises solutions for all the major process areas: recruiting, performance, goal management, compensation learning, succession planning, and development. SuccessFactors has more than 3,500 customers in 168 territories using 35 different languages. This large customer base provides it with 15 million subscriptions and with revenues of $364 million (in 2011). SuccessFactors has many recognized companies within itscustomer list, including 20th Century-Fox, Adobe, Allstate, American Airlines, Astra Zeneca, the Department of Homeland Security, NASA, PepsiCo, Siemens, Sobeys, Starbucks, and Walmart. Originally SuccessFactors focused on performance management software, but in 2009 the company expanded its strategy to offer what it called “business execution” software. SuccessFactors launched the business execution suite – originally known as the BizX suite and now called the HCM suite – to extend its reach from measuring employee performance and goal setting to supporting companies in executing business strategy. By expanding its portfolio to full HCM, SuccessFactors was aiming to double its market potential. SuccessFactors also focuses on its ability to provide business execution, reduce the total cost of ownership (TCO), and use return on execution (ROX) to evaluate the success of projects (as opposed to the standard measurement indicator, return on investment [ROI]). ROX, in its simplest form, can be calculated with the formula:

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Net gain from improved execution / Net execution investment = Return on execution (ROX) ROX is meant to ensure that organizations benefit more than just financially. In the report Return on Execution by Erik Berggren, director of customer results & global research, and Lars Dalgaard, CEO, it was suggested by SuccessFactors that “bottom line results are far more dependent on execution (85% vs. 15%) than on strategic plans.” SuccessFactors helps its HCM suite execute strategy through three main focus areas: • • •

Attract and retain Align and execute Develop and learn

Different process areas feature in each of these areas and SuccessFactors HCM suite covers these process areas (Table 1):

Table 1 Process areas for SuccessFactors HCM suite These are all supported by social collaboration, core HR, workforce planning, and workforce analytics.

Growth by Acquisition During its history, SuccessFactors has made a number of acquisitions to strengthen its existing portfolio. It has acquired six companies for more than $400 million: • • • • • •

Inform Business Impact Cubetree YouCalc Jambok Plateau Systems Jobs2Web

Each of these acquisitions brought in applications that are now core parts of the SuccessFactors offerings. Inform Business Impact (previously called Infohrm) was a $40.5 million acquisition made in 2010, and was the first purchase made by SuccessFactors. Inform Business Impact was a leading provider of analytics software and its assets formed the basis of the SuccessFactors Workforce Analytics solution. A few months later SuccessFactors purchased Cubetree for $50 million. Cubetree produced a cloud

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enterprise social collaboration and networking platform of the same name that eventually became the SAP Jam solution. The last acquisition of 2010 saw SuccessFactors purchase YouCalc for an undisclosed figure. This acquisition meant that SuccessFactors was able to offer real-time data analysis and calculation in the cloud – a first for any SaaS vendor. In 2011, SuccessFactors also made three more acquisitions, with the final acquisition made after the announcement of its deal with SAP. First, in March 2011, SuccessFactors completed a deal to buy Jambok, a provider of a social learning platform focused around content creation and sharing, for an undisclosed sum. Shortly after this acquisition, SuccessFactors purchased Plateau Systems, which at the time was a leading learning management system vendor, for $290 million. Finally, in December 2011, SuccessFactors completed an acquisition of Jobs2Web for $110 million. This deal was announced after SAP had signaled its intention to buy SuccessFactors, although SAP indicated that it was SuccessFactors’ prerogative to make acquisitions while it was still an independent company. Jobs2Web provided application-tracking and social networking integration software, which formed the foundation for SuccessFactors’ Recruiting Marketing solution. Following these series of strategic acquisitions, SuccessFactors was able to offer a full suite of HCM solutions in the cloud, including comprehensive core HR, end-to-end talent management, social collaboration, and analytics.

The SuccessFactors HCM Suite SuccessFactors offers an HCM suite in the cloud, covering all major processes areas. The suite is very strong in talent management, social collaboration, and analytics, and although its core HCM solution, Employee Central, is not yet as mature as SAP HCM, it has grown rapidly since the acquisition has closed. Social, mobile, and analytics underpin a lot of the product functionality across the suite. In the short term, SAP hopes to migrate both Workforce Planning and Workforce Analytics onto SAP HANA for increased speed and processing capabilities, with the rest of the suite also being powered by SAP HANA by the end of 2013. The graphic in Figure 1shows the application processes in the suite.

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Figure 1 The SuccessFactors HCM suite The SuccessFactors HCM suite contains the following applications: • • • • • • • • • • •

Employee Central – The core HCM system Performance and Goals – Performance and goal management Recruiting – Recruiting management and marketing Compensation – Employee compensation planning Learning – Learning management system for training and learning activities Succession and Development – Succession planning and employee development Onboarding – Employee onboarding solution for pre and new hires SAP Jam – Social collaboration and networking platform Workforce Analytics – Comprehensive analytics and reporting Workforce Planning – Workforce planning and resource allocation BizX Mobile – Mobile application to perform processes on the go

Employee Central is the next generation core HCM system that covers functionality such as personnel management, organizational management, and time off. The company’s organizational chart is a key component of the system, which differs from the traditional SAP system. SAP’s hosted payroll solution, Employee Central Payroll, is an optional component of Employee Central. As you might expect, it is fully integrated with all the HCM suite solutions and underpins the rest of the suite as a central platform for managing employees, positions, organizational, and salary data across multiple geographies, companies, and reporting areas. Employee Central has grown significantly since the acquisition by SAP and is now (as of September 2013) being implemented by global organizations such as PepsiCo and Timken. Thomas Otter, a leading industry analyst, has been appointed as Vice President, Product Management, for Employee Central, and he is experienced in both traditional and cloud-based core HR.

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SuccessFactors’ range of talent management solutions – Performance and Goals, Recruiting, Onboarding, Compensation, Learning, and Succession and Development – provide end-to-end talent management that is integrated with the other HCM suite applications. These applications are the focus of SAP’s hybrid strategy, which is when SAP customers use SAP HCM on premise for core HR and SuccessFactors HCM suite for talent management processes. SAP Jam – formerly known as SuccessFactors Jam and offered as part of the SuccessFactors HCM suite – is a social collaboration platform designed to enhance communication and sharing, onboarding of new employees, and collaboration across an organization. It incorporates social-media functionalities that Twitter, Facebook, and Google Plus users will find familiar. SAP Jam provides users with the opportunity to upload documents, create videos, create Wikis, create groups, and automate group membership for individuals based on certain attributes. SAP Jam is not an HR-specific solution and can be used in a variety of functions across an organization, such as sales or finance. Workforce Analytics offers a wide-ranging collection of analytics and reports that covers all processes and HCM suite applications. Workforce Analytics’ benchmarking analytics take all the data from all customer instances to create comparable benchmarks that organizations can use for comparison with their own performance. Predictive analytics are also cutting-edge functionality offered within Workforce analytics. Headlines is a new mobile application available for smartphone and tablet devices that provides managers with relevant and targeted analytics for their area of responsibility in real time. Workforce Planning builds on analytical data to provide customers with the ability to identify current and projected workforce needs, as well as the skills and competencies to support the long-term needs of an organization. In addition it also features “what-if” modeling capabilities to identify the financial impact of different workforce scenarios and predictive workforce planning functionality to forecast company growth, costs, and skills gaps based on current and previous data. BizX Mobile provides employees throughout an organization with the ability to perform a number of activities from their smartphones or tablet devices. BizX Mobile supports iPhone, iPad, Blackberry, and Android devices and provides functionality to view notifications, display the organizational chart, manage recruiting requisitions, manage learning activities, and perform SAP Jam actions. Although part of the HCM suite, BizX Mobile is not a solution in its own right but a complementary solution that supports all the solutions in the suite.

The Acquisition by SAP On December 3, 2011, SAP announced that it had entered into an agreement to purchase the entire stock of SuccessFactors for $3.4 billion via its subsidiary SAP America, Inc. The news sparked a huge wave of excitement over the early December weekend as analysts, markets, and the HCM communities were taken by complete surprise at the announcement. After a period of due diligence and completion of formalities, the acquisition was officially done on February 23, 2012. Shortly after completion Lars Dalgaard, at the recommendation of Hasso Plattner, was appointed to run SAP’s newly formed Cloud Business Unit and joined the SAP Executive Board. As part of the acquisition, SuccessFactors remained a separate entity from SAP and was rebranded as “SuccessFactors, an SAP company.” For the first time SAP was able to offer a full suite of HCM solutions both on premise and in the cloud. It also provided its customers with the opportunity to combine on-premise applications with cloud

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applications from the same vendor. At the time, many analysts saw the acquisition as a defensive move and cited the 52 percent above-market-value share price as an indication that SAP was willing to pay more than was needed to improve its footprint in the growing SaaS HCM and talent management markets. The price alone was enough to provide SAP with a huge level of exposure and signaled its intent to focus strongly on cloud offerings in addition to its traditional offerings. SAP had previously invested a significant amount of money in developing its own cloud ERP suite, Business ByDesign, but SAP had struggled to develop the offering. Business ByDesign’s lack of success was commonly attributed to SAP’s lack of cloud expertise. As part of the closure of the acquisition, Jim Hagemann Snabe, co-CEO of SAP, was quoted as saying that “I believe that what we needed to accelerate our success was the DNA of understanding the business model in the cloud.”

