SAP Human Capital Management is a comprehensive solution for digitizing and automating HR processes. With it, companies can tackle HR challenges such as demographic change and the shortage of skilled workers and meet the growing demands of employees.

What is SAP HCM?

SAP ERP HCM is an on-premise solution from SAP for Digitization of HR from companies. The system collects data from all HR areas and helps to make operational and strategic decisions based on reliable information. The integrated HR management system from SAP HCM can map the entire employee cycle with various modules.

SAP Human Capital Management helps companies digitize and automate their HR.

The big advantage is that the modules, such as organizational management and e-recruiting, are logically linked. Alternatively, all SAP HCM modules can also be used individually. There are also Hybrid solutions from on-premise and cloud possible. For example, payroll accounting can be done on-premise (on your own server), while recruiting and talent management can be done in the cloud with SAP SuccessFactors.

Benefits and advantages of SAP HCM

The administration effort in human resources is comparatively high. At the same time, strategic tasks such as personnel recruitment, retention and development are increasing. SAP HCM helps with that Digitization and automation of personnel processes, so that employees can focus more on strategically important tasks. SAP Human Capital Management offers the following advantages:

  • map all personnel processes centrally
  • Maintain personnel master data centrally
  • find suitable talents more quickly and easily
  • retain employees over the long term
  • Ensure strategy and goal alignment of the company
  • comprehensive reporting options

Ultimately, the focus of the software is to help companies Simplification and shortening of personnel processes to help. Examples include digital vacation requests and the partial automation of payroll accounting.

SAP HCM modules

The SAP HCM Suite consists of numerous modules and sub-modules. At this point, we present what we consider to be the relevant components with which companies can successfully digitally map their human resources and make them future-proof.

SAP HCM: Personnel Administration (PA-PA)

The personnel administration module is the central component of SAP HCM personnel management and also the basis for using other modules such as payroll accounting. With the personnel administration is one Efficient collection and maintenance of employee data such as name, address and personnel number.

Graphics: SAP ERP HCM Personnel Administration V2

It provides standard reports for a flexible evaluation of personnel data and supports personnel cost planning and staffing of positions with personnel master records.

SAP HCM: Organisationsmanagement (OM)

With organizational management, the functional organizational structure of companies and the reporting structure can be mapped and analyzed in order to Carry out personnel requirements and personnel cost planning.

Graphic: SAP ERP HCM organizational management

It offers a high degree of integration with other SAP HCM components, so the organizational management reporting structure forms the basis for workflow management. In addition, the simulation of possible new structures is possible by designing additional organizational structures as planning scenarios.

SAP HCM: Personalabrechnung (PY)

Payroll accounting not only has to meet company-internal peculiarities, but also legal requirements. The module maps these correctly, so that a Payroll accounting according to the individual and legal regulations can be created. Many best-practice use cases are already included in the standard, making it easy to get started.

SAP HCM: E-Recruiting (PA-ER)

The e-recruiting component digitizes the recruitment process and covers all processes: from planning and budgeting to the search and hiring of employees. Communication with applicants can be partially automated, giving HR managers more time for other tasks. In addition, e-recruiting also supports the Development and long-term retention of employees.

SAP HCM: Personnel Cost Planning and Simulation (PA-CP)

With the personnel cost planning module, companies can plan the development of employee wages and salaries as well as ancillary personnel costs on the basis of comprehensive and realistic data. In addition, different Simulate planning scenarios with different assumptionsto analyze the impact. The planning data generated in personnel cost planning can also be used in subsequent processes, for example for overall company planning in controlling.

SAP HCM: Time Management (PT)

Personnel time management is used for the flexible display and recording of working times as well as the digital application and approval of absences.

Graphic: SAP ERP HCM Personnel Time Management

The module enables an evaluation of the working hours taking into account legal, individual, company and collective working time regulations. Employees can view time information such as their personal time account via self-service, which relieves the HR department.

