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HR Connections - Mike Timm on Year-End Payroll

by Mike Timm

November 4, 2015

Ken Murphy, SAPinsider: Hi this is Ken Murphy with SAPinsider, and welcome to another installment of HR Connections, an SAPinsider podcast series focusing on the current developments and trends in the HR space. Today, I’m pleased to welcome back Mike Timm, founder and Managing Partner of Integrated Consulting Group and an SAP certified consultant. Mike thanks for joining us today.

Mike Timm, Integrated Consulting: Thanks for having me. The timing is really good since we’re getting close to year-end, there’s a few things to talk about related to that especially toward the Payroll piece of it. I’m looking forward to this.

Ken: As you mentioned we’re getting toward the end of the year and that would be a great place to start is year-end Payroll in SAP. I’m hoping you can address the changes and concerns and what you’re advising companies to be on the lookout for as they prepare for year-end.

Mike: There are three main areas I think people will find of interest. The first one is just regular HR support packs, and also the country legal changes (CLCs). My advice typically when I work with different companies, or like last year I did a seminar through SAPinsider where we talked a lot about payroll, and SAP generally toward the end of May, beginning of June will release an HR support pack that’s synchronization so it gets you all caught up. And then with that in place – you do that in the summer when it’s not very busy hopefully – and then in the fall, around October sometimes early November depending on the amount of legislation being passed that impacts payroll there’s usually a CLC and we want to put that in place to get all of the final last-minute type of year-end items in place. One of the things that happened this year was if you’re on the latest version of SAP HR, so if you’re on 6.08 SAP changed that a little they actually have the synchronization support pack that came out instead of a CLC so I know I was contacted by one colleague who was at the seminar we did last year and that was an issue for them because they were expecting a CLC and it ended up being a support pack. So there’s more testing and more thought that has to go into the process of putting it in, more impact to other areas. So that’s something to keep in mind.

The second area is the Affordable Care Act, there are several notes that have been put out, and I think a lot of companies I’ve been talking to are trying to figure out how to get all of this in place, some have talked to third parties to ask about outsourcing bits and pieces of it, and even there the roadblocks I’ve been hearing is that everybody is kind of scrambling. Luckily, I think that SAP’s approach is really pretty good, they’re rolling out the functionality as fast as they can in a way that it will actually work so we’re not just dumping stuff out there. And there’s quite a few SAP notes related to that that I think will be very helpful for people to look into:

The first one is the overall Affordable Care Act note which is 2167502. That’s a good place to start, it will give you an idea of what SAP’s roadmap is and what they’re planning and then it will also reference any new notes that come up over the next few months to enhance the functionality they’re putting out.

On Sept. 10 there was a CLC released, and that one has a decent amount of functionality and there are also four additional notes that are going to be needed to provide updates to even that functionality. Three of those have been released, those are 2211233, 2211234, 2211235 – those are the first three, with the last of those released on Oct. 12. There is another one going to be released on Nov. 16 that everybody should keep an eye out for which will put some additional functionality in place and kind of tie up some of the loose ends, and I think SAP is actually going to have a demonstration of that if you want to take a look and demo it. That note is 2211236. According to what SAP has said so far that should be the end of the notes that they’re going to release unless there’s some type of issues, so you should have all the core functionality available to put in place at that point.

