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SAP ERP Payroll and HR Software Review

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An Independent SAP Software Review

SAP (otherwise known as Systemanalyse und Programmentwicklung or System Analysis and Program Development) are without debate, a global software giant. From a 5-person start-up when it was founded in 1972, it is now one of the largest enterprise software companies in the world (and by far the largest software vendor in Europe).

First some basic numbers: the corporate structure is divided into three discrete segments – Products, Consulting, and Training – which together amount to almost 50K employees working in over 50 countries. As a snapshot of growth, the company’s revenue in 1972 was approximately $300K; in 2011, it was $4.7B. According to Gartner, as the largest ERP software vendor in the world, SAP’s market share is an impressive 25%; however, when we focus purely on payroll and HR solutions (which are incorporated into the SAP ERP HCM application) that figure drops to 18%. While still impressive, and still making SAP the market leader, however, this indication of fierce competition on the payroll/HR software arena shows that leader or not, SAP are far from being the only choice.

Given SAP’s dominance in the wider ERP market, it’s perhaps not surprising that payroll and HR are not the company’s primary focus but a large proportion of the company’s 102K+ customers (translating to tens of millions of employees on SAP systems) leverage these applications as components within one of SAP’s business applications:

  • SAP Business Suite (currently on version 7) is the flagship offering; an on-premises ERP application designed for organizations with over 2500 employees (unless stated otherwise, the payroll functionality within this offering is the focus of this review);
  • SAP Business All-in-One is aimed at the larger middle market organization with 500-2500 employees and was recently (May 2012) certified for cloud-based deployment on Amazon Web Services;
  • SAP Business ByDesign is an on-demand, cloud offering for the smaller middle market company with 100-500 employees; And finally,
  • SAP Business One is an on-premises system designed for smaller businesses with less than 100 employees).

It should be noted that each of these ERP applications has varying degrees of HR and HCM functionality.

Organically Growing a Market Leader

Unusually perhaps for a major software house (Oracle and Infor stand in sharp contrast), SAP has grown its business steadily, piece by piece, as opposed to the norm of increasing market share by acquisition of companies and products. Indeed, a 2010 Boersen-Zeitung interview with SAP's Chief Financial Officer (CFO) Werner Brandt indicated that "organic growth" was at the center of the company's strategy, further citing that the company "makes acquisitions to gain technology, not to boost sales, and purchases aren't based on earnings multiples." To what extent this public statement actually might reflect the strategic reality at SAP’s executive level is an interesting point to ponder. After all, with the recent acquisition of SuccessFactors, is this statement implying that SAP was lacking the technology needed to field viable SaaS solutions?

Regardless of the strategic situation in relation to acquisitions, the growth of SAP has been fueled in part by some the company’s partnership strategy which divides its 10K partners into ten categories.

  1. SAP-based outsourcing and cloud services providers;
  2. SAP Crystal solutions providers;
  3. SAP channel partners;
  4. SAP education partners;
  5. SAP language service partners;
  6. SAP OEM partners;
  7. SAP services partners;
  8. AP software solution partners;
  9. SAP support partners;
  10. SAP technology partners

The highest (and possibly most interesting) echelon of partnership leads to SAP granting the partner an ‘Endorsed Business Solution’ (EBS) designation indicating that it fulfils an identified market need which SAP does not intend to pursue. Currently only 33 companies have been invited to EBS status, including some notable names such as Oracle, Meridium, Questra, and SPSS.

SAP partners operate more as an ecosystem than a simple roster and networking allows the tapping into combined expertise, experience, and insights of other industry leaders, often leading to partner collaboration and an increase in customer-centered solutions. The other side to this customer focus is the SAP Community Network, a two million-strong professional social network connecting SAP customers, partners, employees, and experts through which knowledge-sharing is actively encouraged. The final element of SAP’s ‘non-sales’ component in its drive to fully leverage its product, is the hosting of independent user groups. These groups consist of SAP customers and partners but actually function as not-for-profit organizations, dedicated to educating members, facilitating customer involvement, and influencing SAP's strategy.

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