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SAP HR Best Fit & Competitors

Sweet Spot
SAP's company size and HR software breadth grant the company entry into markets that range from small businesses to the largest companies in the world. That said, the target market for the SAP HR software is the broad middle and enterprise markets. As the enterprise software market is saturated, most HR analysts suggest the biggest growth opportunity lies in the middle market. Large enterprises remain SAP's bread and butter, and the company is competitive, but in no way dominant in the middle market. The SuccessFactors acquisition and the company's partner channel give it strong inroads to the middle market, but success for the company in terms of significant market share is yet elusive.

With regard to vertical markets, SAP has seen significant success in the business services, public sector, consumer goods, telecommunications, financial services and utility industries. The company actively targets about 26 total vertical markets with industry-specific software solutions as well as a robust partner channel program. Though the list of SAP customers is obviously too long to cite, a few of the marquis customers include Exxon Mobil, Sara Lee, Sharp, Siemens AG and Wal-Mart.

Short List SAP's HR software when:

  • You seek a cloud-based talent management software product, possibly as a point solution.
  • You are a high growth middle-market company looking for Tier One HR software that cannot be delivered by smaller enterprise systems.
  • You are a company seeking a standards-based approach to efficiencies, process management and ultimately control.
  • You are a large, global enterprise that already uses SAP software in other ERP areas such as Financials but have not deployed HR or HCM.

Alternative Solutions
Prospective HR software buyers may be best advised to consider alternative software products when:

  • Seeking best-of-breed or HR-only software solution.
  • Seeking a HR cloud or SaaS HCM solution.
  • Looking for a robust and scalable HR application with low up-front expenditures and quick deployment.
  • Seeking focused solutions for enterprises that fall outside of the SAP target market.
  • Seeking flexible HR software that can easily accommodate a company's unique business processes.

SAP Customers
Existing SAP customers are advised to:

  • Evaluate SAP Business ByDesign if looking for a SaaS HR (or ERP) solution that will allow deeper integrations into ERP and talent management functionality. Despite a severely bundled go to market initiative, SAP continues to push Business ByDesign as the company's preferred cloud solution.
  • Conduct a Total Cost of Ownership (TCO) analysis to determine if inordinate resources are being dedicated to IT spend, and could be relieved with newer SAP HR solutions.
  • Review SAP product roadmaps (that match your customer profile) in order to understand whether needed deployment options or functionality are forthcoming.

SAP HR Competitors

SAP primary competitors within the HCM and HR software space are Oracle, Infor (Lawson), Workday and to a lesser extent in the middle market, Sage. Due to the confluence of factors such as market consolidation, the rise and influence of talent management software and the non-stop upward trending of the Software-as-a-Service (SaaS) model, SAP finds itself in increasing competition with the smaller (but infinitely more innovative) vendor Workday. Further, the increased functionality that Kronos and ADP have achieved over the last few years has put increased pressure on SAP.

Final Remarks

The company's efforts to date have shown a strong vision for the role that HCM and HR software will play in the months and years ahead. The purchase of SuccessFactors and its potential to be the SaaS answer to SAP's on-premise HR and payroll software suggests that SAP recognizes market trends such as cloud, social business and the consumerization of IT. However, the size of this market leader and a culture that often resists market movements (particularly cloud) may ultimately result in continued delay when it comes to action. Nowhere is this truer than in the company's SaaS offerings, which except for talent management, have missed the mark early and often through delays and missteps.

Legacy software like the SAP HR suite is on a slow but steady decline globally as the cloud continues to gain momentum. This does not suggest that on-premise software will become extinct or is any less robust than the SaaS counterparts, but rather that organizations have increasingly gotten wise to the benefits gained from the cloud deployment model. SAP like countless other legacy systems providers is faced with the conundrum of pace of change and adaptation—an evolution that the company seems to be managing at a snails pace. However, this is a position that mature vendors like SAP have faced before; watching as HR (and by proxy HR software) has evolved from personnel to human resources, to human capital and beyond. With veteran leadership at the helm, a sizeable HR software portfolio, and a robust customer and partner ecosystem, SAP has all the trappings needed to survive and thrive within a new HR paradigm. In order to do so though, the company needs to deal with its cultural apathy and stop lagging behind competitors when it comes to customer driven technology shifts. If SAP can do this, it might well be the HR vendor to beat in the coming years. End

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