What Are My Payroll System Options?

The past few years, as HR marches to the cloud on SuccessFactors, I’ve heard from many SAP Payroll customers who are curious about their future payroll options. More concerning though, is that I haven’t heard from many more because they don’t seem to understand the roadmap. So here’s a short little blog about it all. Short, as in there are a lot more details, there's more to consider - this is just to get started.

The Roadmap

SAP Payroll, and its close cousin SAP Time Management, exist and run on the SAP ECC platform. That platform is supported by SAP until 2025. So that means after 2025 you will either have to pay more for maintenance (likely) or have no maintenance at all (unlikely). Or you could move your payroll to a different platform. What do those platform options look like?

SAP S/4HANA Sidecar

You can setup an S/4HANA system and install a special version of SAP HCM on it to allow you to run the same Payroll, Time and Benefits software you already have. This is called a Sidecar implementation. It won’t be available until 2023, but it is supported until 2030, so you get 5 more years than if you stay on ECC.

Employee Central Payroll

If your company implements SAP SuccessFactors Employee Central, then you could also implement Employee Central Payroll (ECP). Now, ECP is not really a new cloud payroll, it is the regular SAP Payroll hosted by SAP, with tight integration to EC, and packaged with some nice additional features. That’s all really good, but there are some catches. The two most important are: 1) no repairs or enhancements allowed (your ABAP team will know what that means), and 2) SAP Time Management and SAP Benefits are only allowed to the degree they are needed for payroll. This second one is a bit squishy, but I think of it this way – no full benefits processing is allowed, only what is needed for payroll, so no open enrollment and etc. And time management only to the degree it’s needed for accruals and quotas but probably not full time evaluation. SAP wants you to rely on EC Benefits, EC Timesheet or external providers for all that (ask your SAP rep about details on all that). And there is no announced ‘end of life’ for EC Payroll so you don’t face the 2025 or 2030 maintenance deadlines.

SAP’s New Payroll

SAP is working on a new payroll module, but details are scarce and a timeline is not available. So, something new will be offered at some point in the future. What point in the future? I really hope SAP brings more clarity to that, soon.

Outsourcing Payroll

Of course, you can always outsource payroll to a third-party. You might find it surprising for me to mention that, since we do a lot with implementing payroll systems, but we also help companies with outsourcing. It’s a valid option, but you have to determine if it’s the right option for your payroll’s complexity and your company’s culture.

Choose A Different Payroll Software Provider

You could choose to go with a different company for your payroll software, but that probably makes the least sense of any option. All modern payroll systems are integrated with an HR system, so you would also, essentially, be implementing that company’s HR system along with your existing SAP/SuccessFactors HCM.

What Are My Next Steps?

I really encourage customers to reach out to their SAP reps and start a discussion with them about their options. SAP needs to hear directly from customers, and customers need to get answers from SAP. We can help facilitate that, help you prepare, ask the right questions and so on. We can help you evaluate the options that are best for you. Or you can do all that yourself – but the bottom line is, start asking the questions now. Start understanding what the options mean to your company, and what different solutions would look like.