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.