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SAP defends S/4HANA HCM upgrade amid questions

SAP, which has some 14,000 on-premises HCM customers, is extending on-premises support five years to 2030. But HCM users will have to migrate to its HANA in-memory platform for support.

SAP's new plan to extend on-premises ERP human capital management support from 2025 to 2030 is raising eyebrows. That's because maintaining on-premises systems means migrating to S/4HANA HCM, which complicates the decision-making for on-premises users.

The upgrade won't be available until 2023, and the license for the S/4HANA HCM only runs until "at least" 2030. This doesn't prevent the vendor from extending support, but users, for now, don't know.

How will this impact SAP's existing on-premises HCM users?

SAP said it has about 14,000 on-premises HCM customers, with about 80% outside of North America.

SAP believes the S/4HANA HCM migration is best for these users, arguing that the upgrade cost will be offset by the benefits of the in-memory system.

But cloud-based SAP SuccessFactors remains the ultimate HCM upgrade path for its users. This means uncertainty about whether on-premises systems will continue.

"The important thing is that the intention for this is to make life easier for our customers so that they can run their business in the best possible way," said Amy Wilson, head of product at SAP SuccessFactors, in an interview. "It's not something that we've concocted for any other purpose other than this is what our customers are asking for. We care about them, and we empathize with them," she said.

But there are questions. "Simply extending support for the existing R/3 SAP HCM would probably be very difficult, especially as support has already been extended from 2020 to 2025," said Paul Cooper, chairman of the U.K. and Ireland SAP User Group, in a statement in response to questions from TechTarget.

"At this stage, it is far enough out for SAP to be encouraging users to move to S/4, rather than extending the deadline further," Cooper said.

User-group surveys "highlighted that many users have concerns regarding the integration of legacy [SAP HR] and new apps [SuccessFactors] with S/4HANA, so the S/4 HCM announcement does begin to help address this to an extent," Cooper said.

But Cooper said the announcement also raises issues.

"However, without seeing the product and more information on its scope, it is difficult to judge the complexity of the migration," Cooper said. "Projects of this nature are time-consuming, resource-hungry and, therefore, they can be disruptive to an organization. The question for a lot of organizations will be, are they prepared to buy and license 'on-premises' software that only has a potential life of seven years and won't be available until 2023?"

Wilson said the upgrade to S/4HANA HCM should be "nondisruptive."

It's not something that we've concocted for any other purpose other than this is what our customers are asking for.
Amy Wilsonhead of product at SAP SuccessFactors

"In the on-premises world, there's technical upgrades and then there's functional upgrades. When you're talking about a technical upgrade, there is some work to do and some testing and that sort of thing, but it's more similar to a cloud update," Wilson said.

Does SAP's 2025 deadline provide HCM users enough time?

SAP's plan has drawn sharp criticism from Jarret Pazahanick, an SAP HCM consultant who is managing partner of EIC Experts, based in Houston. He also has a large following on his Global SAP and SuccessFactors LinkedIn groups.

Pazahanick said he believes SAP should have extended its support beyond 2025 for its HCM customers.

SAP's action is "not customer-centric," Pazahanick said in an email responding to TechTarget questions.

"They are asking loyal maintenance paying customers to wait at least five years [2023] to upgrade to a new SAP HCM on-premises 'sidecar' offering and take full ownership of the migration cost and risk associated with that," Pazahanick said.

There is no native HCM in S/4HANA, hence the "sidecar" meaning. SAP HCM for S/4HANA will run on a separate instance, but tightly integrated with S/4HANA. SAP said it has the tools and services to support this approach.

"All SAP had to do was make an announcement of, 'We will support SAP HCM and customers until 2030 on their current offering,' which would have been simple, clear and, ultimately, what some portion of their customer base wants," Pazahanick said.

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