SAP’s Strategy for SAP ERP HCM and SuccessFactors On February 22, 2012, shortly after the acquisition was completed, SAP and SuccessFactors announced their joint Unified Product Direction via press release. David Ludlow, SAP group vice president for HCM solutions used his keynote address at the HR 2012 conference in Las Vegas in March 2012 to go into more detail about the planned strategy. Ludlow re-affirmed that SuccessFactors HCM suite (still called the BizX suite at that time) was to be SAP’s go-forward solution for talent management and revealed that while continuous enhancements will continue to be made for on-premise talent management solutions, no further innovations were planned for its suite. SuccessFactors Workforce Planning was also revealed as being the go-forward solution for workforce planning. A summary of the HCM solutions (also known as Line of Business for Human Resources or LoB HR) is shown in Figure 2.

Figure 2 SAP’s "go-forward" solutions for SAP HCM processes

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By “go-forward” SAP means that any customers who wish to purchase solutions for these processes will be positioned with the solutions highlighted in Figure 2. SAP intends to focus its innovation investments in these solutions. However, SAP will still sell, improve, and support the remaining on-premise solutions seen in Figure 2, and these on-premise solutions are still available to all customers. Despite SAP’s announcement of its intention to focus primarily on the SuccessFactors HCM suite for talent management, SAP will continue to support and invest in on-premise technology. However, investment in talent management solutions has been minimal since Enhancement Package 4 (EhP4) was released. SAP Organizational Visualization by Nakisa (SOVN) will remain as the complementary solution for on-premise customers for organizational chart visualization, organizational modeling, and data quality auditing. SAP Talent Visualization by Nakisa (STVN) and SOVN will continue to be sold and supported by SAP, although STVN is not part of SAP’s go-forward strategy for talent management. There are three delivery models for SuccessFactors HCM: the hybrid model, the two-tier model, and the full-cloud HCM model. The hybrid model refers to customers using SAP ERP HCM on premise for core HCM processes (e.g., personnel administration, time management, and payroll) and using the SuccessFactors HCM suite for talent management and, if required, workforce analytics. Within this model SAP ERP HCM is an integral part of using the SuccessFactors HCM suite. SAP’s integration strategy and roadmap is focused around the hybrid model (this is covered in more detail later in this report). One reason that SAP has chosen to focus its integration strategy on the hybrid model is because many organizations have already implemented a stable and effective core HR system in SAP ERP HCM, but want state-of-the-art talent management solutions. SAP considers the SuccessFactors HCM suite as its best-in-class talent management solution. This fresh wave of talent management solutions is still fairly new to the marketplace and there is a high level of investment and innovation taking place. The two-tier model is where a customer chooses to retain SAP ERP HCM as its on-premise system centrally, but uses Employee Central or other SuccessFactors HCM suite solutions at a regional or satellite office. Some customers may not have a core HR system at one or more of its regional offices or want a trial run of a solution prior to a global roll out. This model gives them the opportunity to take advantage of innovations, fill business system gaps, and explore how SuccessFactors works for their business. Full-cloud HCM refers to the entire SuccessFactors HCM suite with SAP Cloud Payroll. Net new customers (customers who are not using any SAP HCM solutions) and existing customers can leverage full-cloud HCM to get a complete and holistic suite of HCM functionality within the cloud, with or without SAP ERP HCM as the system of record. Because some organizations don’t want just talent management and analytics in the cloud, SAP is able to ensure that all of a company’s HCM needs are realized in the cloud. Another key message that was revealed during David Ludlow’s HR 2012 keynote address was that SAP would not force customers onto its cloud offerings and that it would continue to invest in and offer innovations for core HR. The new HR Renewal release and Business Suite on HANA announcements are two examples of innovations from SAP. HR Renewal provides a host of new usability features to SAP ERP HCM, and Business Suite on HANA provides revolutionary performance and processing that has been impossible up until now. SAP would also accelerate its investment in SuccessFactors Employee Central to ensure that it is rich in functionality. So far, SAP has lived up to its promises made in this announcement.

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At the SAPPHIRE NOW conference held in Orlando in May 2012, Lars Dalgaard used his first keynote speech as an SAP executive to announce SAP’s overall cloud strategy. This includes SuccessFactors, Business ByDesign, and SAP’s range of OnDemand applications, such as Travel OnDemand, Finance OnDemand, and Customer OnDemand. SAP has split its cloud applications into four categories: people, money, customers, and suppliers. The people category comprises the SuccessFactors HCM suite. Since this announcement SAP has expanded on its cloud strategy significantly.

Key Misconceptions About the Acquisition One key misconception that arose when the SuccessFactors acquisition was announced was that mainstream support for SAP ERP HCM on premise would end in 2020. These fears arose due to the timing of SAP’s announcement in October 2011 — just two months prior to the announcement of the acquisition — that it was extending mainstream support for its on-premise SAP Business Suite, which includes SAP ERP HCM, by five years (from December 2015 to December 2020). December 2015 was the original date that was set for the end of mainstream support for ERP Central Component (ECC) 6.0 when it was released in 2006. As 2020 draws closer, the mainstream maintenance period is likely to be extended even further. As mentioned previously, David Ludlow was keen to highlight that SAP will not force any customers onto the cloud. While SAP is promoting the SuccessFactors HCM suite, particularly for talent management, it will continue to offer its on-premise talent management functionality and, therefore, there will be no shortage of implementation partners to provide services for this. SAP will not pressure customers to rip and replace their core SAP ERP HCM system for SuccessFactors Employee Central, but they enable this possibility for customers who choose to follow this path. SAP is committed to allowing customers to choose which technologies they wish to use for different processes. Customers should not interpret the current support end date of 2020 as being the end-of-life support for SAP ERP HCM on premise. Rather, that is the end of the current period of support for SAP ERP HCM, and an extension is extremely likely to be announced in the next few years. It should not be forgotten that SAP chose to extend the deadline before the announcement of the SuccessFactors acquisition, showing its commitment to the on-premise suite for a further five years irrespective of cloud strategy.

How SuccessFactors HCM Suite Differs from SAP ERP HCM SuccessFactors HCM suite differs in a number of ways from SAP ERP HCM. Although both solutions cover many of the same process areas, this is largely where the similarities end. The user interface and design principles, administration and data maintenance, configuration, licensing, implementation, mobility, release cycles, and support for SuccessFactors differ considerably from those with which existing SAP users are familiar.

User Interface and Design Principles SuccessFactors prides itself on the “toy-like” user interface and the user experience of its applications. SuccessFactors’ design is in line with its own version of the SMART principles – Social, Mobile, Analytical, Rich and Toy-like – and with extensibility in mind. Extensibility is a design principle that considers future growth of a system through adding, extending, or enhancing system functionality. SuccessFactors is also influenced by the principles behind business execution strategy and therefore

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considers these when building or extending functionality. More recently, Lars Dalgaard announced that there should be a “mobile-first” principle behind application design. The user interface of SuccessFactors HCM suite is a modern-looking and sleek interface that is characteristic of the advancements in Web technology over the last decade and transition to Web 2.0. When ECC 6.0 was released this type of interface was unknown in consumer and enterprise-level applications and is strongly associated with the type of interface Apple introduced as part of its desktop and smartphone operating systems. The user interface of SuccessFactors HCM differs greatly from both the SAP GUI and SAP NetWeaver Portal, as can be seen in Figure 3.

Figure 3 The home page of SuccessFactors HCM suite Users can navigate to different parts of the applications from the tiles on the homepage or to each module from the navigation drop-down menu in the top-left corner of each screen. Since the HCM suite is essentially a Web application it benefits from hyperlink navigation to move between different pages. The applications are also heavy in their use of colors, graphics, and images to provide visually appealing features and emphasize particular functionality or information. Figure 4 shows the Public Profile of an employee, including the employee’s photo, background, “badges” that have been earned, and the employee’s location in the Org Chart.

