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Five important questions about the SAP S/4HANA HCM 'sidecar'

SAP's transitional vehicle for on-premises SAP HCM owners is a detour to SaaS HR on SuccessFactors. To help you prepare, here are answers to your most pressing questions.

In January 2018, SAP announced a new on-premises human capital management product called the S/4HANA HCM "sidecar"...

to much fanfare. There have been many points of view on the topic, ranging from simple, down-to-earth expectations of such a product to confusion over the direction of SAP to conspiracy theories about the performance of SAP's cloud products. The truth is closer to this: Markets outside of North America have demanded such an offering.

Here are answers to five questions that help clarify exactly what the S/4HANA HCM sidecar is and how to plan for it.

1. What is the S/4HANA HCM sidecar?

S/4HANA HCM is a version of on-premises SAP ERP HCM running on the SAP HANA database that will be made available in 2023 and will be supported until at least 2030, with the primary intention of being "deployed alongside, and integrated with, SAP S/4HANA," according to SAP. It is unclear if SAP has any plans to extend maintenance beyond 2030. Functionally, S/4HANA HCM will contain a "comparable functional scope" to SAP ERP HCM but will not include SAP E-Recruiting or SAP Learning Solution.

SAP also plans to offer a license conversion program to enable customers to move to the new offering without having to buy a new license or subscription. SAP said it will release more details this year.

It is likely that, while SAP will make S/4HANA HCM available, it will not offer it proactively to new or current customers -- similarly to how SAP's on-premises SAP ERP HCM product is treated today. Likewise, it will only be available to customers who have purchased or plan to purchase S/4HANA.

2. What is the S/4HANA HCM sidecar not?

While asking what the sidecar is might be helpful, as much is revealed by asking what it isn't. The sidecar is not:

  • a brand new product;
  • a replacement for SAP ERP HCM or SAP SuccessFactors;
  • S/4HANA's HCM module;
  • the future of SAP's HCM product strategy;
  • an admission of struggling sales of SAP SuccessFactors (which, for the record, there are not); and
  • an extension of maintenance of SAP Business Suite or the SAP ERP HCM module.

3. What is driving the need for the S/4HANA HCM sidecar?

While much has been made about the sidecar in North America, the same level of fanfare has not been seen in other markets. While there has definitely been confusion, for some customers, S/4HANA HCM is a solution that they have been wanting for several years. Many are not yet ready to replace their human resources system or simply are not interested in swapping out a system that supports their business perfectly well.

However, the limited time that is left in the maintenance window and the broader ERP initiatives customers are undertaking has meant they needed an alternative option to retain their on-premises SAP ERP HCM systems. S/4HANA already has an on-premises ERP version that they can couple with their SAP ERP HCM system.

Having done consulting work for one country's military, I know there are definitely some customers who will almost certainly never move to the cloud. The level of risk that a country's military faces if the data of army, navy and air force personnel is captured far outweighs the value of cloud applications. And though this is more of an extreme example, it is a significant enough issue for important customers that it plays a part in SAP's decision to release the sidecar.

4. Is there a chance we won't see the S/4HANA HCM sidecar?

It is entirely possible that SAP will decide to extend maintenance on the entire SAP Business Suite -- which includes SAP ERP HCM -- and, therefore, make a sidecar option unnecessary. However, even in that scenario, the sidecar might still be offered as a flavor of SAP ERP HCM for customers looking to gain holistic operational benefits from using HANA across S/4HANA, HCM and other modules.

5. How does the sidecar fit into my enterprise HCM strategy?

Since most companies are different and have different strategies, there is no one-size-fits-all answer. If your go-forward strategy for HCM is to look at the latest and greatest technology, then most likely you will be considering a cloud system like SAP SuccessFactors. If you are planning to implement SuccessFactors or have already done so, then the S/4HANA HCM sidecar offering doesn't impact you. If you have not implemented and are not planning to implement S/4HANA, then this offering also does not affect you.

Where the sidecar might be of interest to your organization is when you are using on-premises SAP ERP HCM, are not looking to move your HCM to the cloud in the next eight to 12 years and have implemented or are planning to implement S/4HANA. In this scenario, the sidecar would be a potentially good platform to implement to keep a similar system in place as you have now.

However, you should give careful consideration to the migration path provided by SAP and how much of your current system configuration and data can be ported to a new system.

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