SAP H4S4: The future of SAP HCM?!
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It’s time to say goodbye, SAP HCM: The version based on SAP ERP 6.0 will be phased out of regular maintenance from 31.12.2027. Depending on the modules used and your individual cloud strategy, there are various options to consider: a switch to SAP SuccessFactors, a migration to SAP HCM for S/4HANA (H4S4) or a hybrid solution that combines both approaches. But what is SAP H4S4? Is SAP H4S4 the best option? How do you implement SAP H4S4? Find out in the blog article.
What is SAP H4S4?
SAP H4S4 – an abbreviation born out of the creativity of SAP professionals, but now common sense – stands for “HCM for S/4HANA” and is therefore the next version of the SAP HR module that has been tried and tested for many years.
In other words: “SAP ERP R/3 HCM” is followed by “HCM for SAP S/4HANA”. You can operate H4S4 on-premise, in the private cloud or in the public cloud. This is primarily a question of corporate strategy and cost structure.
What options do you have until 2027?
Depending on the modules used and the personal cloud strategy, a switch to SAP SuccessFactors, a migration to SAP H4S4 or a mixture of both are possible. SAP H4S4, on the other hand, can continue to be operated on your own infrastructure or in the cloud.
Here are a few examples:
- Scenario 1: Personnel administration, personnel time management and payroll accounting. All other processes are currently not digitized and there are no plans to do so.
Our recommendation: Switching to SAP H4S4 is a good idea here. No functionality is lost. You save on implementation costs for additional systems.
Then digitize your paper processes by introducing Fiori Self-Services combined with a personnel file solution.
- Scenario 2: Personnel administration and time management. Your time management is close to the standard and does not map complex collective bargaining and company agreements.
Our recommendation: Switching to SAP SuccessFactors Employee Central makes perfect sense. You can benefit from state-of-the-art functionality and are well positioned for the future. You can use this as a starting point for the introduction of further processes, such as time tracking, recruiting, learning or performance & goals.
- Scenario 3: HR administration, HR time management, payroll accounting and event management.
Our recommendation: As event management is no longer available with SAP H4S4, it makes sense to switch to SuccessFactors Learning in the form of a preliminary project. SuccessFactors Employee Central should definitely also be introduced here in order to benefit from all the functions. SF Employee Central then also includes personnel administration. Depending on requirements, time management can also be migrated to SF Employee Central. Only payroll accounting then remains on SAP H4S4.
If you are not yet 100% cloud-ready, you can use SAP H4S4 as a bridging technology.
What is the functional scope of SAP H4S4?
Some applications are adopted, but of course there are also changes depending on the selected SAP H4S4 target landscape:
Option 1 “Public cloud” is the most cost-effective option, as the cloud resources are shared with others. Thanks to client separation, access to company data is secure. “Public cloud” is also the most maintenance-friendly and future-proof option. SAP installs updates automatically, allowing users to benefit from new innovations immediately. The system scope then includes the following modules:
- Payroll accounting
- Personnel time management included
- Operational planning
- Working time recording (CATS)
- Personnel administration included
- Organizational management
- Employer benefits
- Personnel cost planning and simulation
- Pension fund (DE/CH)
- ESS / MSS (based on WebDynpro ABAP and/or Fiori 2.0)
- Sub-modules of the public service
- Job management
- Public service deployment planning
- Travel expense management (as part of the finance module)
Option 2 “Private cloud” or “on-premise installation”: If the cloud resources are used exclusively by a single organization or the system is hosted locally, some applications are added on top:
- Corporate remuneration management
- Talent management modules, in particular
- SAP Learning Solution (without Java applications)SAP E-RecruitingTalent Management and Talent Development
- Target agreements and assessments
What options are there for migrating to SAP H4S4 and which is the best?
As always, it depends. As with most upgrades, the following paths are available:
Variant 1: Brownfield migration a.k.a. “The classic”
Here, the existing system is simply updated, similar to the installation of an enhancement package. This is particularly suitable if the current system is stable and maintenance is easy and inexpensive.
Variant 2: Greenfield migration a.k.a. “cutting off old habits”
Here, an S/4HANA system is completely restructured and adapted to newly defined requirements, after which only the most important data is migrated. A data history is usually NOT kept. This option is just right for you IF your current system only causes problems – changes and corrections are expensive, lead to subsequent errors or support package imports cause very long downtimes or transport blocks.
Variant 3: Greyfield / Bluefield / hybrid migration a.k.a. “The best of both worlds”
All 3 terms can be used synonymously. In this scenario, an S/4HANA system is freshly installed, as in the greenfield approach, but the system is not adapted based on newly defined specifications. Instead, programs, customizing and data that are still required are identified and copied to the new system in a targeted manner. The extent to which historical data is transferred, for example, can be decided on an individual basis.
