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HR: Four Pathways to the Cloud

Feature Article | January 25, 2016 by Andreas Schmitz

Companies’ human resources (HR) processes are usually covered by a mix of on-premise and cloud functions. However, many enterprises are increasingly turning to cloud-only solutions. We take a look at the four scenarios.

Innovations every three months, simplified processes, no investment required in new hardware — these are some of the reasons why SAP expert Georg Kerle believes it makes sense to shift HR processes to the cloud. In particular, cloud-based HR software supports a company’s digitization. For example, storing personnel data in the cloud simplifies integration with other cloud processes that are not related to HR. Furthermore, the processes for both permanent and temporary employees can be managed in the same way.

Depending on each customer’s situation and needs, SAP currently offers four scenarios to map HR processes in the cloud. Companies that already run many of their HR processes on SAP ERP HCM start from a different position than enterprises that are only just planning to implement standard software or corporations that want to integrate associated companies and subsidiaries based at home and abroad.

1. Talent Management from the Cloud, Core Processes on-Premise

If companies move their talent management into the cloud and keep their core processes in their existing on-premise solution, they have the opportunity to, for example, use the cloud to handle employee acquisition and hiring as well as target agreements, assessments, and the whole area of further education and training.

On the other hand, employee master data, historical salary data, and information about positions is still kept and managed in the on-premise SAP ERP HCM system. Salary adjustments or bonus payments as the result of a good appraisal are processed in compensation management for cloud and flow into SAP ERP HCM, as does information about new hires or details about newly acquired competencies.

Companies that wish to continue to use HR functions powered by SAP in this form but would like to modernize their user interface can replace the GUI with a browser-based interface with the help of HR renewal, at the same time as taking the first step into the cloud.

2. Run Core Processes On Premise and in the Cloud, Side-by-Side

The second approach is to run core processes both on-premise and in the cloud, side-by-side. This is primarily aimed at organizations with associated companies or subsidiaries abroad, whose current systems make a consolidated view of the whole company difficult or even impossible.

“The parts of the company that deploy SAP ERP HCM on-premise can carry on as before,” explains Kerle. “But where a different software solution is in place – or where there’s no solution at all – master data management can be used from the cloud in SAP SuccessFactors Employee Central.”

Furthermore, SAP SuccessFactors becomes the central point of access for all employee and manager self-services, regardless of whether the employee data is stored in SAP ERP or in SAP SuccessFactors Employee Central. The big advantage is that employees and managers can complete all their self-service activities with a standardized user-friendly interface, while the HR administrators who so far worked only in the on-premise world can continue to use the processes and transactions with which they are familiar.

3. Payroll and Time Management On Premise, with the Rest in the Cloud: Core Hybrid

The idea of approach number three is to have employees clock on and off as before, and also to leave payroll unchanged, but otherwise to transfer functions to the cloud. This is aimed at “companies who want to run HR processes from the cloud, but can’t dispense with their current time management or payroll solution,” says Kerle. The reason for this is that many on-premise customers have modified their payroll application considerably over the years. The essential thing here is for the data from the cloud – in other words, from cloud-based master data management in SAP SuccessFactors Employee Central – to be synchronized properly with time management and/or payroll in the SAP ERP system. SAP SuccessFactors Employee Central is therefore the central component for maintaining employee data. Clocking-on and clocking-off times can be recorded using partner solutions.

4. Everything in the Cloud

The most consistent approach for organizations implementing a cloud strategy is to run the entire range of HR processes in the cloud, from payroll through talent management and time recording. This is ideal for companies looking for an effective way of simplifying complex processes and willing to depart from their on-premise applications completely. The full cloud option makes sense for companies who are not compelled to continue running their legacy systems and do not want to – or no longer want to – assume responsibility for operating their software solutions themselves. “Such companies should seriously consider the full cloud,” says Georg Kerle from SAP.

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