Is SAP/SuccessFactors relevant for small to medium size companies – understanding the business case
During the summer break this year, I have in all secrecy at home been looking extra much forward to getting back to work, as 2BM HCM Cloud are very happy to announce the launch of our new SuccessFactors template for small to medium size companies (350-1.500 employees).
In this blog, I want to concentrate on, just as any other investment, what’s the ROI. Traditionally a difficult question to answer for HRIS, but today not so much anymore, so I will go out on the limp here, using our own experience and aligning with project results from SAP database, and share 2BM’s point of view on the business case for two exemplary SuccessFactors projects.
We believe that the content in this blog, is mostly applicable to small to medium size organizations (350-1.500 employees), with no current or outdated HR system available. If this is not characteristics of your organization, we hope you can find inspiration here and we are happy to work with you on the business case specific to your organization.
Two Business case areas
Our two business case examples will be:
- Company X is implementing SuccessFactors Core HR Employee Central (without Payroll)
- Company Y is implementing SuccessFactors Performance Management
Both business cases are based on the following demographic assumptions
- HQ in Scandinavia
- 750 employees
- 75 Managers
- Industry: Life Sciences
- Revenue: 100.000.000 euro (average employee revenue 133.333€)
Selecting, justifying and working with the value drivers
There are many value drivers to consider for a full picture of the ROI, but here I have selected only three for each case and I prioritized to show different types of value drivers.
In the tables below, in addition to the value drivers, you can read about where the value generation will come from for the respective drivers, just as you can read about the type of driver, the expected improvement ratio and monetary value.
For each of the cases we have taken a conservative approach to all parameters, both in respect to baseline data and potential value driver improvements.
At the bottom of the two tables, you can see the expected “year-over-year benefit” compared to baseline scenario.
For the respective cases I will be focusing on:
Exemplary costs for the two projects:
Costs for a SuccessFactors projects can be divided into three categories:
- SAP licenses for the SuccessFactors product, yearly fee over the contract period
- Implementation price, one-time cost
- Operational costs (support from implementation partner after go-live, dealing with tickets, incidents etc.)
Due to competition, we cannot reveal pricing fully transparent here.
Based on the benefit generated from only the three selected value drivers we see that the Payback period, the time it will take for Company X to generate enough value to break even with the size of the initial investment is:
This is a strong business case, and remember still, we are only looking at 3 value drivers for each project. Actually, our experience is that most customers reach the breakeven point within 1-2 years, when you consider the full value potential. Also, some value drivers that customers feedback on as very important can be difficult to assign a monetary value to, i.e., GDPR compliance, increased employee engagement or when organizations are able to make HR more transparent, open and accessible for employees.
In our modelling we provide all value drivers with a monetary value, however these benefits will not in all value drivers have a direct impact on bottom line results, as benefits might be converted into i.e. employee and manager time spent differently, and obviously we cannot assume how this work will end-up contributing to the business. However, SAP evidence shows that with tools such as Goal Management and Continuous Performance Management (available from scope in case B) organizations tend to spend on average 5% more time on strategic priority tasks.
We hope with this blog to have inspired small to medium size companies and HR departments to be curious about how to take HR to the next level. HR as a function has a strong place in today’s businesses, and many new tasks of more strategic importance are already waiting, and Line-of-Business are expecting HR to be front-runners in seizing many of the opportunities here-in. Also, we hope to have shown that there is a solid business case to take to the board of directors, to approve the projects that can facilitate HR to leap forward.
We are happy to engage in this kind of dialogue, to opening the business case and being completely transparent about all data in the model, and also we are happy to make a specific case based on specific company and industry data.
Go to https://2bm.dk/successfactors/package/ or https://2bm.com/successfactors/package/ to learn more about 2BM’s SuccessFactors Template solutions and here you can also book a free inspirational meeting.
Please share the blog, please share your thoughts, please let us become better when we help customers looking into the potential of SuccessFactors and HRIS investments.
Thank you for your attention.