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Figure 4 The Public Profile of an employee The badges shown in Figure 4 are one concept that is not found within the SAP system. These are used to reward employees for a number of actions, including good performance or behaviors that provide value to a team or the organization as a whole. Other features include Legal Scan, which scans user-inputted text for words that may be illegal or inappropriate, and Tags, keywords used to help identify employees. SuccessFactors is focused more on the employee, as opposed to objects of different types as in SAP ERP HCM. SuccessFactors is not strictly object-orientated, so creation and maintenance of the enterprise is focused more around positions and employees. The concept of organizational units does not exist in SuccessFactors; rather positions can be assigned attributes about their organizational assignment, including Company, Business Unit, Division, and Department. This gives a deeper granularity than in SAP ERP HCM, where the standard organizational assignment is focused purely on the organizational unit. SuccessFactors’ applications are designed with a mobile-first mentality. This ensures that applications are created with simple functionality. The iPhone generation is joining the workforce and is used to using simple and attractive apps on their devices, so it makes sense for the next generation of enterprise applications to follow these design principles. Unlike SAP ERP HCM, SuccessFactors includes its BizX Mobile application as part of the base license for the HCM suite. At the SuccessConnect 2012 conferences – held in San Francisco, London, and Sydney – there was a strong theme of mobility through the sessions and keynotes.

SuccessFactors Administration and Configuration SuccessFactors provides an Admin User login that provides a system administrator with general administration functions, including importing and maintaining organizational data, creating and managing the Welcome message and Quick Links tiles, managing user passwords and permissions, and viewing

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administrative alerts such as stalled workflow requests, people issues, and HR data issues. This type of user does not exist per se in SAP ERP HCM, although a Basis or power user would normally perform this type of monitoring or perform these activities. Figure 5 shows the home page for an Admin User with the different tiles that are available for this type of user.

Figure 5 The Home page of SuccessFactors HCM suite for an Admin User The Admin User can perform system configuration activities through the OneAdminpage, shown in Figure 6. A large number of configurations can be performed in OneAdmin, as well as actions such as hiring new employees, managing pending hires, creating new positions, and maintaining organizational assignment data. This is a fundamental change from SAP ERP, in which the system is configured in the IMG and organizational data is created using transaction codes. In SAP, HCM data is organized into infotypes, while in SuccessFactors it is organized by function. For example, in SAP ERP HCM employee data is stored in and maintained via a number of different infotypes, while in SuccessFactors Employee Central data is accessed and maintained in pages such as Employee Profile or Employee Information. There is no concept of infotypes in SuccessFactors.

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Figure 6 The Admin Tools page for an Admin User The SuccessFactors systems itself is configured via Provisioning, which is the backend of SuccessFactors. Customers do not have access to Provisioning – only implementation consultants have access. Here certain system functionality and behaviors can be switched on or off. Only implementation consultants who have completed the Introduction to Mastery training course get Provisioning access and it can only be linked to customer instances for projects where they have completed the Mastery course. This ensures that only trained consultants can implement SuccessFactors solutions. There is a common misconception that SaaS applications are not highly configurable, although the reality is quite different. Although SaaS applications are not as flexible – or customizable – as on-premise applications, they still have a high level of flexibility when enhancing standard behavior. For certain features, SuccessFactors supports configuration via XML files. However, this configuration is usually performed by the customer’s implementation partner or by a SuccessFactors Professional Services consultant. SuccessFactors is looking to move away from this type of configuration. SuccessFactors offers another method of configuration, which is an object model configuration mechanism called the Metadata Framework. The Metadata Framework enables customers to make changes to the configuration of SuccessFactors through the Admin Tools user interface, such as modifying existing objects, creating new objects, modifying business rules, or creating new interfaces. New objects can be created with various attributes, such as effective dates, user interface (UI) behavior, security, reporting, language-dependent texts and translations, rule-based validations and logic, and approvals. These new objects can be similar to traditional SAP objects, such as a new type of Work

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Center object, or simply new fields. Existing objects can have attributes modified to fit customer-specific logic or behavior, such as compensation logic or cost center validations. This model allows users complete control over creating new objects without performing any coding or custom development. However, unlike in on-premise SAP, the objects created in SuccessFactors can have attributes that are unique to those specific objects. There are no specific infotype controls or validity restrictions. This is a principle that is new to SAP on-premise users and initially the concept might seem alien or limited in its practical use. One of the major advantages of the Metadata Framework is that customer metadata is separate from the SuccessFactors metadata. Users can never overwrite what SuccessFactors delivers, although they can switch it on or off. Therefore the challenges users can face with conflicts when going through enhancement package or Support Package upgrades simply do not occur when new updates are introduced into the SuccessFactors system. When users enhance or extend the data model in SuccessFactors using the Metadata Framework they are creating objects that sit next to the existing data model, rather than sitting within it. These new objects work with the system as if they are part of the standard data model, without creating errors or conflicts. These objects – no matter how many – leverage a single instance of components (e.g., UI components, processing objects, and workflow objects) and therefore performance is significantly greater than if every object had its own unique instance of components. Custom applications can be added into SuccessFactors using the SAP HANA Cloud Platform, as Platform-as-a-Service (Paas). This is fairly new technology at this time, but a video demo of this functionality can be seen on YouTube here.

Licensing: SAP vs. SuccessFactors One of the major differences between SAP and SuccessFactors is the licensing model. SAP solutions (e.g., HCM) are licensed per user on a perpetual basis for a one-off license fee, plus an annual maintenance fee. In contrast, SuccessFactors solutions are licensed per user on a subscription basis per year. No additional maintenance is charged. The cloud-based licensing model used by SuccessFactors has its advantages and disadvantages. There is no large capital expenditure for licensing and yearly charges are made for the exact amount of usage (i.e., customers are only charged for the exact number of users that use the system). Customers are also not tied into using SuccessFactors forever – they are able to exit the contract at the end of the contractual period, which is usually for three years in length, without incurring additional licensing costs or losing part of the one-off licensing fee that would be paid for an on-premise license. Although one-year contracts are available, the average contract for a large customer is usually three years.

Implementation: SAP vs. SuccessFactors Implementing SuccessFactors is different from what many on-premise SAP users are used to. First off, SuccessFactors HCM suite cannot be implemented without the involvement of SuccessFactors. With the exception of third-party extension products such as SOVN or SAP Employee File Management by OpenText (SEFM), most SAP users are accustomed to having their consulting partner perform all the

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implementation activities required during a project. Likewise, some consultants may not be comfortable working with a third party during an implementation. The role of a consultant during implementation of one or more SuccessFactors solutions differs from the type of roles that exist during an on-premise implementation. Quite often only a single consultant is required to perform all project roles, and these tend to be focused on activities such as scoping of customer requirements, data field mapping, and testing. In some instances an integration consultant may be required to perform the technical integration. Typically SAP ERP HCM projects, depending on the solution, have been staffed by multiple consultants and in some cases have involved multiple teams made up of several consultants. However, since SuccessFactors is focused around best-practice configuration and accelerated time frames, fewer resources are required to deliver a project and they are needed for shorter periods of time. In some cases, specialist SuccessFactors consultants (those not working for SuccessFactors Professional Services) have been working on multiple projects simultaneously, each on a part-time basis. This change alone will cause a significant shift in the SAP ERP HCM consulting business over time, since the current level of revenues sourced from on-premise implementations will not be sustainable for most consultancies. This benefits customers who choose to implement SuccessFactors solutions by providing them with much cheaper implementations.

SuccessFactors’ BizXpert Implementation Methodology Another difference in implementation projects is SuccessFactors’ own implementation methodology, which is called BizXpert. The BizXpert methodology can differ from the methodology used by consultancies for on-premise implementations, since many consultancies use the ASAP or Agile methodologies, or a variation of these. With SuccessFactors, the BizXpert implementation methodology is used so that the implementation is delivered quickly and the outcomes are consistent with each project that is delivered. The BizXpert methodology contains five phases, many of which may seem familiar to those who are acquainted with the ASAP methodology. The five phases are outlined in Figure 7.

Figure 7 The phases of the BizXpert implementation methodology Each phase has a purpose, a set of objectives, and a set of deliverables. Many of the phases include best-practice activities that often are excluded from customer projects. This is one of the benefits of the BizXpert methodology – no SuccessFactors customer is at risk of missing out on crucial aspects of a project that are not specific to the software itself. The importance of including activities such as defining success criteria, risk assessment, and a communications strategy cannot be overestimated in ensuring the ultimate smooth delivery of a successful implementation. The Sales phase is not an official project phase, rather it is the period prior to the project starting, but it is helpful to understand how this period sets the foundation for the overall project. This is where the scope and pricing and Statement of Work (SOW) are produced and the project is transitioned from the sales team to the implementation partner or SuccessFactors Professional Services.

