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SAP ERP HCM Software Review

4 stars Average rating: 4 (from 178 votes)

An Independent SAP Human Capital Management Software Review

Founded in 1972, SAP (Systemanalyse und Programmentwicklung or System Analysis and Program Development) has grown from a 5-person start-up to one of the largest enterprise software companies in the world (and by far the largest software vendor in Europe). Operating under the auspices of the segments of Products, Consulting, and Training, SAP has grown to the gargantuan levels of employing just shy of 50K employees over 50+ countries. This growth in turn has taken the company from annual revenue in 1972 of roughly $300K to an astounding $4.7B. These figures make SAP the largest ERP software vendor and according to Gartner, give the company an impressive 25+% market share. However, as far as HR software goes, while the company is still a recognized leader, Gartner indicates that SAP's market share sits at roughly 18% in the Human Capital Management (HCM) software space—further proof of the intense competition that is present in this market.

Regardless of specific market share percentages, SAP software solutions give the company a global footprint that has been adopted by 102K+ customers that serve literally tens of millions of their own staff. For larger organizations, this adoption comes in the form of the company's flagship offering; the SAP Business Suite (currently version 7)—an on-premise ERP application designed for organizations with 2500+ employees, and our focus for this SAP software review. However, SAP also has a number of smaller product solutions (with significant market sizing overlap) that are worth mentioning as well—namely SAP's Business All-in-One (an on-premise application designed for the larger middle market organization with 500-2500 employees); SAP Business ByDesign (an on-demand, cloud offering designed for the smaller middle market company with 100-500 employees); and SAP Business One (an on-premise system designed for smaller businesses with less than 100 employees). Of these SAP software solutions, it should be noted that all except Business One and Business ByDesign are most notably directly sold by SAP (while Business One and Business ByDesign sales distribution model actually runs through SAP's channel partners); and all are built for Enterprise Resource Planning with varying degrees of HCM functionality.

Organically Growing a Market Leader

Of similar importance to the size, market share, and growth that SAP has seen since its inception, is the method with which the company has built its empire. More specifically, SAP has built the bulk of its success organically—a style that sits in sharp contrast to Oracle, who has seen much of its growth come from acquisitions. In fact, a Boersen-Zeitung interview with SAP's Chief Financial Officer (CFO) Werner Brandt indicated that "organic growth" was at the center of the company's strategy, further citing that the company "makes acquisitions to gain technology, not to boost sales, and purchases aren't based on earnings multiples". While this method of growth is easily supported, the acquisitions claim is certainly interesting given prior acquisitions such as Business Objects and more so this past year's massive payout for SaaS talent management software vendor SuccessFactors. Does this suggest that SAP didn't have the technology they needed in talent management, in SaaS or possibly both?

Whatever the case may be for this HR software acquisition, the company's organic growth has been largely fueled by a number of strategic partnerships and customer-centric tactics. Specifically, SAP manages 10 partnership categories (that house roughly 10K partners and their respective solutions): SAP-based outsourcing and cloud services providers; SAP Crystal solutions providers; SAP channel partners; SAP education partners; SAP language service partners; SAP OEM partners; SAP services partners; SAP software solution partners; SAP support partners; and SAP technology partners. The highest (and possibly most interesting) echelon of partnership though leads to the SAP product designation of an Endorsed Business Solution (EBS)—an indication that the partner fulfills an identified market need which SAP does not intend to pursue. Worldwide only 33 companies have been invited to be a part of the EBS, of which some of the more notable solutions include Oracle, Meridium, Questra, and SPSS.

This business partner ecosystem of sorts allows for participating members to tap into the combined expertise, experience, and insights of other industry leaders, often leading to partner collaboration and an increase in customer-centered solutions. This customer focus is furthered through the SAP Community Network (SAP's professional social network for connections between SAP customers, partners, employees, and experts whereby advice and knowledge can be shared) which was 2M+ members strong. In addition to the Community Network, SAP also hosts user groups which are independent, not-for-profit organizations (made up of SAP customers and partners), that are dedicated to educating members, facilitating customer involvement, and influencing SAP's strategy. These communities play an integral role in the SAP ecosystem, and show that having a stellar product is one thing, but having a tightly integrated community to help you leverage it is quite another.

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