SAP HCM

SAP HCM is an integrated HR management system. In this article, we explain the functions and purpose of HCM and introduce the cloud-based successor solution SAP SuccessFactors HCM.

SAP HCM: background, functions and future direction

SAP HCM: background, functions and future direction

As a fully-fledged, comprehensive human resources management system, SAP Human Capital Management (SAP HCM) provides all the functionalities required for personnel management. All HR topics are brought together centrally.

On this page, we answer all important questions relating to the classic SAP HR solution. We also look at the future direction of the SAP system world in the area of HR management.

Important to know: The main maintenance (Extended Maintenance) for the SAP ECC solution SAP HCM expires at the end of 2027. SAP's successor solution is the cloud-based SAP SuccessFactors Full HCM Suite (Public Cloud).

Companies currently have the option of

  • either switch directly to SAP SuccessFactors HCM (Public Cloud)
  • or continue to operate the classic payroll, master data and time management solutions in an SAP S/4HANA runtime environment with a HANA database (private cloud or on-premises).

By switching from SAP ERP to SAP S/4HANA, the classic solutions inherit the maintenance commitment of SAP S/4HANA until 2040.

What is SAP HCM?

What is SAP HCM?

SAP HCM (SAP Human Capital Management) is a human resources management system that was normally offered as part of SAP ERP and is still used by companies on SAP ECC.

As the successor to SAP HR, it contains all the functions that are relevant for personnel administration, payroll, applicant management and personnel development. SAP HCM also combines personnel management and personnel administration with multi-stage application and approval processes.

The system is also closely linked to the organizational structure, allowing hierarchy-dependent processes to be automated. Adaptation to individual company circumstances is possible with the help of the integration of numerous sub-modules. We would like to look at these in detail below.

Which modules does SAP HCM contain?

Which modules does SAP HCM contain?

SAP HCM is an extremely comprehensive HR management system. Describing all the components of the HR solution would go beyond the scope of this wiki article. We will therefore concentrate on the most important modules, to which all sub-modules and additional functions are subordinate:

  • Personnel Administration (PA)
  • Personnel Time Management (PT)
  • Payroll accounting (PY)
  • Organizational Management (OM)
  • Personnel development (talent management)
  • Event Management (PE)
  • Recruitment (PB)

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Personnel Administration (PA)

Personnel Administration (PA)

PA, Personnel Administration, is where all the threads of Human Capital Management come together. The linchpin here is the personnel master record, which exists for every employee. This “digital personnel file” replaces paper-based procedures and ensures that all personnel data is available in an up-to-date form at all times.

In addition to general employee master data such as personnel number, name and address, information such as organizational unit (department), pay scale and pay scale group is stored. Each of these entries is assigned a validity period, creating a history over time.

This chronological assignment ensures a high level of transparency and traceability of changes. Overall, SAP HCM significantly relieves the HR department of administrative tasks, freeing up time for more strategically important tasks such as recruiting and personnel development.

An important personnel administration sub-module that is therefore worth mentioning is “Personnel Cost Planning and Simulation (PA-CP)”. Based on personnel master data, payroll results and other data sources, PA-CP enables transparent and systematic personnel cost planning.

In addition, various scenarios such as salary adjustments or staff additions and departures can be simulated. Restructuring of the organization can also be taken into account in the planning. Furthermore, the planning results can be transferred directly to Controlling (CO) as a basis for financial planning.

Personnel time management (PT)

Personnel time management (PT)

Personnel time recording is now mandatory in almost all industries. In practice, this is done either by employees maintaining their own working times or via time recording terminals. In addition, many companies have time administrators who make manual entries or corrections. All three approaches are supported by SAP HCM PT.

In order to achieve the highest possible degree of automation, time recording via terminals or comparable technologies is recommended. The time bookings are immediately transferred to the SAP system via interfaces, where they form the basis for subsequent processes such as payroll accounting.

Outside of the business premises, browser-based time recording in self-service is conceivable. SAP also offers this option. SAP HCM also supports classic time management workflows, such as requests for flexitime, supplements and corrections.

Payroll accounting (PY)

Payroll accounting (PY)

The third important task of personnel administration is payroll accounting. All relevant information is available in SAP HCM. This applies to master data such as salary groups as well as working times, various absence times, flexible salary components and special payments. Thanks to regular updates, payroll accounting always complies with legal requirements.

Additional security is provided by simulation runs that can be carried out before the actual payroll run. This allows any errors to be corrected in advance. SAP HCM PY also supports different payroll periods. This is particularly useful for international companies.

Organizational Management (OM)

Organizational Management (OM)

In the SAP HCM environment, Organizational Management is used to map the entire company structure with its organizational units. The module also supports the analysis of the process organization and personnel analyses for personnel planning. If organizational changes are imminent, they can be planned with the help of SAP HCM OM. Last but not least, this module forms the basis for functions such as career planning and applicant management.

