SAP HR at a Crossroads

Workday, the better SAP HR

Where you to be inspired by l'esprit de l'escalier, you could perhaps claim that Workday's HR solution is better than any other HR on-prem or cloud solution from SAP. Though this would be because Workday was able to commence its operations a few years ago without any legacy issues on a greenfield site. As a young company, Workday is exclusively cloud-based and designed for the cloud.

SAP, on the other hand, is facing the classic innovator's dilemma (see Harvard professor Clayton M. Christensen, 1952 to 2020). SAP enjoyed considerable success in the early days of the SAP R/3 HR solution. Twenty-five years ago, SAP HR was the industry standard in many HR departments. SAP's annual HR Summits brought together hundreds of HR managers and were regarded as a key event in the industry. However, SAP failed to capitalize on the potential of the web age, failed to recognize the significance of cloud computing in a timely manner, and was reluctant to invest in its own AI research.

SAP tradition versus Workday standards

SAP R/3 HR and ECC 6.0 HR have a long and distinguished history in the ERP market. The Austrian Federal Railways (ÖBB) utilize SAP HR to manage both their active staff and the benefits for tens of thousands of retired employees. Specialized HR solutions like this are unique, but they also present challenges in adapting to a new IT landscape. With the acquisition of the SuccessFactors cloud solution under then-SAP CEO Bill McDermott, the global ERP market leader attempted to retain a foothold in the HR market. Many SAP customers have remained loyal to the HR on-prem solution, and SuccessFactors has been a relatively unfamiliar entity within the SAP ecosystem for an long time. It was only under the guidance of SAP CEO Christian Klein that SuccessFactors could be orchestrated with ECC 6.0 and S/4.

From its inception, Workday has leveraged cloud computing and recognized the potential of machine learning and AI. To facilitate its machine learning and AI initiatives, Workday developed its own large language models and encouraged customers to provide anonymized and transparent data for learning purposes. At present, all Workday users are aware of which data fields are utilized for AI purposes. SAP does not provide the same level of transparency. In fact, because SAP purchases AI knowledge and large language models, there are always performance and transparency issues.

SAP developed an HR administration and organization solution based on the ERP tradition, while Workday focused on a service concept from the outset. The Workday solution empowers the HR department to provide management with up-to-date planning figures and evaluations, while also offering employees a comprehensive information platform. It is a dual-service concept, designed to meet the needs of both company management and employees.

What is SAP CEO Christian Klein doing?

SAP customers can currently give themselves a Christmas present, as SAP is "giving away" SuccessFactors. This SAP strategy is not new; SAP was already very generous in its defense against the process mining solution from Celonis, opting to instead offer their Signavio solution almost for free.

The strategy of offering SAP software free of charge for a defined period of time is a well-established practice with potential risks. In the context of financial constraints, a CIO may be inclined to accept an offer from SAP that may be perceived as “unethical”. He can drive innovation in his own company without being beholden to the CFO. Ultimately, however, every SAP customer will need to pay their SAP fees. By that time, however, the CIO may have already taken the next step in their career and moved on to another company.

Despite SAP CEO Christian Klein currently offering his HR solution SuccessFactors at only a fraction of the price it should have, the issue of credibility and trust remains unresolved. Former SAP board member Rob Enslin joined the Workday management board a few days ago—a clear signal to the SAP community!

From SAP to Workday, what is Rob Enslin doing?

Workday has announced the appointment of Rob Enslin as President and Chief Commercial Officer. Workday has announced the appointment of Rob Enslin as President and Chief Commercial Officer. Rob Enslin, a long-time SAP veteran, former UiPath CEO, and Google Cloud President, will now lead Workday's global business strategy. Enslin and I had the opportunity to speak briefly in early December at the Workday Rising event in Amsterdam.

Rob Enslin has over 30 years of experience in the IT industry, most recently serving as CEO of UiPath. Prior to joining UiPath, Enslin served as President of Cloud Sales at Google Cloud, where he expanded the company's sales activities and achieved significant revenue growth. Enslin's extensive career also includes 27 years at SAP. He began his tenure at SAP in 1992, joining the service organization in South Africa. Most recently, he managed over 20,000 sales and service employees and was instrumental in unifying all SAP sales teams into a single unit. Together with Bernd Leukert (former SAP Chief Technology Officer), Rob Enslin was appointed to the SAP Executive Board.

For further information on Workday, please refer to a recommended German-language interview with my colleague Matthias Hohensee in the business magazine WirtschaftsWoche: "SAP Competitor Workday's Plan of Attack in Germany."‎ The strategy of SAP competitor Workday in the German market is discussed in this article, which is behind a paywall. SAP CEO Carl Eschenbach in the WiWo interview: "We sell to three main customers—the office of the head of HR, the office of the head of finance, and the chief information officer. [...] We are a platform company, so other providers can develop applications based on our offerings."

For insights into Workday's plans for the DACH region and for SMEs, please refer to the E3 round table as a YouTube video stream here (in German).