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SAP HCM Software Review

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SAP ERP HCM Best Fit & Competitors

Sweet Spot
SAP's size as a software company (along with its breadth offerings) affords entry into markets that range from small companies to some of the largest enterprises in the world. That being said, the target market for SAP ERP HCM software is the broad middle market with enterprise sizes that range from 100-999 employees. In large part this target is due to the fact that this market represents the single biggest opportunity area for the company to grow its customer share; however, it should be noted that the fragmentation in this market layer (coupled with the increase in SaaS ERP and HCM solutions) have kept SAP's growth low, and larger enterprises still remain SAP's "bread and butter".

With regard to vertical markets, the company has seen significant success in business services, government, retail, telecomm, banking, and utilities; but it should be noted that not only does SAP actively invest (in order to deliver industry-specific software solutions) in 26 total verticals, the company's robust partner channels also provide inroads for a host of other industries. Though the list of current customers is obviously too long to cite here, some of the more impressive or marquis customers that leverage SAP solutions include Siemens AG, Sara Lee, Sharp, Exxon Mobil Corporation, and Wal-Mart Stores Incorporated.

Short List SAP's ERP HCM software when:

  • You're a mid-market organization looking for "Tier One" HR software functionality that can't be delivered by smaller enterprise packages.
  • You're an organization seeking a "standards-based" approach to efficiencies, process management, and ultimately control.
  • You're a large, global company that already extensively leverages SAP software in other ERP areas such as Financials but have not deployed HCM.

Alternative Solutions
Prospective HRMS or HCM software buyers may be best advised to consider alternative products when:

  • Seeking best-of-breed or HCM-only software solutions.
  • Seeking a cloud or SaaS HCM solution.
  • Looking for a robust and scalable HCM solution with low up-front expenditures and quick deployment.
  • Seeking focused solutions for enterprises that fall outside of SAP's target market.
  • Seeking easier-to-use customization capabilities that can be performed outside of the organization's IT department.

SAP Customers
Existing SAP customers are advised to:

  • Look into SAP Business ByDesign if seeking a SaaS solution that will allow deeper integrations into ERP and talent management functionality. However, it should be noted that with the SuccessFactors acquisition still a relatively new development, full talent management capabilities may have to wait until further integration can be established.
  • Conduct a full analysis of Total Cost of Ownership (TCO) to determine if inordinate resources are being dedicated to IT spend, and could be relieved with newer SAP HCM solutions.
  • Review product roadmaps for all SAP products (that match your customer profile) in order to understand whether needed functionality is forthcoming.

SAP HCM Competitors

Not surprisingly, SAP's primary competitors within the HRMS software space are Oracle, Infor (which also happens to own the powerhouse Lawson), and Sage. However, due to a confluence of factors such as market consolidation; the rise (and influence) of talent management software; and the trending upwards of the Software-as-a-Service (SaaS) model, SAP also finds itself in stiff competition with the smaller (but infinitely more innovative) vendor Workday. Further, the increased functionality that Kronos and ADP have achieved over the last few years has put increased pressure on the German vendor.

Concluding Remarks

SAP's efforts to date have shown that the enterprise software company has a strong vision for the role that HCM will play in the coming months and years. Indeed, with the recent purchase of SuccessFactors tagged to be the SaaS answer to SAP's on-premise HCM, it's clear that SAP both recognizes and values the impact that the right HR software can have for a company. However, the size of this market leader has made it such that remaining agile enough to quickly handle market influences is exceedingly difficult. Nowhere is this truer than in the company's SaaS offerings—which, while now impressive in certain aspects such as CRM and certain ERP functionality, missed the mark early on through several missteps.

Legacy software like the ERP HCM suite is on a slow but steady decline globally as the cloud continues to gain momentum. This doesn't mean that these on-premise offerings are any less robust than their SaaS counterparts, but rather that organizations have increasingly gotten wise to the benefits that can be gained by using the SaaS deployment model. As such, SAP like countless other "legacy" solutions is faced with the conundrum of adaptation—a question that the company seems to be dealing with slowly but nevertheless surely. Of course this is a position that long-term vendors like SAP have faced down before; watching as HR (and by proxy HR software) has morphed from personnel to human resources, to human capital and beyond. With SAP's stellar leadership at the helm, a sizeable war chest of best-of-breed solutions, and a robust customer ecosystem, the company has all the trappings necessary to survive and thrive within this new HR paradigm. In order to do so though, SAP needs to stop lagging behind competitors when it comes to technology shifts and become fully aware of the changes that those shifts accompany. If SAP can do this, it might well be the vendor to beat in the coming years.

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