And then the third area I think people will find interesting is the changing functionality that SAP is putting around the BSI module. We have three notes there that are of interest. The first one is SAP note 1836745, and that one interests me quite a bit because it’s new functionality that will allow us to prioritize additional withholdings that we put in infotype 210 with other deductions. In the past we weren’t able to do that. You put additional withholdings in and that was tax prioritization, and now we have to go in and say we want tax a higher priority or lower priority than other deductions, so that’s nice new functionality. Another one is SAP Note 2193769 and that one allows us to add a message telling us when we run payroll that BSI and SAP are out of synch and so we have the synchronization tool now for SAP and BSI to make sure all the updates are applied appropriately in their right systems, and this note will give us a message telling us we’re out of synch so that way we know something wasn’t applied right. It works great for when you do testing and things like that all the way through but then in production if you run a payroll simulation you can see if that message is out there or not because you know synchronization was supposed to take place over the weekend, and now you can feel comfortable that it actually happened. Or at least you’re not out of synch. And then the third note that everybody needs to pay attention to and this is more of a required one is SAP Note 2219445. The reason everyone needs to pay attention to this one is in March, 2016, SAP and BSI are going to drop support for their current RFC call, so that’s the communication method between your SAP and BSI systems, so you’re going to have to go to a new RFC method and so these things always take a little bit of time and we want to make sure our technical team understands what they need to do and get all that in place and get it well tested so we don’t have any hiccups when we come to March and April next year.

Otherwise the year-end items seem so far where I’ve done the updates and things, seem like they’re going smoothly for most companies. The ACA and these BSI changes are probably the items that people are looking at the closest to see how it impacts them.

Ken:  In addition are there any surprises you’re encountering that people should be aware of?

Mike: So far I haven’t. We’ve applied the different support packs at some locations; at other locations do their CLC’s, I haven’t worked on a project or I’m not working with a client that is currently on 6.08 so I haven’t had to deal with that difference in methodology or difference in what needs to be applied. But based on the other systems, the updates have gone smoothly  we haven’t impacted existing functionality, everything seems to be working OK nothing has jumped out telling me that there’s some kind of code type issue where I’ve seen the same type of issue multiple places. So it’s actually gone very smoothly and I hope everybody else is kind of seeing that so they can focus on the Affordable Care Act notes because I know that is going to take a lot more time and effort than hopefully just the regular updates do.

Ken: Mike, last time we spoke you focused a lot on the SAP Payroll Control Center because there had been some new functionality in the HR Renewal 2.0 feature pack 3 release – I’m curious since then how has this been received by customers you’re working with and maybe address the adoption curve since we last spoke?

Mike: Actually the Payroll Control Center is gaining more and more interest. The more places, companies, and individuals I talk to the more I hear about how interested they are in the Payroll Control Center because of what SAP is marketing it as but also if they’ve seen a demo which has been available at a few different events and also online by SAP, there’s a lot you can do with it, there’s a lot that SAP is delivering it’s not a shell if we go back to when it was originally announced it looked more like kind of a shell where we’re going to have to write a lot of our own custom ABAP code and reports behind the scenes. But SAP is actually delivering a lot of items that currently is in a checklist that I work with companies and we want to make sure all these different things are in order.

One of the other areas a lot of folks are interested in is as we run the payroll process and we run into issues, if we have 20-25 employees that error out in payroll those can be divvied out by a payroll manager or an admin person and can be divvied out – so if five of them are garnishment related they’ll send it over to the person who handles garnishment. Or if we just need to spread the workload we can give it out to different people and then we can see a status update on where that fix is, or what needs to happen to get that person to run through successfully. And I think that was an area I haven’t spent a whole lot of time on myself looking at in the past and it wasn’t an area I had many questions on, but as I started looking into it and started talking to others about that functionality what really kind of struck was that we’d love to know where the issues are and where they’re going to be before we run payroll. And then get those pushed out to the right people.

From an adoption standpoint, there hasn’t been a lot of implementation that I’ve seen so far. That being said there are a lot of people saying next year because you have to be at a certain level of SAP to get to it and most of them will be getting there in 2016. And so I think once they have that in place they’ll start looking at the Payroll Control Center in a lot more depth or at least starting to play around with it in their test environments to see what they think. There are some technical aspects that have to go with it, with declusterization and some of those items. I wish it had been around 5-10 years ago I think it would have been really nice to have.

Ken: Shifting gears a little Mike, I know I don’t have to tell you that SAP is all-in on the cloud. I’m curious how that relates for customers who have an on-premise payroll system and the integration points with SuccessFactors and moving to the cloud. What are you advising customers as far as how to handle that as it relates to the SAP roadmap?