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The first phase is the Prepare phase and is designed to establish the project framework and project objectives, orientate the customer with SuccessFactors and the project team, define the success criteria for the project, and undertake the configuration workshops. Many projects do not have the success criteria defined at the outset, despite how important it is for customers to identify what they deem to be the critical criteria for the success of the project. The Realize phase is where the configuration of SuccessFactors takes place. One major difference between the BizXpert methodology and the ASAP methodology is the inclusion of three configuration cycles, rather than one. These cycles – called iterations – allow customers to review the configuration defined in the Define phase after the first and second iterations, and tweak accordingly. This gives customers flexibility in getting their system configured as per their expectations. In many implementations it is not an uncommon experience for customers to get to the testing phase and discover that something doesn’t work quite like they had expected. In many projects additional changes to the original blueprint must be made via Change Requests, the result of which is very often additional, unplanned-for costs. This phase also features the data migration and integration designs. The fourth phase – the Verify phase – is where the testing and training occurs and the go-live activities begin. The roll-out activities include execution of the communications, training, and risk management strategies. Finally, the Launch phase is where the go-live activities are completed, the customer transitions to SuccessFactors support, and the project comes to a close.

Mobility SuccessFactors has a strong focus on mobility and has two offerings for smartphones and tablet devices – BizX Mobile and Headlines – which it offers for free. This is in contrast to on-premise SAP, which offers a range of mobile applications but has a myriad of licensing approaches and extensive technological prerequisites to get going, such as SAP NetWeaver Gateway and Sybase Unwired Platform. While it can be difficult for SAP ERP HCM customers to build a business case for mobility, with SuccessFactors’ BizX Mobile applications there is little reason not to roll it out across the organization. Figure 8 shows the SuccessFactors BizX Mobile application front screen.

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Figure 8 SuccessFactors BizX Mobile on the Android operating system

Release Cycle SuccessFactors releases new functionality and bug fixes on a quarterly basis, as opposed to on-premise SAP, which releases new SAP ERP HCM functionality via enhancement packages approximately every 18 months, and releases bug fixes ad hoc via SAP Notes or in bulk as part of Support Packages. SAP has also recently introduced Feature Packs for the HR Renewal release in order to deliver functionality on a quarterly basis. New releases by SuccessFactors are made to all customer instances, although, by default, all new functionality is switched off and so it is up to the users as to whether they wish to enable any of the new functionality. This differs from SAP ERP HCM, where implementing enhancement packages or Support Packages can be time-consuming. Enhancement packages might only provide a minimal amount of functionality versus the effort to implement, depending on the functionality used in SAP ERP HCM. In SuccessFactors, each release is added to the system by SuccessFactors so there is no action needed from the system administrator if none of the new functionality is required.

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SuccessFactors’ quarterly release cycle means that rapid innovation can occur and regular enhancements can be introduced. While this can be overwhelming for some organizations, it can also mean that organizations can adopt new functionality without waiting for long development periods or costly and difficult upgrade projects. New customers might not even be aware that they have had new functionality introduced into their system. SuccessFactors releases are released in February, May, August, and November of each year.

Support SuccessFactors has its own support process and Support Portal for customers; this will continue to be the case for new and existing SuccessFactors users going forward. The SuccessFactors Support Portal allows users to perform similar activities as on-premise SAP users can in the SAP Support Portal, such as raise support calls and search knowledgebase articles. Since a large proportion of SuccessFactors’ customers are not SAP customers and the support process differs, it does not make sense to change the current support situation and it seems unlikely that SAP will merge its and SuccessFactors’ support processes or organizations. Without experienced or knowledgeable support consultants within SAP right now it simply doesn’t make sense for SAP to go down this route at this time. In addition to their Support Portal, SuccessFactors customers also have the SuccessFactors Community Web site. This provides forums for general and product topics, thought leadership topics, training, support, and event information.

A Deeper Look into the Technical Aspects of SuccessFactors The SuccessFactors HCM suite also differs from SAP ERP HCM from a technical perspective. Like many Web applications, the SuccessFactors HCM suite is primarily built in Java and uses the J2EE specifications. Every page that is accessed by the end user is dynamically produced by the application and encrypted using SSL technology. The application is a stateless application, meaning that each request is an independent transaction and unrelated to the previous request. This is part of the reason for good performance in the cloud – the memory required is significantly lower than non-stateless applications (such as on-premise applications).

Application Architecture The core application cannot be modified, nor can it be enhanced with a built-in programming language such as ABAP. Like many other Web applications the behavior of the application is influenced with configuration through XML configuration files. The application architecture is shown in Figure 9.

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Figure 9 SuccessFactors application architecture One of the fundamental differences in architecture between SAP ERP HCM and SuccessFactors is that SuccessFactors HCM suite is a multi-tenancy platform. Multi-tenancy is the use of a single instance of software using a single database instance for all customers, in which multiple sets of configuration (called tenants) exist. Each customer has its own tenant that contains its unique set of configuration and its own database schema within the database. This type of model differs significantly from the SAP ERP HCM world, where many differing instances of SAP are on different versions, hardware, operating systems, and databases across the customer base. As a result, using a SaaS solution such as SuccessFactors HCM includes the following features: • • • • • • •

Regular releases Latest version of the software is used across all customers No hardware and licenses for operating system and database required Optimal hardware and software combination Consistent performance and stability More manageable and efficient support and maintenance Data mining and aggregation for analytical benchmarking

Because all users are using the same application, they benefit from always having the latest features and bug fixes available – either as a new user or as an existing user. It also provides greater stability because products naturally become more bug free as they move through their product life cycle. Of course, because of the nature of multi-tenancy systems, one drawback is that changes to the application code or substantial customizations are simply not possible. Since talent management strategies and processes are unique to and dynamic in many organizations, the inability to customize the HCM suite to the same extent as SAP ERP HCM might be a sticking point for some companies to move to the cloud.

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There are numerous direct and indirect cost savings for customers using SaaS software. There are the obvious cost savings made from removing the procurement of hardware and associated software. In the SuccessFactors whitepaper, “The Cloud: When & Why?,” it was demonstrated that, on average, 19 percent of the cost of implementing an on-premise HRIS was for hardware costs and database licenses. However, there are also the cost savings that are passed onto customers by the vendor from the economies of scale that they achieve from streamlining their hardware resources. As the system owners, the vendor already will have ensured that it has the optimal hardware that is required for highperformance and the stable operation of its software. It is not unknown for outsourcing organizations to cut corners when hosting customer systems on their hardware or for inexperienced consultants to incorrectly advise customers when procuring hardware for SAP or related systems. Having a consistent codebase makes support an easier process for SuccessFactors. Experienced consultants know the pitfalls of having a number of components in an SAP system on different versions and patch levels; with so many combinations of components it is inevitable that product bugs will occur for some customers that did not occur for other customers. Usually product bugs require some level of investigation and support from SAP Support, but it is not unknown for users to create workarounds to avoid the support process. Experienced consultants also know that new SAP ERP HCM installations can contain bugs that have fixes in SAP Notes, but for inexperienced consultants this can lead to unnecessary Customer Support messages (known as CSS or OSS messages) being raised with SAP Support when a fix already exists. Obviously, with a SaaS solution, only new and unknown bugs are likely to be discovered, but once identified they can be fixed for all customers quickly. The downside is that non-urgent fixes are only available in the next release. A unique feature available to SaaS customers is the ability to have analytics benchmarks based on aggregated data from all customer tenants. Until the invention of SaaS, this type of data was impossible to provide. Now, customers using SuccessFactors Workforce Analytics have the option to compare their analytics to benchmarks formulated from the data of multiple customers. It is worth noting that customers using SuccessFactors Workforce Analytics have the option to opt in or opt out of having their data (anonymously) used in the application’s benchmark analytics. For many customers the inability to customize SuccessFactors HCM applications can be a reason to stay with on-premise. With SuccessFactors, if a particular piece of functionality does not exist then a customer has to do without it. However, as mentioned previously, the SAP HANA Cloud Platform can provide the ability to add entire new applications into SuccessFactors. With SAP ERP HCM, specific user requirements can often be accommodated by using either the object-model and infotypes enhancements or by using one of the many technologies that SAP has created for extending the system, such as user exits, Business Add-Ins (BAdIs), and the ABAP Workbench. This provides an almost limitless number of methods in which complex user requirements can be met in SAP ERP HCM. Another potential downside for SaaS customers is that any period of downtime, whether planned or unplanned outages, affects all tenants. This is also a possibility with any unexpected side-effects of introducing new functionality or bug fixes. However, the restriction of SuccessFactors HCM being configurable but not customizable – at least in the same way as SAP – ensures that all tenants comply with the application’s data model and application framework.

