Sven Ringling’s view on SAP Payroll Strategy

Sven Ringling’s view on SAP Payroll Strategy

This blog covers my thoughts regarding the cloud payroll processes for a global workforce. The recent Diginomica article including the interview with SAP’s Daniela Lange is an excellent summary of SAP’s payroll strategy and vision – and in my opinion a very uplifting one.

Where we are

Whilst there isn’t anything completely new in the statements regarding the current roadmap, I’ve never seen all the information in one place with such clarity. To me it’s clear: for the majority of customers still on traditional SAP on-premise payroll, there will be Change between now and 2025. If it’s not yet the holy grail of the new Cloud payroll then it will be EC Payroll or the “sidecar” solution.

Exciting Vision for Cloud Payroll

Even more interesting is the vision for the future of cloud payroll. In my opinion it’s absolutely the right focus for all I can tell in my limited experience:

Increasing agility and reducing maintenance risk through modularisation and strict separation between standard rules and customer configuration will help customers with updates, but also allow SAP to innovate faster.

Getting away from batch processes will take some mindset changes in payroll teams, but eventually get rid of peak workload. This allows payroll to really integrate with HR providing up to date data into the mix. As yet, data fed by payroll was the most accurate data, but up to date only once a month on pay day.

Making payroll “fun” is a bit of a stretch for my imagination, too, but things like an interactive payslip answering employees’ questions seem in reach to me. And that’s only one element of a wider automation exercise. Payroll is a text book case for automation by the technology available today. It is very complex, so that many things beyond the actual payroll run (most notably interaction with employees) couldn’t be automated until now. But payroll is basically following strict rules in most cases. Yes, many rules with many special cases and many changes, but still clear rules. So, there’s a lot of potential for automation.

It’ll Probably Take Time

I think the current roadmap for on-premise payroll, EC payroll, and – if needed – sidecar is still relevant for most customers apart from early adopters and some fast followers. So they should stay tuned and plan accordingly.

The new vision will take time to build and my guess would be for the first customers to come from less powerful legacy systems than SAP on-premise payroll.

I’m just thinking about the modularisation approach, which Daniela Lange describes as moving from Spaghetti to Ravioli (what a great analogy! I’ll be sure to borrow that at some point.), to be applied in German payroll in the “Fiktivlauf” logic. Sounds to me like “Ravioli meet Russian dolls” – but luckily SAP has loads of architects and developers much smarter than me, whom I trust to solve even this. With time.

So, I am really, really, really looking forward to touching the new cloud payroll (I have the nagging feeling that being back in Germany doesn’t help as it probably won’t be the first country to have it available), but I’m not counting on all those 9000 legacy customers to be migrated any time soon. Other options, most notably EC Payroll, will still have a role to play.

Payroll Outsourcing Providers Have to Step up their Game or Lose Customers

There is one point I’m sticking to, knowing it’s controversial: the new cloud payroll will continue to do, what EC payroll has already started: eroding the business case for payroll outsourcing even further. My guess is, we’ll see even more organisations taking payroll back in-house after disappointing outcomes from outsourcing.

Here is the Diginomica article referred to above including the interview with Daniela Lange.

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