Mike: It’s a very interesting area and exactly how to approach it, every company is slightly different. Some are more comfortable moving things to the cloud and others I’m working with have no interest to go to the cloud or because they have government contracts and some of those things they’re still trying to figure out how that will work out for them to move to the cloud and what they have to be careful about. From the standpoint of where SAP is, they’ve drawn out the roadmap and by 2025 they want to have customers on the cloud and they will have some availability so you can keep running some functionality of SAP on-premise after that point, it’s not something their marketing is really using as a sales pitch because they want everybody to move over. I do think that the cloud has some benefits from the standpoint that you get updates and those types of things on a quarterly basis instead of a lot of times companies will update once a year with support packs and then a CLC like I was talking about earlier with year-end, so you don’t get all the new functionality coming through as often. We do have ways though with SAP and I think they’ve done a good job with this where you don’t have to pull out your existing on-premise installation. You can still continue to use that and then start to basically dip your toe, start getting an understanding of how SuccessFactors works. There’s a company here in town where I live, a utility district that has done a very good of this where they had on-premise and spent all the money putting it in and the way they work with their information is they want to keep it on-premise for the foreseeable future but they saw some of the benefits of SuccessFactors modules where they could pick and choose – compensation and talent management they picked up to go through SuccessFactors and then that all backs in and now that they’ve done that they’re kind of comfortable with how it works and what it requires and they’re looking at other modules. But I think from a payroll standpoint since that’s where I keep my eye closer –  I think that will be one of the last things if not the last thing that they move off down the road. I think they’ll move all the other functionality (first). So over the next few years pick up Employee Central and we’ll keep the on-premise payroll system and then we’ll eventually go over with that as well. But I think that SAP has done a very good job of allowing a hybrid method so that we can pick and choose to a fair degree of what we want to put in place and what we don’t, and then using the on-premise back-end system. I also know there’s a lot of functionality that depending on the company if they use time evaluation and time management to a great deal on-premise most of that doesn’t exist yet with SuccessFactors and I know they’re working on some of that to a degree but a lot of it SAP goes to a third-party and builds some of that in and people don’t want to do that quite yet. So there’s a lot of things to look at when you look at SuccessFactors, the front end is very neat compared to the aging SAP GUI but from a functionality standpoint you really have to pick and choose what area is going to benefit your company. And I think going slow is the way to do it. There’s still plenty of time before 2025 and we can slowly move bits and pieces over until we’re comfortable making that total jump.

One of the other areas I’ve been hearing a little bit more about lately is SAP S/4HANA because there is not an upgrade path for the HR area to that and so folks see finance, production and everyone else wanting to move to S/4HANA – what does that mean for HR? And depending on how your SAP landscape is now if you’re one of the lucky ones where your HR system, payroll system resides on its own set of boxes and you’re currently using ALE you’re set you don’t have to change anything. Finance and everybody else can upgrade, you just have to point the ALE and the IDOCS to a different partner so it’s actually pretty simple. If you’re on the same system you’re going to have to go through the process of breaking it apart basically so everybody else can go up to S/4HANA and then you would retain that ECC 6.0 version of SAP that you’re running to continue doing HR and Payroll. It’s not terribly difficult but there are some technical things and SAP will be pretty good especially if you talk to them early on about helping you through that process because they want to start getting customers moved to S/4HANA as soon as possible so they can get some testimonials and things.

Ken: Mike I appreciate your joining us today to share your insights.

Mike: Thank you I appreciate it very much and I hope the SAP notes I threw out earlier will come in handy to some folks at least as a starting point to start looking at some things if they haven’t heard about the new functionality or changing functionality yet.

Ken: Again this is Ken Murphy with SAPinsider, this is HR Connections and we’ve been chatting with Mike Timm, founder and managing partner of Integrated Consulting Group. Mike thanks again.

Mike: Appreciate it.

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