Security in SuccessFactors

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One of the biggest concerns for companies when they are considering a SaaS solution is security. While many feel that they have complete control of security only when using SAP ERP HCM, it is worth highlighting that SuccessFactors has a strong number of security standards and mechanisms in place to protect its systems and its customers’ data. There is a widespread perception that data is less secure in the cloud, yet, in reality, the opposite is more likely to be true. This is generally because, although the larger customers using SAP ERP HCM may have dedicated security teams, a number of smaller customers do not have the resources to dedicate a specialist team to manage security in the same way that a cloud vendor like SuccessFactors could. Internally, SuccessFactors classifies security as a product itself and it has a strong focus on data handling, privacy, and protection. SuccessFactors is a specialist in processing and protecting customer data. Since providing secure software services is the core business of SuccessFactors, it has in-house expertise to provide the correct level of protection that is required to safeguard users’ sensitive data. When it comes to handling of customer data, contractually SuccessFactors is a data processor and not a data controller. It has no rights or warrants to customer data and can only perform actions with their users’ data that are specified in the contract between the two parties. The customer always retains ownership of its data and can, at any point, download a CSV file of all its data from SuccessFactors. SuccessFactors separates between sub-contractors and sub-processors within its infrastructure and only sub-processors potentially have access to data, although this doesn’t necessarily mean they will access it. SuccessFactors ensures that the contractual obligations that it has with its customers are part of the agreements that it has with all of the sub-processors that may have access to user data. One example is a supplier of database administration services to SuccessFactors and who is considered a sub-processor. SuccessFactors has specific contractual clauses in the contract that are modeled around EU data clauses and the supplier must also be Safe Harbor certified. SuccessFactors also audits the supplier on a yearly basis to ensure that it complies with SuccessFactors’ own security and privacy standards. The outcome of this audit is both logged and described in a 300-page report. SuccessFactors, like SAP, audits against and assesses its own security standards on a regular basis. It aims to have transparent standards so that customers can not only trust that SuccessFactors security standards are adequate, but also ensure that they do not have to perform their own audits of SuccessFactors’ security standards. SuccessFactors also performs ongoing application and infrastructure penetration testing. SuccessFactors security standards are based on the strict UK BS10012 standards for data privacy and the ISO27002 framework for security standards. The UK BS10012 standards have been adopted by Germany to govern its data privacy standards. SuccessFactors also sits on various cloud security committees and complies with a host of continental and global security standards and certifications, including: • • • • • • •

EU Directive 95/46/EC (also known as the Data Protection Directive) Payment Card Industry Data Security Standard (PCI DSS) ISO27002 BS10012 SSAE-16 SOC2 ASIO-4 FIPS 140-2 level 3 certification

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• •

U.S. government FISMA accreditation (OPM/DHS/NTIS) Safe Harbor certification

SuccessFactors has various security protections at each of the layers of its service and infrastructure, including the physical site, database, middleware, application, and network and communication channels. SuccessFactors has two data centers each in North America, EMEA (located in St. Leon Rot, Germany), and Australia. As well as providing the SuccessFactors services, the data centers in each region act as a disaster recovery for each other, and data replication between the two data centers runs in near real time. All data centers are high-availability, network access protected, and ANSI/TIA/EIA-942 Tier III+ rated facilities connected by IPSEC Secure Tunnels. Each server has Host-Based Intrusion Detection System (HIDS) server protection, plus a host of leading antivirus, anti-hacking, and vulnerability detection software that runs on a daily basis. In addition to these, the data centers have a number of physical security measures including 24-hour security guards, closed-circuit camera monitoring, and adverse weather protection. The administrators of productive systems at SuccessFactors are subject to compulsory multi-factor authentication. On the database layer SuccessFactors has numerous controls for activity monitoring and blocking, data change logging, and auditing on its databases and all stored data is encrypted with AES at a minimum of 128 bits. All changes to data are logged in encrypted and unalterable log files with a variety of attributes. Additionally, data is also backed up on a nightly and weekly basis. The middleware layer – the platform that SuccessFactors runs on – has various authentication security provisions that include single sign-on (SSO), federated identity management, SAML 2.0 Assertion, and segregation of duties (SoD). Applications in the SuccessFactors HCM suite comprise the application layer, and the built-in role-based permissions (RBP) mechanism is the main form of security used. RBP is similar to the authorization roles used in the SAP authorization concept. Using RBP means that security is managed at all levels of SuccessFactors applications, including the function, transaction, field, and data levels. Like roles, the RBPs are often based on activities that must be performed by the user for whom the role is defined. As a result, roles can be managed centrally in the same way that they are within on-premise SAP systems. SuccessFactors also requires that users have a minimum set of privileges to perform certain functions, so it is not possible to accidentally provide access to a certain function by granting of one type of privilege. SuccessFactors’ applications are designed to automatically log the user out after 30 minutes of inactivity. Passwords are sent to the application server from the client machine using SHA-1 hash encryption. SuccessFactors does not have a structural authorization concept, which some organizations may consider to be a limitation or barrier to adoption. Access is based on an area of responsibility and RBPs are assigned easily by a systems administrator rather than a security expert. RBP is flexible and can be easy to configure compared to SAP authorizations while still offering a great deal of flexibility. In fact, someone without experience in configuring authorizations and security should be able to configure RBP in SuccessFactors. For complex or global organizations that use dotted-line or matrix management, the matrix manager concept of SuccessFactors may be sufficient to provide multiple access points to data maintenance as an alternative to structural-based authorizations. Organizations with a strong need for structural authorizations should take into consideration whether SuccessFactors can meet their security requirements during evaluation of the HCM suite.

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The network and communications layer uses well-known standards for transferring data, including VeriSign-certified SSL/TLS, SFTP, and SSH.

System Availability SuccessFactors contractually promises a minimum of 99 percent system availability to customers outside of regular and emergency maintenance windows and, as a result, has carefully considered the steps required to maintain high availability in each of their data centers. And because SuccessFactors’ applications are accessed through the cloud, performance is also a critical factor for high user satisfaction. In each data center the servers used for tier of the service (e.g., network, database, and application) are clustered and load balanced to spread traffic demand and act as a failover to prevent interruption or loss of service. Fallback servers – replicas of the active production servers – are on standby in case of an upsurge in usage. SuccessFactors create forecasts of future demand based on historical usage and new subscriptions on a monthly, quarterly, and yearly basis to ensure that adequate servers are in operation and on standby. To monitor and quantify application performance, SuccessFactors simulates the end user experience every 15 minutes from 10 different locations. The performance of each server is monitored in real time and the application source code is monitored in real time by a source code profiler. Internal network traffic is also limited so that only the data required by the application is transferred internally.

Integration Between SAP ERP HCM and SuccessFactors HCM Suite Integration is one of the hottest topics when it comes to SuccessFactors. SAP is still in the early stages of developing its platforms for integration between SAP ERP HCM and the SuccessFactors HCM suite, although it has already formulated and announced its integration strategy. The strategy is centered on providing integration for the hybrid model and therefore other integrations, such as those for Employee Central and SAP Jam, are not included in this strategy. Saying this, SAP does already have integration between SAP ERP HCM and SAP Jam and provided some integration between SAP ERP HCM and Employee Central (full-cloud HCM) in Q4 2012.

Integration Strategy for SAP ERP HCM and SuccessFactors HCM Suite SAP’s integration strategy focuses on three main areas of integration: 1. Data – Data foundation so that SuccessFactors applications can use SAP ERP HCM data 2. Process – Integration of specific end-to-end HR processes with SAP ERP HCM 3. User experience – Unified access and seamless navigation for end users Data integration sets the foundation for point-to-point integration with SuccessFactors so that SAP ERP HCM data can be used in the various talent management applications in the SuccessFactors HCM suite. The hybrid model SAP ERP HCM is the system of record for employee and organizational master data,

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so SAP intends to deliver integration to upload this data to SuccessFactors on a periodic basis. The main aim is to ensure that data is not entered into two systems twice. Process integration is ensuring that data produced in talent management processes in SuccessFactors, such as compensation or recruitment, is stored back in the SAP ERP HCM system and used in the various dependent processes, such as payroll or hiring actions. Providing loosely coupled integration, rather than full real-time integration, is strategically designed to enable hybrid processes to be executed without creating changes to SAP ERP HCM data prior to the point at which they are needed. User experience integration is about providing a fully unified experience for end users when accessing SuccessFactors applications from Employee Self-Service and Manager Self-Service in SAP NetWeaver Portal and NetWeaver Business Client (NWBC). SAP’s intention is for users to access the different systems without realizing that they have left one application and entered another. It is also SAP’s intention that SAP NetWeaver Portal or NWBC and SuccessFactors applications can be accessed from within the same drop-down menus and screens. This includes the use of SSO, unified navigation structures, and integrated menus. SAP wants to prevent segregated access for different applications so that the user experience is seamless enough for users to not even notice that multiple systems are used. The biggest challenge SAP faces here is that the SuccessFactors user interface differs from SAP NetWeaver Portal and NWBC both in layout and design, despite the theme configuration that can be done in both platforms.

