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SAP ERP Payroll and HR Software Review


An Independent SAP Payroll and HCM Software Review

A great deal of news has come out this past year about SAP. From the purchase of SuccessFactors to new enhancements to this industry giant’s on-premise solution. Our focus for this review is on that on-premise solution, but before reviewing the specific functionalities of the system, certain elements need to be explained. To begin with, it became clear early on in our review that SAP’s deployment options were somewhat confusing. Sparing inconsequential details, what we want to make clear here is that our review is for SAP’s legacy/client-server system. Yes, the company has made some serious progress with respect to cloud build-out, but that is not our focus for this analysis. That’s not to say that the system can’t be hosted (it can be by either SAP or a partner solution in a remote data center), but that does not make it Software-as-a-Service (SaaS) like solutions such as Workday. Because of this, a subscription pricing model cannot be followed and licenses must be purchased, annual maintenance fees must be paid, upgrades must still be handled by the customer, and data center management costs will be assessed. Whether SAP continues this model in perpetuity is yet to be seen given the efforts they’ve made towards SaaS, but for now the company still deploys this software in this manner.

As for our review, we discovered that SAP’s Payroll and HR software functionality is sub-divided into 4 broad categories: Core HR and Payroll, Service Delivery, Talent Management, and Workforce Analytics. Here, we review those in greater detail.

Core Human Resource and Payroll Software

SAP's Core Payroll and HR software provides the following key functionality:


The payroll engine is a multinational solution that integrates directly with the HR software from SAP – allowing users to enter HR information that becomes immediately available to the payroll program for gross-to-net calculations. The payroll software can be integrated with SAP ERP Financials as well, which facilitates the efficient transfer of payroll results for the general ledger, controlling and bank transfer activities, and other operational purposes. SAP’s payroll offering carries with it the functionalities of a payroll area (in which employees can be grouped depending on pay date frequency); a period modifier (which segments out periods with the same frequency but different dates); a payroll calendar (which generates cumulating wage type calendars—allowing for month, quarter, and annual sum totals); wage types (payment/deduction coding); and pay scale types, areas, groups, and levels (which respectively aids in the segregation, differentiation, and subdivision of pay scales based on pre-defined criteria).

Further Core HR functionality includes:

  • Employee Administration: which automates basic, personnel-related data, and leverages a centralized database that enables employees and management to access up-to-date, consistent information that supports HR- and business-related decisions. SAP ERP HCM supports all of the basic processes for managing personnel and handling employee information. This information is stored and maintained in a central database that is the core of the solution; all functions access, leverage, and update this data in real time. The software automatically checks and dates all data as it is entered. As a result, your employees and managers have access to information that is up-to-date and consistent for HR- and business-related decisions. There is also support for data and document archiving.
  • Organizational Management: which manages and disseminates organizational structure and policy information, and provides position management as the building blocks for HR and talent management. With SAP ERP HCM, you can manage and disseminate your organizational structure and policy information. Access to the reporting structure lets you more easily establish authorizations and enables more effective management of workflow. Organizational management functionality is the backbone of SAP ERP HCM, providing for effective management of information about organizational units, jobs, positions, and employees.
  • Global Employee Management: which supports processes involved in international employee relocation, including planning and preparation of global assignments to personnel administration and payroll for global employees. SAP ERP HCM supports most if not all processes involved in international employee assignments – from planning and executing global assignments to personnel administration and payroll for global employees.
  • Benefits Management: which supports multiple and diverse plan options/definitions and allows the tailoring of individual employee benefit offers. SAP ERP HCM provides a flexible framework for creating and managing tailor-made benefits packages. Versatile configuration options let you offer a diverse range of benefits to accommodate even complex plan definitions. Further, there is powerful support for all administrative benefits-related tasks, and standard and flexible reports let you summarize and analyze benefits data. In addition, support for self-services enables your employees to view and change their benefit selections online.
  • Time and Attendance: which allow for effective time strategies and includes convenient time tracking, monitoring, record keeping, and evaluation of time data. With SAP ERP HCM, you can record, track, monitor, and evaluate your employees’ working times and activities. There are state-of-the-art planning and data-entry technologies as well as mechanisms for monitoring time management tasks. Working times are recorded once and reused across your enterprise in fully integrated business processes. Intuitive user interfaces are tailored to the individual needs of your HR professionals, time administrators, shop-floor supervisors, secretaries, team leaders, and team members.
  • Compensation Management: Unfortunately following suit with several Payroll/HR vendors, Compensation Management within the SAP ERP HCM solution is lumped into the category of Talent Management. That said, this module does have utility—allowing for the analysis, comparison (internal and external), and implementation of reward strategies, such as performance/competency-based pay, variable pay plans, and long-term incentives reward programs.
  • Next - SAP Payroll Software Capabilities >>

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