consideration for payroll during cloud migration

Part One: Considerations for Payroll during Cloud Migration

Part One: Considerations for Payroll during Cloud Migration 1024 512 SpinifexIT

A THREE-PART BLOG SERIES BY DARREN SOUTER

Over the last 10+ years, I have watched with keen interest many different announcements from SAP.  Many of these ended up with little momentum, but the purchase of SuccessFactors by SAP was something quite different.  From the outset, momentum was already there with many existing customers using parts (i.e. modules) of the SuccessFactors Solution.  More recently with the continued investment in SuccessFactors Employee Central, this momentum has further increased with many more existing On-Premise customers looking to move to the Cloud.

However, for most of these customers, SAP Payroll is a huge consideration because of the close integration and dependency  to the existing SAP HCM Solution. SAP’s recent announcement which extends Payroll’s lifetime ‘til 2030 provided more options for existing customers. I’ve documented some reactions and possible effect of this extension on my blog a few weeks ago. Like most customers, we’re also hoping to hear more news about what this solution will contain, and what SAP’s plans are for the Next Generation Payroll solution.

The good news is that the current SAP Payroll is an extremely powerful  and flexible solution and that most of the customers have various options available for their Payroll and how it could be  deployed into the future.

I’m making a blog series for customers and organisations who are in this position. We’re breaking it into several parts to cover off the following key topics:

  • What are my options when moving to Employee Central?
  • Considerations During the Implementation of your new Payroll Solution with Employee Central – What functional use cases and technical areas should I be aware of?
  • Streamlining Further Payroll Operational Processes in your new integrated Payroll Environment

We will look at all the solutions that SAP provide and cover off some of the technical changes such as HANA declustered tables and many more areas.

Before I talk about these things, I’d like introduce myself.

I started working at SAP as part of the team that built the Australian Country Payroll solution. Since then, I’ve been involved in designing and building out our SpinifexIT integrated software solutions for SAP HCM/Payroll with the ultimate aim of providing capability in the hands of Payroll and HR professionals that exposes value in their work and efficiency in their payroll and HR operational business processes and the management of such processes….whether that be in the automation of reporting that exposes insights on the accuracy of employees payroll, the automation of recruiting letters and employment contracts for new hires, tools to accelerate testing in payroll upgrades, solutions to help address complex payroll enquiries, the automation of interfaces with third parties who require payroll and banking information, or delivering embedded custom payroll or HR functionality using our solutions to address a specific customer need…. These are just a few examples of the capability I am passionate about providing to such professionals, because in my eyes, Payroll and HR Professionals are unsung superheroes who work tirelessly for the care of the employee and the employee lifecycle process!

Right now,  I am proud to say that we have  over 800 installations in over 40 countries of our solutions adding values to Payroll and HR professionals everyday, this is just what we do, this is my passion!

Ok so lets now talk a little about SAP Payroll and SuccessFactors. Over the last few years, I closely followed announcements from SAP which includes SuccessFactors, HANA, Payroll Control Center and HR Renewal, and have worked with many customers to help them navigate in understanding these solutions and what it means to them.

Hence, it makes sense for me to  blog about SAP Payroll and share my views and some best practices we’ve witnessed through our implementation and engagement experience with customers. I’ll keep this blog general and make reference where appropriate to our SpinifexIT solutions and content since our customers found significant  value in leveraging the solution in different areas of the SAP Payroll and HR Operational lifecycle.

Start following me or our SpinifexIT LinkedIn page so you don’t miss any updates about this topic.

Let’s get started.

HR & Payroll – Migration Options for Customers

As SAP has often stated, customers can start anywhere and go everywhere.  This is no different in the HCM area, and there are many options available to customers.  Some of the key current options available to customers are listed below

  • Migrate to Employee Central and leave Payroll On-Premise
  • Migrate to Employee Central and also migrate Payroll to Employee Central Payroll
  • Migrate to Employee Central and migrate Payroll to a Hosted option
  • Migrate to Employee Central and move payroll to a 3rd party outsourcer such as ADP, NGA or other Payroll services providers
  • Customers can do nothing right now – Stay on Premise and utilise tools like HR Renewal

As you would see, there are a lot of options available for the Payroll Business.  Each of these have different migration paths with different complexities.  The clear message from SAP however, is that the future of the Employee Master Data is within Employee Central (In the cloud).

This, in my discussions with many customers and partners, is an important part of the future landscape of SAP and likely one that most customers will take over the coming years.  The good news is that there is still time to plan this properly and schedule this into your future plans. The transition is a project that should be planned out carefully, as it is not just a migration, but a business transformation and you should look to review internal HCM business processes during this migration.

In terms of Payroll, there are a number of options available.

Migrate to Employee Central and Keep Payroll On Premise

One of the simplest options is to keep Payroll On-Premise and move the HR Functions into Employee Central.

