H4/S4 between bridge technology and innovation

SAP Human Capital Management for S/4 Hana (H4/S4) is the long-announced successor to SAP ERP HCM OnPremise Payroll, which will be phased out of SAP Standard Maintenance in 2027. An additional three-year grace period until 2030 will result with Extended Maintenance. H4/S4 has been available since October 2022 to continue to provide users with the familiar user interface and functionalities until 2040.

The first transition projects are now being implemented and many user companies are closely following the first reports of experience. However, this is merely a bridging technology that gives SAP's existing customers time to complete the HR cloud transformation. Many functionalities are planned for the public sector. Likewise, with the deviation from "cloud-first" to a "cloud-only" strategy, SAP is placing the investment focus on its own cloud products. These include SAP SuccessFactors (SFSF) and the associated Employee Central Payroll (ECP) as well as the SAP HCM Private Cloud Edition.

Payroll in the cloud 

Now the strategic question arises: bridge technology or step with payroll into the cloud? Making the right decision is also influenced by various dimensions such as the technical, functional and organizational criteria of the organization.

Especially for users who have SuccessFactors Employee Central in place and operate a hybrid system landscape, testing the ECP becomes essential. Lift-and-shift project approaches can be used to transfer the system parameterizations one-to-one to the new system with software-supported migration.

Here, the limitations of the ECP instance compared to the old on-prem world apply to the functionalities around the BAV module as well as to specific system components of the public sector (for example, VADM) and to positive time management. The latter can be replaced with 3rd party tools or also SuccessFactors Time Tracking.

Cutting off old habits 

User companies should seize the opportunity when migrating systems in the future. There is seldom a better time to put the current configuration and applications to the test and to cut out old habits. At the same time, new functionalities can be added and the HR IT landscape can be modernized, thus making sense to return to SAP standards at the same time.

 Whether an on-prem H4/S4 migration to protect the investment made in the transition project is now more favorable than performing lift and shift with ECP, the future will show. However, a detailed discussion of the various SAP payroll software options is necessary for each affected user organization to find its own and correct path for the respective individual circumstances.