HR Technology Column with Us to the Thrilling Days of Yesteryear -- Via SAP

For years, the chattering classes in HCM have almost unanimously declared SaaS applications in the cloud to be the inevitable next stage of computing. All of them should have the reality check of being in a room with 1,000 HR-IT folks still wondering whether the cloud is secure and reliable, as I did at the annual SAP HCM user conference. But there were innovations there, too.

Monday, March 31, 2014
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Non-boomers will want to know the headline was the announcer's opening line for the immensely popular television series "Lone Ranger." I didn't see any of the movies.

Everyone should know I'm not picking on SAP.

It's just that for years, the chattering classes in HCM (analysts, consultants, press, bloggers, vendor and agency marketers, plus a distressing variety of hybrids) have almost unanimously declared SaaS applications running in the cloud to be the inevitable next stage of computing.

The more thoughtful ones usually add the caveat that "of course, some really large companies, or those with special circumstances, will stay with their on-premise systems from Oracle/Peoplesoft and SAP."

Well, there are an estimated 25,000 of those companies' on-prem HCM customers around the world, and all the evidence I saw at the SAPinsider HR2014 user conference in March confirmed they're not jumping ship any time soon.

Not that they weren't being encouraged. Strongly!

Morning keynotes from SAP Global Cloud & Line of Business President Shawn Price and SAP HCM Solutions Group Vice President David Ludlow hit the same messages -- hard.

Shawn: "The cloud is here. Everything is a service.... Last June, the on-prem and cloud salesforces were combined.... Also the support organization.... 500 engineers are working on NextGen Core HR in the cloud (Employee Central) with 300 customers signed (double in 12 months).... We are a cloud company powered by Hana [SAP's in-memory database]."

David: "Unmistakable that Employee Central is the future.... It already covers 68 countries with full HR compliance and 27 country payrolls....Talent management has moved to the cloud: 99 percent of our talent solution resources are devoted to them."

The two couldn't have been more direct, and remember, like Oracle, SAP offers a variety of hybrid solutions thanks to its acquisition of SuccessFactors that aims to get customers to the cloud, not just rip-and-replace. They also described on-prem and cloud innovations to be detailed shortly.

But the enormity of their task became clear at the afternoon general session: An "Expert Panel" I moderated with Bersin by Deloite's Partner and Founder Josh Bersin; Horses for Sources' SVP Research Christa Degnan Manning; and IDC's Research VP for HR Lisa Rowan.

Naturally, they were stunningly insightful dissecting the subtleties of SaaS and the cloud. Then our first question came from an oil company guy, "Is the cloud secure?"

Wham! Back to 2005, when SaaS scared people.

Finally, I understood why two years ago Jarret Pazahanick, an SAP Mentor (don't ask but just know that SAP has anointed only seven HCM mentors worldwide) and principle of EIC Experts, a boutique SAP integration firm, started posting links extolling the virtues of Workday on the HR Tech Conference LinkedIn group!

At the time, I only wondered why SAP wasn't tearing off his epaulets and putting him in front of a firing squad. I mean, his business requires good relations with SAP.

Now I understand. He was beating a drum for understanding the benefits of the cloud that he thought SAP customers just weren't getting. Well, he is still right.

This is now Mike Ettling's problem.

Former CEO of HR BPO provider NorthgateArinso, Mike wasn't on stage at HR2014 because his new job wasn't official until April 1. Instead, like most senior execs at software user conferences, he was closeted in back-to-back meetings for two days with customers, prospects, partners and, for a short time, me.

Realizing he was about to become one of the four most powerful software executives in HCM, I booked him on the spot for the current The Bill Kutik Radio Show ® if you'd like to listen to my conversation with him.

Mike is now "Global Head of Cloud & On Premise HR" for SAP. The details behind his title are these: He is the third person to head SuccessFactors, following Lars Dalgaard and Shawn Price. But he will also be simultaneously responsible for SAP's huge installed base (12,000 separate companies) of HCM R/3 customers.

Combining the two areas makes perfect sense: SAP wants to move its customers to the cloud, but not because they're unhappy with their on-prem systems! Aren't you glad that incredible balancing act is not your job?

Mike has huge experience with HCM R/3. NorthgateArinso developed and sold a standalone product called EuHReka, which was a multi-tenant SaaS version of SAP's on-prem solution wrapped in a new UI. With SAP now in the SaaS business itself, EuHReka is only available as part of NGA's BPO offering.

As for the question of whether customers continue to buy on-prem, he told me the South African government recently made a huge purchase of SAP on-prem, the second largest deal after Germany. And that R/3 HCM continues to sell in emerging markets around the world, which may be ignorant of the benefits of the cloud (join the club!) or may have some good reasons to remain on-prem.

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As for the new stuff, SuccessFactors, before being acquired, made plain it wasn't touching U.S. benefits and would rely instead on its partner Benefitfocus. Now with SAP's larger world-view, work is just underway for Global Benefits, expected next February and focused on the common non-cash rewards offered in Europe and elsewhere, such as a company car.

A new on-prem Help Desk, called New Employee Service Center, will be coming out in May, servicing both customers and employees. It will have connections to Employee Central.

All talent management apps will now include a new module for free, Presentations, which is very like Talent Reviews already sold by Workday and Oracle. And some big new developments are promised for learning management in mid-June.

And finally something for everybody! David declared 2014 to be "all about payroll" and introduced Payroll Control Center, which was scheduled to be generally available now, and useful for both on-prem or cloud customers, whose payroll is the on-prem code but hosted.

He said payroll was his customer's biggest complaint because SAP had always focused on process efficiency and architected the application to make it run fast. But that made reporting a bear, which he says has now been improved, including making reconciliation easier.

I yawned, too, but David insisted PCC would be huge for the people who care. Two reasons to care about payroll: If you're responsible for doing it, or if your check/direct deposit is wrong.

Finally, I wondered how long SAP -- notorious for blowing hot and cold on HCM every two or three years over the last dozen -- would keep its focus and stick with this gargantuan development effort.

VP Thomas Otter, product head of Employee Central, recalled going to a recent developers meeting in Germany with 10,000 of them -- working on every SAP application -- packed into a stadium. "I was the third person to speak and that shows the board-level attention for HR," he says.

 Hi-Yo, Silver! Away!

HR Technology Columnist Bill Kutik is co-chair emeritus of the 17th Annual HR Technology ® Conference & Exposition, returning to Las Vegas, Oct. 8-10, 2014.  You can comment on this column at the Conference LinkedIn Group, which doesn't require prior or future conference attendance to join. He is also host of The Bill Kutik Radio Show ®. He can be reached at

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