Personnel development (talent management)

Personnel development (talent management)

The main task of talent management in SAP HCM is to match vacant and open positions with the available personnel resources. This is done on the basis of defined criteria such as qualifications and personal interests. At the same time, these functionalities allow individual career and development plans for employees, including the associated target agreements, to be mapped in the system.

It should also be mentioned that talent management comprises further sub-modules. These include Performance Management (PEM) and Learning Solution (LSO).

Training and Event Management (PE)

Training and Event Management (PE)

raining and Event Management in SAP HCM is closely linked to personnel development. It supports the planning, implementation and evaluation of events such as training and further education. A complete event catalog including lecturers, rooms and documents can be stored in the system. Existing events can be used as templates and scheduled on a recurring basis. It is also possible to accept registrations.

At the end of the event, SAP HCM PE supports cost center assignment and invoicing. Another helpful feature is a function that allows qualifications achieved to be transferred directly to the personnel master data. This means that a training history is automatically generated for each employee if required.

Recruitment (PB)

Recruitment (PB)

The HCM Recruitment module supports companies in managing vacancies. The transfer of job requirements and job descriptions to online platforms is also possible with PB. Numerous functions such as scheduling interviews or application deadlines can be created automatically and tracked in a clear manner. The entire recruitment process can be mapped individually.

Separate master data management is available for candidates. This not only allows you to build up an applicant pool that can be accessed as required. If a candidate is hired, the applicant master data can be transferred extremely easily to the newly created personnel master data.

Other SAP HCM sub-modules

Other SAP HCM sub-modules

As mentioned at the beginning, the main modules mentioned above contain several sub-modules that can be used to map specific tasks in the HR environment. The following modules should be mentioned in particular:

  • ESS/MSS: Employee Self Services/Manager Self Services
  • Structural (dynamic) authorization assignment
  • Personnel appraisals

ESS and MSS relieve the HR department massively by digitizing workflows. For example, it is possible for employees to initiate processes such as working time corrections, travel requests or training bookings in the system themselves. Access points can be the SAP Netweaver Business Client or the Fiori Launchpad, for example. Fiori applications can even be used on mobile devices.

Structural authorizations, which can be used in conjunction with organizational management (OM), also ensure security and efficiency. In contrast to the standard SAP role and authorization concept, authorizations are not assigned statically but dynamically.

The functional principle: authorizations are assigned to positions within the organization. If an employee takes up this position, he or she automatically receives the appropriate authorizations. This is a clear advantage in terms of IT security.

SAP HCM also makes it possible to map employee appraisals. The data stored in the system in turn forms the basis for salary adjustments, variable salary components or bonuses. However, the assessments can also be used in conjunction with event management to ensure the quality assurance of further training events.

Meinolf Schäfer, Senior Director Sales & Marketing

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What advantages does SAP HCM offer companies' HR departments?

What advantages does SAP HCM offer companies' HR departments?

If you look at the tasks of HR departments today, they are still predominantly of an administrative nature. Paper-based personnel files are kept, vacation requests are processed on paper and even working hours are recorded manually. However, in times of a shortage of skilled workers and limited personnel resources, it would be much more important to focus on the strategic objectives of personnel management.

SAP HCM offers important support in two respects. On the one hand, it enables the optimization and digitalization of HR processes, and on the other, it contains numerous tools that are important from a strategic HR perspective.

The simplification and streamlining of administrative processes is achieved through the following HCM features, among others:

  • Digital leave request (e.g. via web browser) incl. approval workflow
  • Central, system-supported maintenance of all relevant HR master data
  • Consistent data records and traceable changes (history)
  • Complete data transparency
  • Partial automation of payroll accounting
  • Simplified time recording (corrections also possible in self-service)
  • Integration into other SAP modules such as FI/CO

Strategic components of the system include:

  • Tools for effective and individual employee development
  • Comprehensive talent management
  • Support for modern recruiting channels
  • Support for onboarding processes (induction)

SAP HCM vs. SAP SuccessFactors HCM

SAP HCM vs. SAP SuccessFactors HCM

As far as the HR sector is concerned, the successor to SAP HCM is already available.

It is the SAP SuccessFactors Full HCM Suite, a solution with new code lines that is available via the public cloud. The name SAP HXM for SAP HCM, which was used for some time, will no longer be used.

Companies that are currently still running the SAP ECC solution SAP HCM can choose between two (or three) ways to deal with the impending end of extended maintenance for SAP HCM on December 31, 2027:

  • Either switch directly and completely to SAP SuccessFactors HCM,
  • use SAP HCM under SAP S/4HANA with HANA database (maintenance commitment until 2040 by using SAP S/4HANA) or
  • rely on a hybrid model of SAP HCM with SAP S/4HANA and SAP Success Factors HCM (for example, from SF Employee Central as the master data system and SAP Payroll and SAP Time Management from SAP HCM for SAP S/4HANA).

