Implementing SAP HR

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COST FACTORS

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The next major apprehension associated with mySAP HR implementations is the costs involved.

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Cost of Consultants


Consultants can be expensive - but paying attention to a number of factors, including controlling the number of days consultants stay on the project and selecting experienced consultants, can minimize these costs.
Careful preparation of a budget. Project sponsors and Management need to spend sufficient time preparing a budget and work out a sensible project plan together with the consulting firm chosen. The budget should include the number of days planned for each consultant with dates, rates and the type of task. A good consulting firm will be able to give accurate numbers of days - even though it is impossible to predict an exact number of days. It is also advisable to research how many consulting days other companies required. By making this budget as precise and detailed as possible and comparing the costs continually with the budgeted figures, it is actually possible to stick to the budget and maybe even save some money - on the other hand it also enables you to monitor any major divergences and to take corrective actions.


Fixed contract versus time and material. To keep an eye on costs, it is sometimes more prudent to opt for a fixed contract rather than time and material. It is however important to keep some flexibility since it is likely that additional consulting days will be needed. Unexpected problems and complications can occur at any time and Management needs to be prepared for this - and have consultants on the project for extra days to solve the problems. If you opt for a Time and Material contract, paying the consultants on an hourly basis, make sure you have worked out a concise project plan with an accurate estimation of many days the consultants will be needed. Keep in mind, that it is better to have one experienced 'expensive' consultant who gets things done the right way the first time than two or more inexperienced consultants with lower hourly rates - quality will always prevail over quantity.


Choosing a firm with a track record. This is probably the most effective way of keeping costs to a minimum: choosing consultants with excellent technical s****s and extensive business process knowledge that gets things done and solve problems quickly. With more and more firms "out there", this is becoming an increasingly difficult exercise and here again, a word-of-mouth recommendation by other HR professionals is one of the most trustful source available. Make sure you ask consultants for references and their experience level. Another option is to choose a smaller firm, specializing in mySAP HR and Payroll only, providing consultants with the very specific s**** sets needed for an HR Payroll project. It may seem obvious to many, but it is worth noting that the s****-set needed to be an effective SAP HR consultant is very different from that needed to be effective in the other modules of SAP (e.g. Accounting, Logistics, etc). Spend some time with the consultants prior to project launch - it is equally important to be able to work with them in a team. Ensure that their work ethic and professionalism is up to your standards.


Monitoring of progress on a daily and weekly basis. As with time, costs can be reduced by closely watching the progress being made. Project team members should have a centrally logged action plan for each day and update this plan, together with the issue log, on a daily basis. Consultants have to discuss tasks for the day with the client project team members and co-ordinate their work.


Phased implementations (module by module) help to monitor costs. To have better control over implementation time and costs, mySAP HR can be implemented in phases. Approaching an implementation step by step, users have time to get familiar with the system before launching the next module, which will ultimately reduce implementation time. When implementing HR and payroll, the following phases would be a good solution: Phase1: Master Data, Time Management, Payroll, Benefits Administration, Organizational Management and Payroll Phase 2: Personnel Development, Recruitment, Training and Events, Travel Management and Compensation Management - this phase can be broken down further. Phase 3: Employee Self Service, Manager's Desktop

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Costs of Employees On the Project Team Not Able to Perform Their Normal Jobs During the Implementation


Another cost factor is associated with the fact a replacement needs to be arranged for employees assigned to the mySAP HR project. They cannot be expected to perform to jobs at the same time.


Commitment of employees during and after the implementation. In most cases, it is possible to have project team members temporarily replaced by their colleagues. It is the Line Manager's responsibility to co-ordinate this exercise and to ensure that proper briefing and task delegation takes place. It is vital that all employees affected are committed to achieving the objectives set by the project - even if they are not directly participating - by supporting their colleagues and ensuring that the business operations are run as usual.


Support and Commitment of Line Managers and Upper Management. The role of Line Managers cannot be stressed enough - these are the ones who need to ensure that project team members can focus on the mySAP HR implementation, that their jobs are carried out by a suitable replacement and that the replacement person is aware of the importance of his/her support. The role of Upper Management is to make the Line Managers "buy into" the SAP project, explaining what is expected of them. All too often it happens that Line Managers are not given the full picture, are therefore unsure about the outcome of the SAP project and concerned how to run their department with less resources. Gaining the support of Line Managers is a certain guarantee for a smooth implementation.


