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How to Use Cloud as a Catalyst to Drive Standardization

Q&A with Mike Ettling, SAP Global Head of Cloud and On-Premise HR

insiderPROFILES, Volume 5, Issue 3

July 1, 2014

Cloud as a catalyst

Mike Ettling, SAP Global Head of Cloud and On-Premise HR, discusses his new role in a comprehensive Q&A that touches on SAP’s overall HR roadmap and the SuccessFactors integration strategy. Ettling joined SAP in April, 2014, to oversee the human resources (HR) line of business.

 
 

Mike Ettling

Mike Ettling joined SAP in April 2014 to oversee the human resources (HR) line of business, including cloud solutions from SuccessFactors and the on-premise SAP HR solution. In this role as the global head of cloud and on-premise HR, Ettling helps manage more than 17,000 customers that use SAP HR solutions. Prior to coming to SAP, Ettling was CEO of NGA Human Resources, a global HR and payroll services provider. He has also held various executive roles at Unisys, Synstar, plc., and EDS. insiderPROFILES recently spoke with Ettling to uncover his passion for HR and SAP’s strategy for cloud and on-premise HR.

Q: What are your primary goals and objectives in your new role as the global head of cloud at SAP?

I’m very excited to be here. SAP has a tremendous opportunity to affect the industry quite significantly in the coming years, and I wanted to be a part of it. At NGA, I developed a passion and interest in the HR space, and this is a very interesting time in the industry in terms of technology to further that passion. This is a direct opportunity to change the way we operate in the workplace.
 
As I talk to customers, partners, and analysts to really come to grips with the business, I’m seeing one of the areas that will be very strategic for us is how to grow and scale this business to the largest global cloud business serving some of the largest multi-national companies.

I believe that the winners in cloud HR will be the companies that get the servicing model right, because that is what clients expect.

From a customer perspective, with HR being the back-office function leading the adoption of cloud, this presents opportunities and challenges for how clients craft a roadmap to the cloud. Where SAP plays a critical role is in helping to define and craft that roadmap to enable successful HR transformations and successful business outcomes.
 
A particular area of focus is service delivery and quality. The software-as-a-service (SaaS) world is very different than on premise. SaaS is about ongoing and continuous service delivery. I believe that the winners in cloud HR will be the companies that get the servicing model right, because that is what clients expect. This is a key focus, making sure SAP has the best service delivery model in the industry. There will always be variances in product feature functionality, but service delivery is going to be a key differentiator.

Q: What specifically attracted you to this opportunity with SAP?

First and foremost, SAP has rich and leading functionality in its on-premise HR solution, and that DNA has been transferred into our cloud-based solution, SuccessFactors Employee Central. In terms of globalization and its ability to meet local requirements, Employee Central is way ahead of what is out there in the marketplace and has significant advantages over our competitors’ products. As the CEO of NGA, I had the opportunity to witness implementations of all of these products, so I’ve seen them from a partner perspective. My perceptions are from hands-on personal experience. This was a big factor in coming to SAP.
 
A major challenge for a lot of cloud companies in the SaaS market is the ability to scale. The SAP infrastructure — in terms of data servers, servicing, and technology — is world class. It is a platform uniquely suited toward scaling the business. Lastly, as an accountant by profession, I can’t divorce myself from the concept of profits and cash flow. In going to work for a cloud company, it was of utmost importance that it was a profitable cloud company. SAP is the only profitable cloud company at scale in the market. There is currently a bubble around extraordinary over-valuations of cloud companies that is due to burst as investors realize that growth must translate into profits sooner than later. SAP is growing at high double-digit rates similar to other cloud companies, but the difference is we will continue to grow and do it profitably. I believe customers will place more weight on the financial risk profile of the cloud vendor they choose.

Q: Your role bridges cloud and on-premise HR offerings. How is SAP straddling that line between cloud and on premise in terms of defining an HR roadmap moving forward?

One of the things that SAP offers is a very strategic roadmap for how to get to the cloud. Currently, there is a stampede to the cloud, and obviously the problem with stampedes is that you can get crushed. There are a lot of vendors out there with rip-and-replace, “blow it all up and move to the cloud” propositions, and that may not be the right thing in terms of customers’ ROI or where they are with amortizing their investments. SAP’s ability to offer a hybrid model — a combination of on-premise, private, and public cloud — in different scenarios is very unique. This enables clients to plot out a roadmap and ROI with far less risk. We have found that this is very important to our over 14,000 on-premise customers.
 