SuccessFactors was originally an independent US company that offered a cloud-based talent management suite with functions for analyses and collaboration. SAP acquired the company in 2011 and has since massively expanded its range of functions.

SuccessFactors is now a complete HCM solution from the cloud. It includes all the functions from classic SAP HCM. However, some additional, innovative features are also available. These include:

  • SF Employee Central as the heart of the HCM suite (strategic HR): responsible for master data management and for mapping personnel administration, organizational management, absences and payroll (optional)
  • (E-)Recruiting: supports a collaborative, objective and mobile selection process
  • Onboarding: configurable onboarding process that involves new employees, hiring managers and an onboarding buddy
  • Compensation: maps all compensation processes; the central element is a compensation profile including salary history and positioning
  • Performance & Goals: manages target agreements and monitoring of target achievement for performance evaluation
  • Learning: learning platform that is linked to numerous other modules (e.g. Goal Management and Onboarding); can be used on mobile devices
  • Succession and Development: controls and automates succession planning activities
  • SAP JAM: communication and collaboration platform for employees, similar to a social network
  • Analytics: enables the creation of reports for all SuccessFactors modules

As in other areas, SAP is clearly moving towards the cloud and is focusing on the innovative SAP SuccessFactors HCM solution in the public cloud in the HR area.

SAP HCM under SAP S/4HANA

SAP HCM under SAP S/4HANA

Companies that want to continue using SAP HCM can do so today under SAP S/4HANA. According to SAP, this is not the “innovative way” (as the code lines do not change), but it is an option for anyone who does not yet want to or cannot switch to SAP SuccessFactors HCM.

Hybrid operation (i.e. a combination of both solutions and further gradual conversion to SAP SuccessFactors HCM) is also an option that is suitable for companies.

This means that part of the HCM system landscape is mapped from SAP ERP HCM (on-premise or private cloud) to SAP SuccessFactors HCM (public cloud) using a hybrid model.

  • This can mean, for example, that a company uses SuccessFactors Employee Central in the public cloud, but also operates SAP Payroll and SAP Time Management with SAP HCM SAP under S/4HANA.
  • Another company uses SuccessFactors Employee Central and SF Time Tracking, for example, and only runs SAP Payroll under SAP HCM.

Conclusion: SAP HR products ensure future-proofing

Conclusion: SAP HR products ensure future-proofing

The challenges in HR management are now many and varied.

  • One of the most pressing problems of our time is the shortage of skilled workers. Not every company is able to quickly fill vacant positions with suitable candidates.
  • In addition, employees in the areas of payroll accounting and administration still spend too much time on routine activities.
  • Reporting is also in need of optimization in many places, which means that HR strategies are not always based on sound figures.
  • Last but not least, employee collaboration offers scope for improvement.

All of these challenges can be met with SAP HCM - and in particular with the cloud-based successor solution SAP SuccessFactors HCM.

SAP's HR products enable the digitalization and automation of HR processes, intelligent recruiting and talent management as well as better collaboration thanks to social and mobile ERP. Flexible reports and forecasts can also be generated under the “Analytics” banner, which can significantly optimize strategic decisions in HR.

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A data warehouse enables companies to combine and analyze a wide variety of data. You will find everything worth knowing about data warehousing and corresponding systems on this page!

SAP Basis - operation, structure and definition

SAP Basis is the foundation of every SAP system. On this page you can find out what is behind the term and what SAP Basis is responsible for in detail.

SAP Authorization System under SAP S/4HANA

The introduction or conversion to SAP S/4HANA can be an opportunity to optimize your own SAP authorization system.

SAP Best Practices: Definition, Meaning and Use

Those who use SAP Best Practices benefit several times over. The standards simplify and accelerate business processes and make companies more flexible. They also help with the changeover to SAP S/4HANA

SAP BO explained in detail and understandably

SAP BO is a collection of products from numerous individual solutions, with which companies realize analysis and visualization of business management data. But what does this mean in concrete terms

SAP BRF+ - Implement business rules easily in ABAP

With the SAP Business Rule Framework plus (SAP BRF+), complex business rules can be accommodated in SAP - and without specific IT know-how. Learn more about this approach here.

SAP C/4HANA and CX - for sales, service, marketing

With SAP C/4HANA or SAP CX, companies manage their customer experience with the latest generation of tools. Find out here how this SAP product family is made up and what it does.

SAP S/4HANA Cloud, Private Edition

The individual cloud solution for maximum data control

What is LeanIX?

SAP LeanIX is a solution for the management of Enterprise Architecture (EA), the IT enterprise architecture. Find out here what you need to know about the functions, benefits and areas of application of LeanIX.

What is the accounting SAP CO-PA?