SAP HCM: Personnel Development (PD)

The HR development module from SAP HCM helps companies Recognizing employee potential in order to promote and use it in a targeted manner. Since the current status of employee qualifications can be evaluated at any time, vacant positions can be filled quickly and optimally with internal employees. Talent management also supports career and succession planning.

SAP HCM: Training and Event Management (PD)

The event management is for the Planning, implementation and management of events such as further training measures for employees or corporate events. It has numerous interfaces to other components of SAP HCM such as organization management, personnel administration or personnel development. In the event of changes, for example a new qualification as part of further training, these are entered directly in the personnel master data.

SAP ERP HCM ESS/MSS (Employee/Manager Self-Services)

With the web-based employee and manager self-services from SAP HCM, employees and managers can take on administrative tasks themselves – via mobile apps from any device. This relieves the HR department and accelerates work processes such as creating and processing vacation requests or the updating of personnel master data. The involvement and encouragement of self-organization also increase employee satisfaction.

SAP HXM compared to SAP HCM

SAP has now largely replaced the term HCM in its HR products and henceforth calls them HXM (English for Human Experience Management). With the renaming of the product name, SAP is pursuing a new approach. Classic HCM primarily collects quantitative data. For example, the number of terminations can be measured, but the reason for termination is not recorded. SAP Human Experience Management on the other hand, also collects qualitative data such as empirical data, so that the reason for termination can be raised. SAP HXM should not be understood as a completely new product, but rather as a further development of SAP HCM geared towards end users. It should include the needs and motivation of the employees more and create an appealing employee experience.

How to migrate SAP HCM to S/4HANA?

If a company decides to migrate to SAP S/4HANA, it can only use SAP Human Capital Management with the help of compatibility packs. The new solution SAP Human Capital Management for SAP S/4HANA (SAP H4S4) is an alternative gradual transition from on-premise products to the cloud. SAP H4S4 is fully integrated into the SAP HANA suite and has extensive functionalities in personnel time management and payroll accounting, which will not be available in the SAP SuccessFactors modules for the foreseeable future. There will be no way around this cloud-based HCM solution from SAP in the long term, as SAP’s strategic focus is clearly on cloud use.

Future of HCM: SAP SuccessFactors

The cloud-based SAP SuccessFactors is already offered in parallel with SAP ERP HCM. SAP SuccessFactors offers almost the same functions as SAP HCM, but in some cases more developed and for the Cloud optimized shape. As a cloud solution, the HR software can be accessed from anywhere and offers a user-friendly interface that adapts to the respective end device. Like the on-premise solution, it consists of various components that map the employee lifecycle. The cloud solution supports HR managers, among other things, in recruiting new talent, with onboarding and personnel development through central and structured learning management.


The HCM solution from SAP is a comprehensive tool that HR departments can use master current challenges such as the shortage of skilled workers be able. Thanks to the modular structure, customers only pay for the modules that are actually required. The cloud-based SAP SuccessFactors has already succeeded SAP Human Capital Management and offers a high degree of future security. Companies that are still on-premise and cannot switch to the cloud for the time being will receive a strong interim solution with SAP H4S4, which they can use until at least 2040.

HR challenges such as the shortage of skilled workers can be met with SAP HCM and in particular with the successor solution SuccessFactors. The HR products from SAP enable digitization and automation of personnel processes, intelligent recruiting and talent management and better collaboration thanks to social and mobile ERP. Under the “Analytics” flag, flexible reports and forecasts can also be generated, which can significantly optimize strategic decisions in human resources.

Box: We would be happy to assist you with the digital HR transformation of your company and make your processes fit for the future. Visit our website and contact us for a first non-binding consultation!


With CONET HCM consulting, you benefit from our many years of experience in the HCM field with numerous well-known and satisfied customers.

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Photo: Niklas Ludwig

Niklas Ludwig has been Communication Manager at CONET since March 2020 and is responsible for the internal and external communication of the CONET group of companies.


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