Technology for Hybrid and Full-Cloud HCM Integration SAP’s integration strategy is based around two types of integration technology: file transfer and middleware. SAP’s first integration package relied on a flat-file transfer, although from the third package (Service Package 2), middleware integration was offered via SAP NetWeaver Process Integration (PI) and middleware integration also will be available with the forthcoming SAP HANA Cloud Integration (HCI) platform. Figure 10 displays the integration technology options for the hybrid model.

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Figure 10 Integration technology options for hybrid integration Dell Boomi AtomSphere is the de facto integration platform used between SAP ERP HCM and SuccessFactors Employee Central and this integration scenario is part of the full-cloud HCM model. For SAP Jam, the Social Media ABAP Integration Library (SAIL) is provided by SAP and this scenario is part of both the hybrid model and the full-cloud HCM model. SAP’s flat-file integration option is delivered as part of the first integration package and provides a single direction upload of employee and organizational data from SAP ERP HCM to SuccessFactors using an SAP program and FTP server, as demonstrated inFigure 11. This integration option is free for all SAP ERP HCM customers. More details will be covered later in this article when the integration packages are examined.

Figure 11 Architecture of flat-file integration SAP NetWeaver PI, previously called SAP Exchange Infrastructure (SAP XI), is a middleware integration solution used to integrate and transfer data between different SAP technologies. Around 35 percent of SAP ERP HCM customers use PI and therefore can benefit from leveraging this technology to use SAP’s integration packages. Since SuccessFactors is considered an SAP system, there is no additional licensing for customers wishing to use their existing PI installation to integrate SAP ERP HCM with SuccessFactors.

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However, customers who do not have PI would have to invest in licensing and implementing PI to integrate these platforms if they do not wish to wait for the release of SAP’s upcoming cloud-based middleware integration solution, HCI. HCI is a PaaS integration solution that will be used for integrating a number of SAP’s new cloud solutions with SAP on-premise solutions. It was released in March 2013 for Ramp-Up and for customers who are part of SAP’s Customer Engagement Initiative, and it is planned for general availability at the end of 2013 or beginning of 2014. HCI will be priced at 7.5% of the subscription of the SuccessFactors application, with a minimum cost of €12,500. At the time of this writing, it is currently available for Performance & Goals, Compensation, and Recruiting. Initially only SAP Professional Services will be able to implement HCI, although SAP does plan to open up implementation capabilities for partners. Figure 12 is an overview of the architecture for the middleware integration platforms, which are represented by “SAP Integration Technology.”

Figure 12 Architecture of middleware integration for compensation process integration Dell Boomi AtomSphere is a PaaS integration solution that is used for full-cloud HCM integration. This technology has been used by SuccessFactors to integrate a number of on-premise HCM systems with Employee Central. It has a graphic user interface with drag-and-drop workflows and wizards for easy data modeling. The license of Boomi AtomSphere is included in the base SuccessFactors Employee Central subscription and SAP has specified that Boomi AtomSphere should not be used in any other SAP integration scenarios other than integrating SAP ERP HCM with SuccessFactors Employee Central. Therefore, Boomi AtomSphere is not used for hybrid integration scenarios.

Hybrid Integration Packages SAP delivers a number of integration packages to provide the integration scenarios that are set out in its strategy. Some of these packages have already been delivered and are available on SAP Service Marketplace. SAP has planned to deliver five packages in its first wave of integration package releases. Additionally, SAP has already released a Cookbook for configuring SSO, a Rapid-Deployment Solution (RDS) for the third integration package, and a Cookbook for integrating multiple SAP ERP HCM systems to SuccessFactors. Below is a summary of the five packages: 1. First integration package: Integration Add-on 1.0 for SAP HCM and SuccessFactors 2. Second integration package: Integration Add-on 1.0 for SAP HCM and SuccessFactors Support Package 1

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3. Third integration package: Integration Add-on 1.0 for SAP HCM and SuccessFactors Support Package 2 4. Fourth integration package: Integration Add-on 2.0 for SAP HCM and SuccessFactors 5. Fifth integration package: Integration Add-on 2.0 for SAP HCM and SuccessFactors Support Package 2 The first integration package, Integration Add-on 1.0 for SAP HCM and SuccessFactors, was released for Ramp-Up on May 11, 2012, and went on general availability on August 10, 2012. This package provided point-to-point integration using a flat-file upload mechanism. It works through an SAP report that generates a CSV file that is uploaded to SuccessFactors via FTP. This file contains 29 pre-defined fields and up to 15 customer-specific fields, all of which can be selected from standard SAP fields or defined via a customer-specific BAdI (for both the pre-defined and customer specific fields). There are also 30 extractors to extract data for use with SuccessFactors Workforce Analytics. Full details of the fields, reports, and security roles can be found in the Administrator Guide on SAP Service Marketplace under Release & Upgrade Info > Installation & Upgrade Guides > SAP Business Suite Applications > SAP ERP Add-Ons > Integration Add-On for SAP ERP HCM and SuccessFactors. The package currently has an end of mainstream maintenance date of June 30, 2014. The technical name of this add-on is SFIHCM01. Support Package 1 for Integration Add-on 1.0 for SAP HCM and SuccessFactors was released in September 2012, with the primary focus of introducing delta-file handling for the integration package. Previously an entire data extract was required for each CSV file that was generated, but Service Package 1 introduced functionality so that only changes were extracted. Additionally it includes some new fields, a report to remove inactive employees, and a number of SAP Note corrections for the initial package. Support Package 2 for Integration Add-on 1.0 for SAP HCM and SuccessFactors was released on November 5, 2012, and was quite significant because it was the first package to support the use of middleware integration and the first to introduce process integration. The focus of this Support Package is to introduce the transfer of employee and organizational data via one of the middleware platforms and introduce bi-directional data transfer to support the compensation process (known as pay-forperformance). This process integration involves transferring salary and pay data to SuccessFactors and then transferring the resultant compensation data back to SAP ERP HCM, where it must be activated to be written to the infotypes used in payroll and production of compensation statements. This process is shown in Figure 13. The process integration supports approved merit increases, bonuses, and lump-sum payments with integration with SAP Payroll.

Figure 13 Architecture of compensation process integration

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One of the striking factors for users is that, even though middleware integration is used, the integration does not use real-time or near-real-time data transfer. While many users might find this unusual, the decision by SAP to refrain from using real-time integration was influenced by their co-innovation customers. Because the compensation process is a step-by-step approval-based process, it made sense for customers to have data pulled back to SAP once the compensation process was completed in SuccessFactors Compensation. For this package it is important to note that one of the middleware platforms is a prerequisite for transferring the compensation data, although it is not a prerequisite for transferring the employee and organizational data as the flat-file mechanism is still available. Another important point is that configuring or implementing any part of Enterprise Compensation Management (ECM) – the on-premise compensation management module from SAP – is not required because the sole application for performing compensation management in this scenario is SuccessFactors Compensation. Support Package 3 for Integration Add-on 1.0 for SAP HCM and SuccessFactors was released on December 12, 2012 and included a number of bug fixes for the integration scenarios released to this date. Support Package 4 will also include a number of bug fixes and is due for released in Q1 or Q2 2013. Integration Add-on 2.0 for SAP ERP HCM and SuccessFactors was released for Ramp-Up on March 18, 2013, and went on general availability on August 16, 2013. The package includes attract-to-hire process integration for SuccessFactors Recruiting. This allows hiring and transfer actions to be started in SAP ERP HCM once an employee has accepted a job offer in SuccessFactors Recruiting. The end-to-end process covers the recruiting process from planning vacancies through to filling a vacant position. Figure 14 shows the process integration flow.