When I was at the SAPinsider HR 2014 event in Orlando, I received a lot of feedback from customers about this. Many of our on-premise HR customers were saying they are happy with the on-premise solution, but are interested in learning more about hybrid scenarios for expanding to the cloud with talent management, for example. The ability to present customers with options like these is a big differentiator for SAP. Working together with our customers to develop roadmaps and opportunities for a greater ROI with less risk is mutually beneficial. The reality is that HR is rapidly adopting cloud solutions, and within four years, more than 50% of HR deployments worldwide will be in the public cloud, but getting there does not have to be painful.

Q: As clients plot their HR roadmaps, what other challenges are they encountering, and how does SAP meet those challenges?

Traditionally, on-premise installations are highly customized. A systems integrator customized the SAP HR solution to match a customer’s detailed process requirements. This level of customization was expensive, but resulted in a unique solution that ensured the processes ran exactly as required. The cloud model, by comparison, is more about standardization. It’s configuration versus customization, and organizations look to change processes according to best-practice models dictated by a cloud solution. This changes the whole dynamic in an organization, because now HR organizations need to focus less on the implementations, which are faster, less expensive, and less risky, and more on how change management is deployed to change processes for a global best-practice model.
 
This allows HR leaders to drive their standardization agenda around processes, which we’ve never seen before to this extent. The opportunity to use the cloud as a catalyst to drive standardization is a big reason why HR leaders say they want to go to the cloud, and are doing so faster than their other back-office colleagues. This is a fundamental shift, and my counsel to customers is to not underestimate the devil in the details. If you don’t pay enough attention to change management, the cloud transition can be more challenging than it has to be.

Q: What is the SuccessFactors integration strategy moving forward?

We now have a single approach to clients and potential clients in the marketplace: It’s an HR business, not an on-premise HR business and a cloud HR business. Our clients know about the richness of our offerings and deployment options, but there is more work to be done. The fact that we do have such an abundance of offerings can sometimes cause confusion, and the onus is on us to be very clear in the marketplace about how the offerings play together and how clients can avail themselves of these different capabilities.
 
We have made considerable progress recently in terms of integration and will continue to gain traction as we work together as a cohesive business. That is one of the big leadership challenges I face in this new role; pulling everything together as one complete business.

Q: How are changes in the workforce affecting the role of HR in an organization?

It is truly a unique time. Today, we have five generations in the workforce with millennials fundamentally changing the nature of work and engagement in the business world. You’re seeing everything that millennials typically thrive on — mobile interaction, social engagement, the way user interfaces work these days — coming to HR because we have to cater to these upcoming generations that are soon going to make up the majority of the workforce.

Onboarding is a perfect example. Five years ago, HR would look at it as a series of processes: sign up for payroll, issue a laptop, get a security badge, sign up for benefits — a series of 10 or 12 processes that someone has to work through.
 
Today, we think of this as more of a social networking activity; How do we get you up to speed to find your networks, find your peers and mentors, and connect you to the organization that will help you be most effective? There are many social networking and collaboration tools and concepts in play, and we’re embracing this change at SAP. Our applications are built for mobile, and our designs and user interfaces in our applications capture those social concepts.

At the end of the day, customers are undertaking HR journeys not for the sake of the software, but to enable transformation, and a changing workforce is part of that dynamic.

At the end of the day, customers are undertaking HR journeys not for the sake of the software, but to enable transformation, and a changing workforce is part of that dynamic. Organizations want to improve talent management, they want to change the focus of HR altogether, they want to create competitive differentiation in attracting their workforce, and SAP has the most comprehensive suite of offerings to enable those goals.
 
In the short time I’ve been on board, I’m seeing more opportunities for customers to realize and appreciate the depth and range of offerings we have in the HR space and all of the different configuration options that can help them along their transformation journeys with a great ROI.
 
One of my main priorities is to spread this message. I encourage any organization considering an HR transformation to engage with SAP. We offer market-leading solutions combined with deep HR domain expertise to help enable HR transformations that will drive customers’ people engagement initiatives and business outcomes. 

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