Providing incentives and goal-based awards to reduce turnover on the project team. Another idea is to offer incentives to those employees who are committed and hard working to achieving project goals. These incentives could come in the form of a promotion, salary increase or company benefits. This might make it easier for some people to dedicate their efforts to the SAP project and be a motivation for others to join the team.

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Costs of Upgrading


The costs of upgrading might be an additional reason why some organizations choose not to opt for mySAP HR.


Having a highly efficient, integrated and automated system versus an out-of-date stand alone software. Again - the question that organizations need to find an answer to, is whether it is worth buying a small Payroll or HR package which might need to be replaced within the next 3 to 5 years, either because it is not sophisticated enough for the needs of your business, does not offer suitable integration or might be because it has become out of date and the vendor can no longer offer technical support. The advantage of SAP's software is that it keeps up with the latest technologies, laws and regulations and your system will not need to be replaced.


Upgrades are "mini" projects - much of it can be done in-house. Upgrades are 'less painful" than implementations mainly because employees are already familiar with the product and much of the work can be done internally. Upgrades are not a system replacement, but involve the implementation of additional functionalities and the latest technologies. The costs of upgrading are trivial compared to the costs of having to replace a system every few years. They involve fewer, if any, consultants for a shorter period of time.

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Cost of Software, Licenses and ESS


Many mid sized organizations might be reluctant to invest large sums of money into purchasing the software and user licenses. The other question that arises is: should we purchase SAP if we use it for HR only and Payroll only? Purchasing mySAP HR might not be the right choice for small companies with few employees - but when a company is large enough to realize their need for an integrated HR and Payroll system, then the following analysis should help them justify the investment.


Calculating ROI and cost savings. To start evaluating cost savings, managers need to analyze how much time is spent maintaining personnel records, recording time, running and correcting payrolls, maintaining training details on different spreadsheets etc. How much money and resources are being used to pull information out of different systems or converting data in order to run reports? How many double and triple entries are being made just to preserve the integrity of multiple systems and databases? After completing this exercise, managers should then look at the savings attained by using mySAP HR, which provides timely information, helps to spot levels of absenteeism, low retention, career progressions etc. Company-wide reporting enables managers to be proactive rather than reactive. Tracking and managing employees' training and development on a single system enables them to internally promote and fill vacancies, reducing recruitment expenses. By integrating external recruitment, position requirements can be matched with applicant qualifications, also reducing costs through decreased turnover. Downloading payroll results and other cash flows out of payroll into accounting can be automatic through an integrated system. This is only a brief review of cost savings that can be achieved through mySAP HR.


It also helps to justify a mySAP HR implementation by estimating the ROI.



However, attaching dollar values to time saved in HR can be a difficult exercise. While it is fairly straightforward to calculate expenses such as new software and hardware, consulting fees and staff time, it is another story to calculate the benefits side of ROI. As a starting point, executives need to look at obvious dollar savings achieved through benefits and employee administration self-service, time saved by running customized reports from one system etc. But to fully evaluate how much money can be saved through SAP, executives need to take a closer look into HR processes, the new functions mySAP HR offers to re-engineer processes, the reduced number of people involved and shortened steps in a transaction. One possible way of estimating ROI, is determining how much time Managers, Hr and Payroll employees and IT support staff spend on traditional processes, prior to the mySAP HR implementation, by breaking down the steps and attaching dollar amounts to each step in the process.



Next follows an estimate of how much money can be saved by re-engineering these processes with mySAP HR. The same exercise should be conducted after go-live, to measure the improvements achieved.
Intangible benefits. Even though ROI is important, the importance of involving end users up front and getting their input cannot be stressed enough. Employee satisfaction contributes to the company's bottom line and has a direct impact on employee retention, performance and profitability.


Looking ahead: mySAP HR as an investment benefiting the entire organization, not just HR. MySAP HR can be extended to the whole organization. The advantage of purchasing the software is that its functionality can be extended as needed. If the primary objective was to have an integrated HRIS and Payroll system and the implementation was successful, the next goal might be to implement mySAP Finance and Controlling or Sales and Distribution. The more familiar the organization will be with the software, the more likely it is to add extra functionality, extending mySAP to the whole company in gradual phases.