Accounting-based SAP CO-PA is on the advance and is regarded as SAP's strategic solution. But is it really the market segment calculation of the future?

What is a Buy Side Due Diligence?

If the buyer commissions the due diligence examination, this is referred to as a "buy-side due diligence".

Corporate Finance

Corporate finance is embedded in every corporate strategy. Every activity must be financed, capital must be used optimally, the value of the company must be increased and risks must be averted.

SAP Demo System: Experience S/4HANA live immediately

With the help of live demo systems, companies can experience SAP S/4HANA immediately - and thus, among other things, test and evaluate whether the SAP best practice standard is sufficient for their processes.

What is Artificial Intelligence (AI)?

Artificial Intelligence is not new, but it has been getting new attention since end of 2022 with the introduction of ChatGPT. Read here what you need to know about AI.

Adobe Forms for SAP

Adobe Forms for SAP lets you develop forms - a technology that surpasses its two predecessors, SAPscript and SmartForms.

Asset Deal

Companies that buy companies have several options. One variant: the asset deal. What does the term mean? What are the advantages of this procedure? What are the practical implications?

GROW with SAP

GROW with SAP is SAP's new offering for new customers and midsize companies to get started quickly and easily with SAP S/4HANA.

Greenfield vs. Brownfield: the right strategy

There are different ways to SAP S/4HANA: Greenfield, Brownfield or even a selective migration. To find out where the differences lie and the advantages and disadvantages of the respective strategies, read here.

12 questions about SAP S/4HANA Cloud

What cloud solutions does SAP offer? What does RISE with SAP have to do with the SAP S/4HANA Cloud? And what are the advantages of the SAP Cloud? Here are the answers!

M&A deals: opportunities and risks

New highs in M&A deals are being recorded, and the value of deals worldwide has also risen significantly recently. But why is that and what are M&A deals anyway?

What is SAP SuccessFactors?

SAP SuccessFactors is an HR cloud solution. It supports companies in controlling and transforming their HR management processes. In this article, we provide an overview of the solution.

ECC conversion by 2033: SAP Cloud Transition Option

New offering for SAP customers: In Q2 2025, SAP will introduce a "transition option" to support the move from SAP ECC to SAP Cloud by 2033 (instead of 2030).

What is the SAP Business Data Cloud?

The SAP Business Data Cloud (BDC) is a fully managed SaaS solution for standardizing and managing SAP data. Read here what you need to know about BDC.

What is SAP Business Suite in the cloud?

SAP has relaunched the name Business Suite - for all of the Group's cloud applications. Read here what you need to know about the new Business Suite.

What is an e-invoice?

E-invoicing between domestic companies has been mandatory since January 1, 2025. Here you will find answers to the most important questions about electronic invoicing.

What is SAP Document and Reporting Compliance?

SAP Document and Reporting Compliance (SAP DRC) is the SAP solution. Companies can use it to meet compliance requirements. Read here what you need to know about SAP DRC.

ETL Process

The ETL process is one of the fundamental concepts in computer science. It enables the transformation of data from various sources into valuable knowledge. On this page, you will learn more about the details!

19 questions about SAP S/4HANA

What is SAP S/4HANA? What are the advantages of SAP S/4HANA? Or how to make the switch to the new ERP suite from SAP? Questions over questions. Here you will find the answers.

What is SAP Credit Management?

SAP Credit Management is a software solution that helps companies to manage credit risk when dealing with customers. Get to know the solution here.

What is SAP Cash Management?

SAP Cash Management helps companies to manage cash flows, liquidity planning and cash flow monitoring. Find out here what you need to know about this product.

What is SAP Collections and Dispute Management?

Efficient receivables management and rapid dispute resolution: SAP Collections and Dispute Management automates processes, improves liquidity and strengthens customer relationships - integrated in SAP S/4HANA.

What is SAP SCM?

SAP SCM is an independent product with various functions for supply chain management under SAP ECC. Read here what you need to know about SAP SCM.

What is WalkMe?

With the help of the Digital Adoption Platform, users can get to know and use software more easily and companies can optimize applications. WalkMe has been part of SAP since 2024. Get to know the solution here.

11 questions about SAP Central Finance

SAP Central Finance is an SAP platform for finance and controlling, reporting and consolidation. Read the answers to 11 key questions about Central Finance here.

Central processes in SAP Central Finance

With SAP Central Finance, processes in Finance can be centralized. Find out here what these processes are and what advantages they have in detail.

10 questions about RISE with SAP

What is RISE with SAP? What are the benefits of SAP's new offering and how does RISE relate to the SAP S/4HANA Cloud? We answer your questions about RISE with SAP.

SAP and Brexit: What you need to consider now

Since January 1, 2021, the negotiated partnership agreement between the EU and the United Kingdom has provisionally applied. Many companies still have to make necessary adjustments now.

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