Use this option IF you generally trust your system, but legacy data causes problems from time to time. This is often the case with HR-only systems that were created as a copy of a previously shared ERP system.
What steps are required for the SAP H4S4 migration?
The following project process has proved successful:
- Carry out a readiness check
First, some programs are planned and evaluated using standard tools. To this end, it is essential to check the customer’s own programs for S/4HANA suitability.
Workshops are held to identify topics that need to be discussed and possibly addressed in a preliminary project.
The result should be a rough guideline with approximate project durations. - Define a basic IT strategy for dealing with the cloud and enter into license negotiations with SAP
If you know what you want, you know your options and can negotiate better. - Carry out preliminary projects
These can be, for example:
– Data deletion and archiving with ILM
– Replacement of components that are no longer supported, such as event management, Managers Desktop, etc.
– Establish S/4 readiness of customer-specific programs - H4S4 sandbox
Every system ticks a little differently. Especially with brownfield or a hybrid migration approach, setting up a sandbox gives you the opportunity to…
– …practicing the technical migration.
– …to recognize challenges not found in the Readiness Check at an early stage.
The readiness check cannot recognize all situations. For example, if you simply copy SAP coding, the checks will run into nothing
.
– …get to know and try out new functionality.
– …keep the transport block of the actual system rail short.
– …better estimate the project plan. - Set up an emergency system
This means that an urgent correction can find its way into the production system despite transport stops - Migration of the development system
- If necessary, migration of the quality assurance system and other intermediate systems
- Migration of the productive system
- Take advantage of new opportunities!
The new S/4HANA license model eliminates the license costs for Employee & Manager Self-Services. So why not use them if you’re already paying for them anyway? - Establish S/4 readiness of customer-specific programs
What are the advantages of H4S4?
Smaller improvements are mainly found in the core modules. Here are a few examples without any claim to completeness:
Time management
absence collision table
– Easier identification of error sources in the
time management evaluation
– Break fields in infotype 2002
“Attendances”
Organizational management in PPOME/PPOSE
– Cost distribution in overview screen
– Maintenance of translations integrated
Payroll accounting
A lot is also happening in the area of Fiori self-services. All Fiori 2.0 applications are to be replaced by more up-to-date and better versions over the next few years. This is already the case for these applications:
- “My reporting”
- “My team calendar”
- “My time events” / “Approve time events”
- “Employee search”
The following applications have also been added:
- “My HR documents”
- “My search”
- “My actions”
- “My organization”
- “Employee profile”
- “Personnel processes”
- “Search courses” / “My courses” / “Manage course participation” (SAP Learning Solution)
SAP H4S4 secret tips
With the switch to SAP H4S4, a new license model comes into force. In future, there will no longer be any user-based licenses; only the master records will be licensed. The Personnel Administration, Time Management, Payroll, Learning Solution and E-Recruiting modules will be licensed separately. Most talent processes will be assigned to Personnel Administration.
This also creates opportunities for the HR department: the previous additional license costs for using Employee & Manager Self-Services are now eliminated. So why not use it in future if you are paying for it anyway?
The economic conditions in 2024 and the meagre outlook for 2025 so far have prompted many companies to postpone planned SAP H4S4 migrations to subsequent years. This could result in a shortage of consultants. If you are smart, you will at least not put off SAP H4S4 planning and secure suitable resources at an early stage. The pool of available and capable consultants will rapidly shrink towards 2027. I can only advise those responsible for the system to leave a very generous gap to December 31, 2027, so that a “Plan B” can take effect in the event of a failure.
Conclusion and outlook: SAP H4S4 as a bridging technology on the way to the cloud
With SAP H4S4, you get a bridging technology that gives you more time for an orderly move to the cloud. SAP offers this infrastructure in every flavor and to suit your corporate strategy: OnPrem, private cloud,public cloud. For companies with special security requirements, StackIT, as part of the Schwarz Group, also offers a private cloud running in Germany.
In the vast majority of cases, a classic brownfield approach leads to success. In contrast to other S/4HANA projects, this will not be a transformation project, but is more comparable to an enhancement package upgrade. Nevertheless, it makes sense to clean up the system before the migration and, if necessary, move modules that make sense and require innovation to SuccessFactors.
In contrast to creating a new wage type, an SAP H4S4 project cannot be planned and implemented within 2 weeks. So get to grips with the topic early on, carry out a proper readiness check and enter into license negotiations as quickly as possible. Don’t wait for 2027 and tackle the project “at the last minute”. Give your employees enough time for such a project – like so many things, such a project usually comes “on top”.
We can support you with all these topics! Get in touch with us this year and start planning with us!
We wish you a successful migration, don’t lose sight of the fun of the challenge and the technology.
