If all things in this world were fair and just, then the dig­i­tal trans­for­ma­tion of the human resources (HR) func­tion into cloud-cen­tric, ser­vice-based com­put­ing mod­els would prob­a­bly be known as elec­tron­ic HR, or eHR. But there’s a rea­son why this is not so.

The term HR is being replaced by the wider notion of human cap­i­tal man­age­ment (HCM). This is due in no small part to the pres­ence of soft­ware solu­tions now designed to shoul­der core HR functions. 

So regard­less of names, what exact­ly is elec­tron­ic HR or HCM? And why would it work bet­ter in the cloud? To answer this ques­tion let’s look at SAP’s prod­ucts in this space and fol­low the cloud trans­for­ma­tion jour­ney for HR professionals.

At the Heart of HR: SAP SuccessFactors

SAP clear­ly has a sig­nif­i­cant pres­ence in this space with SAP Suc­cess­Fac­tors, its HCM soft­ware suite. It also boasts its own ded­i­cat­ed con­fer­ence for those inter­est­ed in HR tech­nol­o­gy, known as Suc­cess­Con­nect in September.

SAP Suc­cess­Fac­tors’ core fea­tures include its learn­ing man­age­ment sys­tem (LMS) and its tal­ent man­age­ment sys­tem (TMS), which are part of its com­plete port­fo­lio of HR solutions.

Peo­ple Man­age­ment, Mov­ing to a Cloud Near You

Wikipedia notes that the learn­ing man­age­ment sys­tem in SAP Suc­cess­Fac­tors has more than 600 cus­tomers and 11.5 mil­lion users. Its tal­ent man­age­ment sys­tem has more than 4,000 cus­tomers and 25 mil­lion users. These fig­ures show the scope of inter­est and degree of mar­ket pen­e­tra­tion in this space so far.

Accord­ing to a Jan­u­ary 2018 prod­uct note from SAP, ​“Near­ly six years ago, SAP acquired Suc­cess­Fac­tors, pro­vid­ing our cus­tomers with the best cloud-based HCM solu­tions on the mar­ket. Since then, the num­ber of cus­tomers using SAP Suc­cess­Fac­tors solu­tions has near­ly quadru­pled, and we con­tin­ue to see increas­ing momen­tum toward the cloud for HCM glob­al­ly and across all industries.”

Some Have Their HR Feet on the Ground

SAP explains that, despite the dri­ve toward the cloud, it con­tin­ues to sup­port cus­tomers using SAP ERP Human Cap­i­tal Man­age­ment, the company’s on-premise solu­tion. While an increas­ing num­ber of cus­tomers are migrat­ing to SAP Suc­cess­Fac­tors solu­tions to accel­er­ate their dig­i­tal HR jour­neys, SAP insists that it also rec­og­nizes that every cus­tomer jour­ney is unique and should hap­pen at each customer’s pace.

To sup­port these needs, SAP plans to offer a new on-premise HCM option based on SAP ERP Human Cap­i­tal Man­age­ment with a com­pa­ra­ble func­tion­al scope (except for the SAP E‑Recruiting appli­ca­tion and SAP Learn­ing Solu­tion). It is intend­ed to be deployed along­side and inte­grat­ed with SAP S/4HANA. The solu­tion is planned for avail­abil­i­ty in 2023, with main­te­nance offered through 2030. So, there’s no rush to go to the cloud if your orga­ni­za­tion isn’t ready.

Hir­ing Machines to Do Drudge Work

When we dig­i­tal­ly trans­form core HR func­tions, we start to imme­di­ate­ly expe­ri­ence the ben­e­fits of automa­tion. Core HR func­tions that are con­sid­ered grunt work can be shoul­dered by IT sys­tems, whose favorite func­tions are those dull and repeat­able, yet pre­cise­ly defin­able types of tasks.

Areas of human cap­i­tal man­age­ment such as vaca­tion time requests and approvals, time and atten­dance record­ing and man­age­ment, and employ­ee benefits/​perk deliv­ery are all well-suit­ed to automa­tion in a dig­i­tal app.

These are func­tions that work bet­ter and more effi­cient­ly when moved to con­nect­ed cloud sys­tems that ​“know about each oth­er,” so to speak, so they can share infor­ma­tion and process these requests — some­times more intel­li­gent­ly than a human could.

Why Avoid the Cloud?

There are, of course, chal­lenges with cloud HR. Not every region of the world allows the flu­id stor­age of per­son­al data in pub­lic cloud ser­vices that HR requires. For exam­ple, the Euro­pean Union (EU) has intro­duced data com­pli­ance restric­tions, such as the Gen­er­al Data Pro­tec­tion Reg­u­la­tion (GDPR). These have man­dat­ed data pro­tec­tion issues that may stand in the way of cross-bor­der, 360-degree cloud HR.

The Pos­si­bil­i­ties of 360-Degree Cloud HR

Chal­lenges aside, cloud HR can have a real busi­ness impact. Imag­ine this exam­ple of an employ­ee who logs in an upcom­ing busi­ness trip to the cloud HR sys­tem. What kind of actions could that trigger? 

• An auto­mat­ed all-sys­tems alert goes through the con­nect­ed cloud HR lay­er, inform­ing all rel­e­vant data ser­vices that this employ­ee has logged a peri­od of travel. 
• The IT depart­ment auto­mat­i­cal­ly calls in the employee’s lap­top for pre­trav­el ser­vic­ing and testing. 
• The IT depart­ment applies a vir­tu­al pri­vate net­work (VPN) login to this employee’s priv­i­leges to keep cor­po­rate data con­nec­tions more secure while on the road. 
• The IT depart­ment applies a roam­ing bun­dle to the employee’s smartphone. 
• The employee’s man­ag­er gets a dai­ly email, remind­ing him or her that the employ­ee will not be avail­able for face-to-face client meet­ings while away. 
• The employee’s project track­er appli­ca­tion sets appro­pri­ate goals and tar­gets for the trip, avail­able through a report dash­board detail­ing dai­ly progress. 
• When back in the office, the employ­ee can revert to nor­mal sta­tus with just one click, inform­ing HR of his or her presence. 

But HR Process­es Must Evolve, Too

David Lud­low is the glob­al vice pres­i­dent at SAP Labs with respon­si­bil­i­ty for HR tech­nolo­gies. He has sug­gest­ed that the path to this type of auto­mat­ed future may take some time for some firms to envi­sion and develop.

The dif­fi­cul­ty often comes down to the fact that com­pa­nies — even when they upgrade their soft­ware to cloud-based HR sys­tems — still rely on lega­cy process­es. And many of these process­es have remained rel­a­tive­ly unchanged over the past 30, 40, or even 50 years.

The ulti­mate goal is for HR to ele­vate itself from being noth­ing more than a cost cen­ter and rein­vent itself as a func­tion­al, prof­it-con­tribut­ing por­tion of the busi­ness. The move to cloud HR is clear­ly no overnight rip-and-replace affair, so let’s think about this strate­gi­cal­ly and con­sid­er the human fac­tor in dig­i­tal human resource management.

Join us in Sep­tem­ber in Las Vegas for the Suc­cess­Con­nect con­fer­ence. Or in Octo­ber in Toron­to for the ASUG Expe­ri­ence in Human Resources & Pay­roll to learn from oth­er prac­ti­tion­ers and inno­va­tors work­ing to improve the employ­ee experience.