We just completed a comprehensive briefing with SAP and SuccessFactors about product integration. Katherine Jones and I were impressed with the progress the company is making: SAP’s engineering prowess is clearly being applied to this area in a big way. And SAP customers will see these integrations being applied to all of SAP’s cloud offerings.
Understand that HR Integration is Highly Complex
The first point to make is that HR system integration is very complex at the outset.
HR systems have to interoperate with payroll, benefits, assessment, data providers, and lots of third party talent management applications. Over the last five years a wide array of new HR content, data, and services have been launched (training, assessment, workforce data, compliance processing, sourcing data) – making integration more important than ever .. and many of these new services are provided by cloud vendors, so they cannot be “integrated” directly in the data center. And the average large company has 6+ HR systems already.
SAP clearly understands this complexity, and the company now has a well thought-out strategy to address nearly every possible scenario.
Today the company has built out and developed four broad types of integration scenarios:
1) SAP Core HCM (HR) or Payroll customers who want to integrate SuccessFactors talent management (which SAP calls Talent Hybrid).
Without getting into the details, this is a large set of companies. For these situations SAP has developed a set of architected integration tools which let SAP HCM interoperate with SuccessFactors talent applications.
You can now run SAP payroll through the cloud; you can replicate employee master data between Employee Central and SAP HCM, and the talent applications in SuccessFactors can interoperate with SAP HCM’s employee statement of record. Some of the more advanced integrations are still coming (i.e., some of the learning/LMS and additional recruiting integration will come in 2014).
Remember that SuccessFactors has already been designed to work with third party HRIS systems as well. Traditionally many of the SuccessFactors customers interoperate with Oracle, PeopleSoft, and other HR systems – so all those architected integrations continue to be supported.
2) SAP Core HCM integrated with SuccessFactors Talent and Employee Central (which SAP calls Two-tier HCM)
In this scenario, you have an existing SAP HCM or payroll system and you want to add SuccessFactors talent management, but you also want the benefits of cloud HR (SuccessFactors Employee Central). This may be done as part of a migration strategy or as a way to provide HR services to remote locations who are not currently using the core SAP HCM system.
One SAP customer, for example, is a consumer products company that has many global affiliates, some of which were never migrated onto the core SAP system. For these business units the company has purchased SuccessFactors Employee Central and is letting them run their own cloud-based HR system. These clouds can now interoperate and coordinate HR records with the core HCM system.
This provides a potentially powerful solution, particularly for companies that are “migrating” slowly from core HR to SAP Employee Central.
3) Full Cloud HCM integrated with SAP ERP (not HCM)
The third situation, which is likely to be increasingly popular, is a company that wants to use SuccessFactors Employee Central as their new cloud-based HR system, coupled to their core SAP system running financials and other ERP components (not necessarily SAP HCM). This may be an SAP customer that wants to replace PeopleSoft or another on-premise HR system.
This is also a fully supported solution and the components in HR which are needed in the ERP system are automatically replicated from Employee Central. The people-related data which is needed by SAP ERP is replicated from Employee Central into SAP.
4) Integration with 3rd Party Payroll and other Applications
The fourth integration is the most common: integration with benefits, time and attendance, payroll, health care. assessment, and other providers.
For these cases, SAP/SuccessFactors has built pre-packaged integrations (iFlows) with AON Hewitt, BenefitFocus, Kronos, Workforce, ADP Globalview, NorthgateArinso, and third party integrations done in partnership with Cigna, TowersWatson, Mercer, Fidelity, MetLife, Talent2, Ceridian, BNY Mellon… with and lots more coming.
Productized iFlows and Open Interfaces for Third Party Integration Apps
A critical part of the integration strategy is SAP’s productized iFlows, which are SAP-developed integrations which cover end-to-end security, data management, and process integration. The iFlow solutions, which are being developed by several dozen SAP engineers, are being prioritized based on customer demand.
We believe SAP/SuccessFactors is also going to get creative about allowing customers to develop their own “apps” to integrate with their cloud platform given flexibility in their architecture. Some of those ‘apps’ will be public or private, but the notion of a cloud “app store” is intriguing. This will give third parties the opportunity to extend the SuccessFactors solutions in ways we have not yet imagined.
If you compare SAP to other core HR providers like Oracle, ADP, Workday, and others you’ll find similar tools. In SAP’s case, use of SAP payroll is a pre-packaged integration, so a company which wants payroll in 50+ companies can use SAP payroll with SuccessFactors Employee Central (it’s now renamed SuccessFactors Employee Central Payroll).
In addition, SuccessFactors Workforce Analytics (we’ll write much more about this later in the year as we launch our new Talent Analytics research) is a full-blown talent data warehouse, talent analytics, HR analytics, and workforce planning system available in the cloud.
Much Progress and More Work to Do
The Cloud Integration team has come a long way over the last 18 months. There is clearly a long term strategy here – one which will help customers preserve their investments and really integrate cloud-based talent and HR software with their current operational systems.
We are talking with SuccessFactors clients now and look forward to sharing more details with you as we finalize our new whitepaper. If you have any questions about these integration scenarios.