SAP SuccessFactors is a market-leading, cloud-native Human Capital Management (HCM) suite that covers everything from core HR and payroll to talent management, recruiting, and analytics. Unlike SAP’s traditional on-premise software, SuccessFactors is sold exclusively as a subscription service, and its licensing is based on a straightforward per-user-per-month (PUPM) model.
The Per-User-Per-Month Model
At its core, SuccessFactors licensing is simple: you pay a monthly fee for each employee who is authorized to use the software. This fee varies depending on which modules you subscribe to and the total number of users you have. The more users you have, the lower the per-user price. A full-suite subscription, which includes all the major talent modules, typically costs between $28 and $38 per employee per month (PEPM) at list price, but significant discounts are available for large enterprises.
It’s important to note that you don’t have to buy the full suite. SuccessFactors is modular, and you can subscribe to individual modules or bundles based on your specific needs. For example, you might start with Employee Central (the core HRIS) and then add the Recruiting and Onboarding modules later. The most common modules include:
- Employee Central: The heart of the SuccessFactors suite. It’s the system of record for all your employee data.
- Recruiting: Tools for sourcing, tracking, and hiring candidates.
- Onboarding: A solution to manage the new hire process from offer letter to day one.
- Performance & Goals: Tools for setting goals, managing performance reviews, and providing continuous feedback.
- Compensation: A module to manage salary planning, bonuses, and long-term incentives.
- Learning: A learning management system (LMS) to deliver and track employee training.
- Succession & Development: Tools for identifying high-potential employees and managing career development plans.
- Workforce Analytics: A powerful tool for analyzing HR data and identifying trends.
Each of these modules has its own PUPM price. For example, the Recruiting module might start at around $2.66 PUPM, while the Onboarding module might be closer to $1.18 PUPM. You can mix and match modules to create a package that fits your budget and your HR strategy.
Active vs. Inactive Users
One of the key things to watch out for in your SuccessFactors contract is the definition of a “user.” Most contracts are based on the number of active employees in the system. This means you’re not paying for terminated employees or contingent workers who don’t need access to the system. However, some older contracts might be based on the total number of employee records in the system, which can be significantly more expensive.
When you’re negotiating your contract, make sure you have a clear definition of an active user and a process for de-provisioning licenses for employees who leave the company. You should also clarify how contingent workers, contractors, and other non-permanent staff are licensed. In some cases, you may be able to purchase a lower-cost license for these types of users.
Implementation and Support
In addition to the software subscription fees, you’ll also need to budget for implementation and support. Implementing SuccessFactors is a major project that typically requires the help of a certified implementation partner. The cost of implementation can vary widely depending on the complexity of your requirements, but it’s often a significant one-time expense.
Ongoing support is included in your subscription fee, but the level of support you receive depends on the support package you choose. SAP offers several tiers of support, from basic support with a standard SLA to premium support with a dedicated customer success manager and 24/7 assistance.
Optimizing Your SuccessFactors Spend
While SuccessFactors licensing is more straightforward than traditional SAP licensing, there are still opportunities to optimize your spend:
- Negotiate a strong discount: Don’t accept SAP’s list prices. Benchmark your deal against similar companies and push for a significant discount, especially if you’re a large enterprise making a long-term commitment.
- Buy what you need: Don’t let SAP sell you a bloated, all-in-one package if you only need a few key modules. Start with your most critical needs and add more modules as your HR strategy evolves.
- Manage your user counts: Regularly audit your user base to make sure you’re not paying for inactive employees. Implement a clear process for de-provisioning licenses when employees leave the company.
- Review your contract terms: Pay close attention to the details of your contract, especially the definition of a user, the terms of your subscription, and the process for renewing or terminating your agreement.
SuccessFactors is a powerful tool that can transform your HR operations. By understanding its licensing model and negotiating a favorable contract, you can get the most out of your investment.