Findings and Analysis
AMR Research spoke with current SAP customers to assess whether mySAP HR meets typical organisational requirements for WRM. We found the following:
- mySAP HR (4.6c) adds functionality for HR administration, payroll, benefits administration, and Employee Self-Service (ESS), meeting most core WRM requirements.
- Customers are evaluating mySAP Workplace, an employee-facing portal, for employee access.
- mySAP HR alone won't meet all your requirements for all critical processes; expect to use third-party applications.
- Depending on complexity, upgrade and implementation time frames can vary dramatically.
- SAP appears to be committed to providing a competitive system for HR administration, with pockets of strategic WRM functionality.
- No enterprise HR application, including mySAP HR, will meet 100 per cent of your WRM requirements. But mySAP HR should meet most HR administrative needs, providing the foundation for third-party outsourcers or point systems is there to fill the gaps.
- If you are currently using SAP HR 3.1 or earlier, consider upgrading to mySAP HR for substantial gains in HR functionality as well as better access through Workplace. While Workplace will operate on version 3.1, functionality such as drag-and-relate will not be available. Users of SAP HR 4.0 or 4.5 should also consider upgrading to mySAP HR, especially
The advantages of enterprise integration and a consistent platform across the organisation may outweigh the lack of specific functionality Source: AMR Research
- If you have other R/3 modules installed and are not currently using the HR product, consider moving to mySAP HR as a way to get more from your investment in SAP systems, while delivering solid administrative workforce management functionality to your organisation.
- If you are choosing a new enterprise HR system, evaluate mySAP HR for its HR, payroll, and benefits administration functionality as well as its global capability.
mySAP HR can further maximise an investment in SAP with little sacrifice in core administrative functionality. Source: AMR Research
While it is not at the cutting edge of WRM, mySAP HR can provide the foundation for strategic workforce management. Employees need to be paid, and benefits must be deployed. Workers enter and leave the organisation every day, and government and regulatory agencies expect their reports. This is the realm of human resources systems, and is where enterprise HR systems like mySAP HR are traditionally strong.
WRM applications include HR transaction and record-keeping functionality but, more importantly, also support the cross-functional, cross-organisational processes that help to create, develop, and retain your optimal workforce: they are distinctly not HR-facing applications. WRM systems must provide access and support for collaboration to everyone who manages and makes decisions about human capital.
They also provide analytical and planning capability to allow organisations to optimise the workforce and continuously evaluate how different workforce scenarios will affect business goals. Not coincidentally, these are the very characteristics of the emerging class of Enterprise Commerce Management (ECM) systems.
Enterprise HR systems are entering the ECM era slowly, and there is not yet a best-of-breed vendor for WRM as there is for Customer Relationship Management (CRM) and procurement. Nevertheless, you should expect an enterprise HR system to meet most of your core HR transaction and administrative needs. It should also provide a solid foundation for outsourcing or point systems to fill the gaps. True to its HR-centric roots, mySAP HR will support most administrative and transaction-level requirements, and provides the platform to aggregate and transfer data into other systems, if necessary, for critical strategic processes.
Advantage of enterprise integration
Integration is still a compelling prospect for any enterprise. Using a consistent platform, data elements, tables, and a toolset and skillset across as much of your IT infrastructure as possible should translate into lower total cost of ownership and fewer headaches.
WRM has many touchpoints across the organisation, apart from HR, which supports the case for integration. Procurement, travel planning, and expense administration workflows and approvals all rely on employee and organisational master data, including the following:
- Employee status and level
- Employee ID
- Job and organisational role
- Budget authority
- Signing authority
- Organisational structure
Other areas, such as environmental health and safety and shift planning, integrate at the employee level for skills, training, certifications, incident reports, and availability.
SAP's HR application has finally reached the functional level that forces SAP customers to make the business case for "why not mySAP HR?" instead of "why." Although there will be instances where specific functionality requirements aren't met - and this will be the case with any WRM system - the holes will have to be gaping to negate the benefits of enterprise integration.
Maximising an investment in SAP
As mySAP adoption in the installed base continues, most SAP users should seriously consider using mySAP HR for transactional and administrative functionality. Although customers need to make the business case based on their requirements, AMR Research has learned that some SAP enterprise users found it as cost-effective to upgrade their entire SAP suite to get an additional module than to invest in the module individually, based on SAP's pricing model in 2000.
MySAP provides other modules that can help support WRM: mySAP Workplace, an employee-facing portal, and Business Information Warehouse (BW), for workforce analytics. These products can be used with older versions of R/3. For example, Workplace can be backported to version 3.1I. But users may not get the full range of functionality in this configuration; the drag-and-relate functionality in Workplace, the technology that moves data between disparate systems and a distinguishing feature of Workplace, is only available in 4.6c.
SAP realises HR is an integral part of running a business, and continues to develop their product suite to make use of its inherent strengths across all applications. Even given the need to add third-party applications for certain processes, users may still find it more cost-effective, from both a licensing and implementation perspective, to implement mySAP HR along with other mySAP products rather than implementing and interfacing an entirely different enterprise HR system.
Meeting most fundamental WRM requirements
SAP has added a number of enhancements in version 4.6c, primarily in benefits administration, time management, time evaluation, and payroll. Some enhancements, such as savings bond purchase functionality and out-of-sequence paycheck processing, add deeper functionality to what was already a strong product for basic employee administration. Other changes, such as the Time Managers' Workplace, offer a redesigned and enhanced approach for time administrators in decentralised organisations.
