Employee Central (EC) customers who want to use SAP Payroll can chose between 3 basic options – On-Premise (in-house) Payroll, Employee Central Payroll or a continuum of “hosted” or “managed cloud” payrolls in between. A lot has been written about their respective merits, but few understand that the integration models available differ.
Decisions on payroll solutions aren’t easy and you want them to be future proof. For SAP SuccessFactors Employee Central customers who don’t use SAP on-premise payroll today, the case is clear: If they want to use SAP Payroll, Employee Central Payroll is a natural choice. For customers using SAP on-premise payroll today, there certainly is a strong argument to stay where they are for now, integrate with SAP SuccessFactors Employee Central through core hybrid packaged integration, and enjoy world class integration between Payroll, and Time & Attendance and the Personnel Cost Planning and Simulation module.
Against this stand the benefits of EC Payroll of being able to retire some infrastructure and – less obvious – the fact that innovation is mostly limited to the PTP (Point to Point) integration. PTP is certainly the superior integration model (and highly recommended when using EC Payroll), but only readily available between EC and EC Payroll. This may sound like a small thing, but being cut off from innovation in integration may also mean being cut off from fully utilising some future innovations in EC.
That’s all fine, as long as customers have clarity about the advantages and disadvantages of each model. There is no right or wrong.
Not all SAP “Cloud” Payrolls are created equal
Unfortunately, there is some confusion about other hosted or cloud-based (sometimes called “managed cloud”) payroll models. They provide Infrastructure-as-a-Service and/or Platform-as-a-Service, but are not equivalent to SAP’s Employee Central Payroll. They combine some advantages of the in-house, on-premise model with some advantages of the cloud model, but they don’t offer the same innovation as EC Payroll, because they don’t use PTP integration.
The one message you should take on board: Not every SAP Payroll that is labelled as “cloud”, “hosted” or “managed” does have the same advantages as SAP Employee Central Payroll (and maybe also not the same limitations).
It seems customers are sometimes led to believe that their model comes with all the advantages of EC payroll minus some of its limitations. This is usually not true. Make sure they are very clear which integration model they use. Don’t take the word of the sales rep, as they often aren’t educated about the differences. Otherwise you risk:
- Being left behind regarding the innovations EC Payroll offers
- Using an integration model with lower performance
- Being stuck in a long-term contract not matching your needs
- Having to move again or suffer higher maintenance fees if standard support for on-premise payroll runs out (whenever that will be)
None of the main models in the market is wrong. They all have their virtues. Unfortunately, choice also creates confusion and the use of “cloud” instead of more specific IaaS, PaaS and SaaS as well as some not very clear pitches make it more difficult for customers to make a good decision.
Personally, I’m really glad to not have to sell any of these models, but to be able to sell services complementing any of them. So, no pressure to tilt the advice we can give, even subconsciously.
This overview shows some of the main indicators favoring each option (not comprehensive). Note that boundaries between options can be blurred:
Sven Ringling is Head of UK/Europe at iXerv. He has over 20 years of HRIS experience, working with organisations that need to optimise their HR & Payroll processes or want to drive Digital Transformation in the cloud.