Figure 14 Architecture of Recruiting Management process integration This package is significant because it has various integration points between SAP ERP HCM and SuccessFactors Recruiting Management. Data will flow from one system to the other depending on the stage of the recruiting process, unlike the compensation process in which data is transferred from SAP ERP HCM to SuccessFactors Compensation and then back from SuccessFactors Compensation to SAP EPR HCM once it has been used in the compensation process. Support Package 2 for Integration Add-on 2.0 for SAP HCM and SuccessFactors was released on September 6, 2013. The package includes define-to-hire process integration for SuccessFactors

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Recruiting and enables requisition requests to be created in SuccessFactors Recruiting using employee, organizational, and vacancy data from SAP ERP HCM. The technical name of this add-on is SFIHCM02. Future integration packages will be released in 2013 and 2014 for Skills and Competencies and Learning integration. Integration packages are also under consideration for Onboarding and Succession integration. The release of the rapid-deployment solution package SAP ERP HCM Integration to SuccessFactors rapid-deployment solution followed the release of Support Package 2. This rapid-deployment solution provides users with a rapid implementation of the integration package by either SAP or an SAP partner. The SAIL technology is used to integrate SAP ERP HCM and SAP Jam and is part of SAP NetWeaver from specific Support Package Stack releases of the SAP_BASIS component. Although no integration packages have been released, SAP released the SAP JAM ABAP Integration Configuration Guide in November 2012. In addition to these packages, SAP has also released two Cookbooks: • •

Integration of SuccessFactors Business Execution into SAP NetWeaver Portal via Single Sign-On Integration of Multiple SAP ERP Human Capital Management Systems with SuccessFactors Business Execution

Both of these provide instructions to set up integration of SSO and integration of multiple SAP ERP HCM systems with SuccessFactors.

Full-Cloud HCM Integration Packages As mentioned, Dell Boomi AtomSphere is the integration technology used to support integration between SAP ERP HCM and SuccessFactors Employee Central. Along with the hybrid integration packages, this integration platform provides full-cloud HCM integration. SAP has released one integration package for a full-cloud HCM model, the Employee Mini-Master Integration Package. This was released for Ramp-Up on November 30, 2012, and was released on general availability on February 15, 2013. This package integrates employee, job, work contract, and payroll data between SAP ERP HCM and SuccessFactors Employee Central and is also used for integration between SuccessFactors Employee Central and SAP Cloud Payroll. It leverages the Dell Boomi AtomSphere platform. At the time of writing, it is unknown if SAP plans to release further integration packages for a full-cloud HCM model. However, new integrations are being released on a quarterly basis.

Technical Information and Prerequisites for a Hybrid Integration Scenario All the integration packages have the same prerequisites, with the exception of the initial package, which does not have any middleware prerequisites because it only supports file-based integration. SAP ECC 6.0 is the minimum release for using the integration packages and there are no enhancement package prerequisites. For the various Support Package Stack requirements companies should consult the Administrator’s Guide on SAP Service Marketplace. They should also review SAP Note

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1708986 (Installation of SFIHCM01 600). Within SAP, configuration of the integration packages is done centrally in the IMG. For middleware integration using PI, the following minimum prerequisites apply: • • •

SAP NetWeaver PI 7.0 Enterprise Services Repository (ESR) content for the add-on HTTPS communication

Prerequisites for HCI have not yet been released. The integration packages are delivered in eight languages: English, German, Spanish, French, Portuguese, Russian, Chinese, and Japanese. However, the documentation found on SAP Service Marketplace is largely in English, with some documentation also in German.

Integration Challenges The pre-delivered integration from SAP is a big step forward for SAP ERP HCM users and provides benefits to users wishing to use the hybrid approach. Despite this, there are still some challenges remaining for customers. SAP has communicated large parts of its strategy, but since this strategy is constantly evolving it has not been possible to provide full disclosure on a regular basis. SAP has taken the opportunity at major events to provide updates about their strategy, but many users simply do not have access to or know what channels to look at for this information. Users should be proactive about trying to stay well informed about coming changes; this is discussed in more detail in the “So What Does This Mean for SAP ERP HCM Users?” section. While users who already have an SAP NetWeaver PI installation in house can benefit immediately from SAP’s integration packages, those that do not have to invest in an SAP NetWeaver PI implementation and the associated licensing costs. Those users also have the choice to use HCI, but at present the licensing costs are unknown and therefore it is difficult to accurately compare the two options. Ideally users should wait until they have all the information on licensing before examining their options. Customers using concurrent employment should understand that there is additional maintenance for employees who have multiple employment contracts. For the integration process to recognize employees on concurrent employment, the personnel number of the main contract must be maintained in infotype 0712, with subtype SFSF. This acts as a Central Person ID in SuccessFactors. The integration package report in SAP will then read the Central Person ID and all related personnel numbers, but the personnel number defined in infotype 0712 is used as the central employee number. Another consideration is that the email address field is compulsory in SuccessFactors and therefore all employees must have an email address maintained. Since a BAdI implementation can be used for determining the email address, it can be possible for organizations to write some ABAP code to generate this. However, this solution does not work for all organizations.

Key Misconceptions

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Some misconceptions exist around additional licensing for integration. The integration packages are all license-free and for customers leveraging SAP NetWeaver PI there is no additional licensing required for middleware integration. For HCI, there are additional licensing costs. It has also been rumored that much integration content is still required. However, the first integration addon covers all of the basic employee data required for all talent management processes and for the SuccessFactors Employee Profile that is used in Employee Central and as a central component for talent management solutions. Module-specific integrations are available for recruiting and compensation but need to be built for the other solutions. Other rumors have circulated that more standard integration is crucial for the success of a SuccessFactors implementation. However, for many customers integration is not a new topic and is not always a critical aspect of an implementation. In some instances this may be the case, but for some customers who do not need to transfer data between different systems, integration is not critical.

So, What Does This Mean for SAP ERP HCM Customers? Based on the previous information I believe that there are certainly a number of ramifications for SAP ERP HCM customers and, in the long term, the SAP ERP HCM landscape is likely to look very different than it does today. I believe that on-premise will remain significant for the foreseeable future and SAP ERP HCM is central to SAP’s hybrid model as the core system of record. In the longer term SAP may begin to offer Employee Central as the system of record instead of SAP ERP HCM, but at the present time this should not be of great concern to SAP ERP HCM users as SAP offers both options. The major changes will come in the talent management area, where SAP is investing significantly in innovation and integration. Talent management is widely seen as the next era of HCM and numerous studies have showed a clear correlation between organizational success and a sound talent management strategy. To support this, SAP has invested in a new wave of talent management applications in its enhancement package 4, which was released in 2008. With this in mind, customers should strongly consider that across the suite, SuccessFactors applications are likely to offer more functionality-rich features than on-premise talent management now and especially in the future. While it is not true for all the talent management applications in the HCM suite, this is likely to change as SAP invests further in the HCM suite. The R&D budget available to SuccessFactors has increased significantly since the acquisition and this drives huge innovation in all of SuccessFactors’ products, not just in talent management. While users should consider this, they should also investigate each solution’s functionality and integration effort before making a decision. For companies who use a number of SAP’s talent management solutions already and do not require additional licenses, then staying with SAP ERP HCM may be the most attractive and practical proposition. Companies that are using and wish to continue using SAP ERP HCM’s on-premise solution should not be overly concerned by SAP’s strategy. SAP continues to invest in core HCM and analytics, particularly around usability and SAP HANA. SAP has made multiple investments in HCM analytics solutions recently and, I expect, will continue to invest in the technology that can assist customers who wish to invest in HCM analytics. More recently, SAP announced that the SAP Business Suite is now certified to run on SAP HANA, which indicates SAP’s commitment to on-premise ERP.

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Companies looking to implement talent management solutions or extend their talent management portfolio may wish to evaluate their strategic direction to incorporate SaaS. Whether they want to leverage their on-premise investment or move to the cloud depends on a number of factors. These factors can include: • • • • • • • • • • • •

Organization culture and readiness for the cloud Internal SAP strategy and roadmap Existing customization and enhancements within SAP ERP HCM Existing investments in talent management or SOVN Existing infrastructure and technology Projected maintenance and support costs of extending on-premise usage Management of capital expenditure versus subscription costs SAP ERP HCM and SuccessFactors functionality versus business needs and requirements Level of integration effort between SAP ERP HCM and SuccessFactors SAP’s strategy, roadmap, and innovation focus areas Legal restrictions and local legislation Implementation partners

While there are many reasons why an organization might move to the cloud, I am not going to discuss them in detail here. However, I examine some of the SuccessFactors-specific factors that companies can consider.