MySAP HR also introduces a life event framework to ESS. This allows customers to add content, of their own creation or from a third party, to help employees make decisions while changing personal data related to life events: for example, marriage, or the birth or adoption of a child. Adding this type of content can help employees make better decisions and eliminate the need to call an HR or benefits expert. AMR Research believes that a life event approach along with content is necessary for ESS to be truly effective, and customers have come to expect this framework for ESS.
MySAP HR does not add any new strategic WRM functionality; most of what it does offer was added in 4.0 and 4.5, most notably competency-based management. Weak areas still include compensation, particularly processes important to the US - stock administration and incentive plans, for example - as well as the lack of a hook into the Strategic Enterprise Management (SEM) application for planning and forecasting.
Customers are evaluating mySAP Workplace
An important aspect of WRM applications is making information available to a broad array of constituents, including employees, line managers, executives, HR professionals, retirees, contract workers, and even spouses. In fact, HR systems were the early leaders in providing so-called casual users role-based, intuitive access through ESS. The old model of HR power users accessing the system directly while most employees use Web-based ESS for personal changes has evolved into a model that allows all employees to use a portal to access all necessary job-related applications and information.
Companies need to consider how employees do their work and examine organisational goals. Employees that use multiple systems every day will probably benefit from the single sign-on and drag-and-relate capabilities of mySAP Workplace. Organisations can also use portals as a way to share personalised or targeted information with groups of employees, based on their roles, instead of the one-size-fits-all approach of a corporate intranet.
Since your WRM deployment probably includes, or will include, ESS anyway, evaluate whether having Workplace on everyone's desktop instead can provide additional benefits, such as easier system access or improved employee communications. SAP customers should evaluate mySAP Workplace as their corporate portal product for the integration and investment reasons already discussed. In some cases, especially for those not on the mySAP platform, launching ESS from your company intranet may still be the most feasible solution.
MySAP HR alone won't meet all user requirements
Showing its roots as an HR administrative system, mySAP HR lacks the strategic or extended functionality to support WRM fully. Notable examples are end-to-end, collaborative recruiting functionality; incentive planning and administration; and workforce planning tied to overall strategic enterprise management and performance. Depending on the complexity and the degree of critical importance of these processes to your business - and for most businesses, proactive workforce management is fairly critical - users should expect to use third-party systems at least some of the time to expand upon mySAP HR functionality.
SAP has been cautiously increasing the number and scope of its partnerships with third-party HR system vendors to provide some of this functionality. The vendor recently added partners for recruiting, benchmarking, and compensation functionality, among other areas. But the convenience of a delivered interface may be offset by the need to deal with two separate vendors on contracts, upgrades, maintenance, and customer support.
As always, your business requirements should drive the selection process and final decision. Since you will have to use third-party systems anyway to meet some of your WRM requirements, evaluate the functionality offered by an SAP partner along with other systems on the market before making a final decision. And keep in mind that other vendors may have reusable experience - and interfaces - if they've already worked with SAP customers.
Depending on complexity, upgrade and implementation time frames can vary dramatically. According to SAP, about 20 per cent of its existing HR customer base is live on, upgrading to, or implementing mySAP HR. After a somewhat slow start last year, upgrades are rapidly increasing; in part, this is a result of increased clarity in the customer base - and with SAP - about what mySAP is and what value it provides users. According to SAP, upgrades to mySAP HR range from four weeks to eight months. This wide range can be attributed to a number of factors:
- Amount of new functionality being turned on with the upgrade
- Where the data is coming from - for example, multiple third-party systems versus one enterprise system and how clean it is
- Number of customisations in the source system, and the need to redo customisations in mySAP HR
- Process re-engineering required, or desired, in conjunction with the upgrade.
These same factors will affect initial implementations of mySAP HR (or any enterprise WRM, for that matter), and those time frames can widely vary as well. Users that AMR Research spoke with took a year or more to implement the system but were not particularly dissatisfied with that time frame. In other words, they understood up front how long it would take and the project was completed on or close to schedule.
Most customers are upgrading from earlier versions of R/3, where the upgrade will deliver the biggest functionality gains. Users can go from version 3.1 to 4.6c directly. And since 4.6c marks the debut of SAP's new architecture, which ostensibly gets rid of the release cycle (SAP will push out new functionality as it becomes available), being on mySAP should make life easier for customers.
A competitive system for HR administration
Customers are understandably reluctant to invest in software if they are not sure that the vendor will be around, or whether the system will soon be out of date. The recent rash of dot-com failures has done nothing to allay that fear. SAP, while not cutting-edge, provides a dependable if conservative system that eventually incorporates the best ideas from niche vendors. The continued growth of SAP's customer base, including HR customers, indicates that this is not necessarily a bad approach.
The recent reorganisations in the SAP AG development organisation and the SAP America subsidiary have kept mySAP HR in good stead, with a global Human Capital Management (HCM) organisation and a product management organisation in the United States both dedicated to mySAP HR. These teams have also been paying attention to, and succeeding at tackling, non-technology issues: for example, improving their relationship with the Americas SAP Users Group (ASUG). As a product, mySAP HR is almost--not quiteat the same level of importance as SAP Customer Relationship Management (CRM) and SAP Supply Chain Management (SCM). Expect SAP to continue to produce a competitive HR product at the transaction and administrative level.
That said, mySAP HR won't win any awards for innovation in WRM, but that's not what SAP is trying for. What mySAP HR will do is deliver solid functionality for administrative needs and serve as a foundation for third-party WRM systems, if necessary. When it's measured against the appropriate benchmark, mySAP HR should get the job done for most organisations.
AMR provide strategic advice, research, and data on e-business applications and infrastructure technologies to help customers develop technology strategies that support business goals.
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