We have already seen many customers take this approach, as it still allows for the future proofing of the business with Employee Central but maintaining the existing Payroll Rules thats are already in place.

This option doesn’t mean that you cannot take advantage of some of the new functionality, inside of SAP including the Payroll Control Center, which allows you to setup your payroll as a process that can be run from a browser view or directly from Employee Central.

Many customers are also implementing SAP HANA as part of their overall ERP landscape.  This has a large advantage with the Payroll Control Center as well, as the Payroll Control Center writes to new Payroll Declustered Tables that can be optimised for SAP HANA queries.  These can result in very fast validation checks to ensure your payroll is correct and accurate.

During this process, one of the larger pieces of work is the integration between Employee Central and the Payroll System.  As most data now is maintained via Employee Central, you now need the Payroll Relevant Data to be migrated to SAP.  This includes most core Payroll Information, but some customers who have existing processes are also continuing to migrate data such as Organisational Structures and other more general employee data.  It really is important to consider what your goal is here in terms of information that comes out of the Payroll System and what processes are to be migrated over to SuccessFactors.

Migrate to Employee Central and move Payroll to Employee Central Payroll (ECP)

In many cases, the customer is looking to completely remove infrastructure and cost that sits within their business while moving to a full cloud solution.  In this case, one of the better integrated options is the SAP Employee Central Payroll Solution. This is a hosted solution that SAP Provides on a subscription model.

With Employee Central Payroll, this is treated as a new Implementation.  The advantage of this approach is that many customers over the years have built up manually intensive practices, have complex payroll processes and in many cases use old versions of SAP Solutions, have  infrastructure capability that is coming close to end of life. It is an opportunity to revisit their entire implementation and redo this process.

PRO:

You can still move transports from your old system to the new system. Custom configuration can still be migrated into the new solution to speed up your implementation, with few exceptions.

PRO:

The integration is much more tightly controlled.  The ECP solution does not require you to configure the SAP Cloud Integration, but instead uses integration processes that are built within the SAP ECP system.

CON:

Some functionality such as Time Evaluation and other Non-Payroll type functionality are not supposed to be used within the Employee Central Payroll Environment.

Several SAP Partners also offer a multi tenanted option here (This means that multiple customers can use the same hardware in the same SAP system), which has the benefits of the SAP ECP environment, but is also tied to some partner solutions that allow for faster implementation with accelerators.  This does still require an implementation (Like the Employee Central Payroll Option), but it does allow for some savings if you can leverage off some of the pre-defined options such as country configuration.

Migrate to Employee Central and move Payroll to Hosted Solution

If you are not looking to rebuild a lot of your payroll processes, but would like to retire your hardware and infrastructure, another option may be to use a Hosted Payroll Service Solution. This is an option if your goal is to move all infrastructure out of your current environment, and to essentially keep your Payroll System as it currently is today.

I have not heard from any customers who may have taken this up, but this option is discussed in more detail in various blogs.  One which questions this option for mid to large sized businesses is as follows. Jarret Pazahanick explains why in his blog.

Migrate to EC and move Payroll to 3rd Party such as ADP, NGA

If your goal is to completely transform your business processes, a further option may be to move to a Managed Service Payroll (Still using SAP Payroll as the engine to deliver payroll). Whilst this option is also a reimplementation of your payroll, you can do it with a partner and adopt a lot of their own pre-defined configuration for the individual countries you run payroll for.

Whilst on one hand, this option could be seen as being similar to moving to the ECP Solution, this actually has many more options including just provision of a hosted payroll solution right through to the complete outsourcing of the Payroll to the provider.

Do nothing and continue to use the current SAP HCM System

STAY ON-PREMISE

The last option is to actually do nothing and just follow the migration path SAP will offer to its customers.  SAP have now given a migration path (Planned from 2023) to move to a S4/HANA sidecar solution, which will allow a quick migration to a similar SAP environment, keep your HR and Payroll Solution (Except for Recruitment and Learning).

Of course, in the next 12 years, the innovation in the cloud will be far more than the existing on-premise system. You might find this dated and this may eventually force the move to Employee Central.

To Sum It Up…

There does seem to be a momentum gathering with more and more customers putting in plans to migrate their core HCM into Employee Central and the other SuccessFactors Modules.  SAP’s focus has been on developing into the cloud. Luckily, this has also had flow on effect back to the On-Premise solutions with applications such as the Payroll Control Center being available to use within the Cloud or On-Premise.

The decision now comes back to more of a business need. Consider these:

  • Do you want to re-implement your SAP Payroll?
  • How much Business Transformation would you want to do in one go?
  • Do you want to continue managing your own payroll?

The choice is yours and you are spoilt for choices.  It is worth really considering the options available rather than just waiting for the inevitable.

In our next part to this blog, we will talk more about the implementation and some of the considerations with focus more on the Payroll.


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