Functionality Within SuccessFactors there is, as one would expect, a great deal of overlap across many solutions. Employee Central is the least mature of SuccessFactors solutions, but SAP has and continues to invest heavily in bringing it up to the same level of functionality as SAP ERP HCM. Employee Central has now reached a maturity level where it is fit for enterprise. On the opposite end of the scale, SuccessFactors Performance and Goals and SuccessFactors Workforce Analytics are two of the most feature-rich solutions in the HCM suite. SuccessFactors Performance and Goals contains a number of social and gamification features to ensure that the performance management process is more attractive to both users and managers. While these might be considered fluffy features, the core functionality is strong and matches what is offered in the SAP Performance Management module. SuccessFactors Recruitment features a standard user interface that far outstrips SAP’s standard offering, with attractive themes and controls. Although SAP’s recruiting engine – like its performance management engine – is one of the strongest around, e-Recruiting does lack usability, presentation, and social media integration. However, SAP e-Recruiting is highly customizable and has a great deal of flexibility. As a result, companies need to examine whether a trade-off is needed between modern recruitment techniques and the flexibility that SAP e-Recruiting offers. SuccessFactors Learning is based on Plateau Systems’ learning management system (LMS), which SuccessFactors acquired in 2011, and therefore it has a comprehensive set of leading LMS features. SAP Learning Solution (LSO) is not as strong as the SuccessFactors solution and requires the additionally licensed SAP Learner Portal and SAP Learning Assistant mobile app to enhance the learning

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experience. SuccessFactors Learning has a strong focus on social-media integration and collaborative recruiting processes, as well as built-in analytics and complementary mobility functionality. Customers should investigate if SuccessFactors Learning Solution offers all the functionality found in SAP LSO. When it comes to compensation management and succession planning, both the on-premise and cloud solutions have similar features and functionality. For compensation management it is worth evaluating if ECM is a viable solution if SAP Performance Management is used, since they are used in complementary processes, have a similar look and feel, and require no additional licensing. Customers should look at their processes and what key functionality they need to support those processes. This activity will vary from customer to customer, but should be evaluated thoroughly. The development planning functionality offered by SAP in SAP NetWeaver Portal is not integrated with other solutions and is fairly rigid, limiting the value of automated objective setting and measurement of an employee’s long-term development plan. For workforce planning and for analytics the on-premise solutions from SAP – BusinessObjects Strategic Workforce Planning and BusinessObjects for HCM Analytics – both rely on BusinessObjects technology, and both SuccessFactors Workforce Planning and SuccessFactors Workforce Analytics should be seriously considered irrespective of whether BusinessObjects is running. In particular, SuccessFactors Workforce Analytics features more than 1,000 predefined analytics and benefits from benchmarks that are not available in any on-premise solution. For companies that currently don’t have HCM analytics or SAP NetWeaver Business Warehouse (SAP NetWeaver BW) then it makes sense to look at SuccessFactors Workforce Analytics. For social collaboration, SAP Jam is SAP’s go-forward solution, ahead of the existing solution – SAP StreamWork. Although these solutions share a number of common social-media-related features, SAP Jam offers more features and its overall usability, despite being similar, could be considered superior to SAP StreamWork. For example, the layout, user interface design, and social collaboration features in SAP Jam make it easier and more engaging to use than SAP StreamWork. In addition, some of the features for Wikis, blogs, and video recording found in SAP Jam certainly bring new benefits to customers who want to use a social collaboration platform. As a result, new customers seeking a social collaboration solution should look at SAP Jam rather than SAP StreamWork as the focus of SAP’s innovation investment has shifted exclusively to SAP Jam.

Integration Considerations One the biggest areas of concern for SAP users should be around integration. With SuccessFactors, it appears that SAP has traded integration – one of its biggest selling points – for innovation. SAP has made integration a key advantage of using its software previously and now it is pushing a solution that has relatively weak integration when compared to the solutions that have been offered historically. This is not to say that integration will not get better; on the contrary, SAP is investing significantly in introducing standard integration scenarios for SAP ERP HCM and SuccessFactors while also providing users with a foundation to develop their own integration scenarios. However, in addition to the information provided previously in this report, users must be aware of the challenges that they may face in creating and maintaining integration between SAP ERP HCM and SuccessFactors for the hybrid model. At this time, the integration is fairly limited for the hybrid approach and is restricted to selected talent management processes.

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Integration for full-cloud HCM has existed for some time with Dell Boomi AtomSphere and integration for SAP Jam is already available. If SAP NetWeaver PI is not implemented then either an implementation of SAP NetWeaver PI or an implementation of the forthcoming SAP HANA Cloud Integration platform is required. An implementation of SAP NetWeaver PI would require both a license for PI and the additional costs of an extended implementation project that could take upwards of six weeks. Interestingly, although SAP has stated that Boomi AtomSphere should only be used for integration with SuccessFactors Employee Central, SuccessFactors offers Boomi AtomSphere for integration with all modules. Customers should first confirm that SAP supports this type of integration method so that there are no integration surprises at a later date. In addition to this, customers would also need to design and configure any integration that is not provided with the SAP standard packages. Depending on the level of customizations within on-premise SAP, this effort might be considerable and could add more maintenance to what might be an already complex SAP landscape. On the other hand, should an organization’s talent processes be closer to best practice then using the standard SAP integration scenarios would be an efficient way of adding SuccessFactors solutions to their SAP landscape. Potential users should be advised to monitor SAP’s integration roadmap and releases on a regular basis to understand whether appropriate content is released from SAP that enables simple and easily maintainable integration. Once the HCI platform is released and additional details are known, then users who do not currently have PI can make a better-informed decision about the path they wish to choose for integration. One of the impacts that the acquisition has already had on SAP is the change in its release cycle. Like SuccessFactors, SAP is now releasing new functionality on a quarterly basis with the Feature Packs that are part of HR Renewal. While all SuccessFactors users have the functionality in the latest release available to them, SAP users must already have enhancement package 6 and HR Renewal 1.0 implemented to benefit from this new release strategy. Although this quarterly release cycle mirrors that of SuccessFactors, it is still an open question whether the HR Renewal Feature Packages will deliver the same number of innovations as is delivered with SuccessFactors.

Core HR For customers who are looking to revitalize their core HR processes they may want to consider implementing SuccessFactors Employee Central. Although, at this stage, it is not yet suitable for all customers it does meet the needs of a significant proportion of customers and it will continue to be enhanced. SAP has and continues to invest extensively in the development of Employee Central into the next generation core HR system. Appointing Thomas Otter from Gartner to oversee the strategy of Employee Central was a defining move in the future of the product. With a growing roadmap and increasing integration points customers are advised to look at what Employee Central can offer them, even if they are unsure whether it can meet their business needs at the present time.

Talent Management Solutions Companies looking to implement talent management solutions or extend their talent management portfolio may wish to evaluate their strategic direction to incorporate SaaS. Whether they want to leverage

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their on-premise investment or move to the cloud depends on a number of factors. Since SuccessFactors is where SAP will invest most of its innovation budget for talent management then companies looking to implement one or more talent management solutions should take this into consideration along with the following factors: • • • •

Existing investments in SAP’s talent management solutions Functionality of talent management solutions in SAP ERP HCM versus SuccessFactors Available integration between SAP ERP HCM and SuccessFactors Planned innovations and mid- to long-term developments

For organizations without any talent management solutions, SuccessFactors is worth considering, despite the integration concerns. If a phased approach is used for the talent management solutions in SuccessFactors then in due course it is likely that SAP will deliver integration scenarios to cover the solutions that are not yet implemented. Companies with existing talent management solutions must consider whether moving to the cloud is suitable for the new processes. Since SAP’s talent management solutions are designed to be integrated processes, it might not make sense to move one or two internal processes to SuccessFactors while keeping others on SAP ERP HCM. In some cases, there might not be additional functionality in SuccessFactors than is found in SAP ERP HCM. SAP ECM has a number of similarities with SuccessFactors Compensation and therefore an investment in additional licenses might not warrant a return on investment versus the cost of implementing ECM, especially since there are no additional licenses for using ECM. Users might also find that SAP ERP HCM can deliver all the functionality that they require. Customers should examine their existing talent management landscape, the functionality within SuccessFactors versus SAP ERP HCM, and whether there is a significant return on investment in purchasing licenses for SuccessFactors versus the additional functionality and adoption that would be obtained.

Legal Restrictions and Data Protection Despite strong data protection laws that exist, some companies in some territories may have legal restrictions or a lack of legal protection for their data. As the digital age outgrows legislation that was put in place in the past, some organizations may face restrictions from moving to the cloud that may exist until up-to-date legislation is brought into law within their territory or region. Organizations should make sure they are fully aware of the legal implications of their data. SuccessFactors does have strong data protection mechanisms, policies, and standards for protection of data. Their data centers are located in various territories that afford solid protection for customer data and can protect against unauthorized parties accessing data. For most companies there are unlikely to be any repercussions of moving to the cloud. However, companies must ensure that they do their homework.

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