Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions

Economic Validation: Analyzing the Economic Benefits of SAP SuccessFactors Solutions ECONOMIC VALIDATION Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions Validating How Organizations Can Realize over 100% ROI through Increased Organizational Efficiency by Deploying SAP SuccessFactors Solutions By Aviv Kaufmann, Practice Director and Principal Economic Validation Analyst Enterprise Strategy Group June 2023 This Enterprise Strategy Group Economic Validation was commissioned by SAP and is distributed under license from TechTarget, Inc. © 2022 TechTarget, Inc. All Rights Reserved.

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions Contents Introduction ....................................................................................................................................................................... 3 Challenges .................................................................................................................................................................... 3 SAP SuccessFactors .................................................................................................................................................... 4 Enterprise Strategy Group Economic Validation ............................................................................................................. 5 SAP SuccessFactors Economic Overview .................................................................................................................. 5 Improved Experience for all Employees .................................................................................................................. 6 More Efficient HR and IT Operations ....................................................................................................................... 7 Improved Business Agility and Enablement ............................................................................................................ 8 Unique SAP Advantages .......................................................................................................................................... 9 Enterprise Strategy Group Analysis ........................................................................................................................... 10 Considerations ............................................................................................................................................................ 13 Conclusion ...................................................................................................................................................................... 13 2

Economic Validation: Analyzing the Economic Benefits of SAP SuccessFactors Solutions Introduction This Economic Validation from TechTarget’s Enterprise Strategy Group (ESG) focused on the quantitative and qualitative benefits organizations can expect by using SAP SuccessFactors Human Experience Management (HXM) solutions rather than continuing to use SAP ERP human capital management (HCM) on premises or an alternative SaaS-based HCM/HXM suite. This report will consider unique differentiators that SAP SuccessFactors provides for existing customers as part of the consideration. Challenges As organizational leaders launch digital transformation initiatives aimed at modernizing their HR operations, it is crucial that they consider the changing nature of the workforce, its composition, and evolving expectations. Today’s workforce includes a greater diversity of workers with differing needs (five generations in the workforce, a mix of permanent and temporary workers, desk-based and deskless staff, etc.) along with increasing social and governance responsibilities. This goes beyond systems or processes and is about helping organizations’ most important resource—their people—and the new ways in which they work. As organizations look to reskill and shift people into new jobs, roles, and teams, 84% of those involved in HR and talent acquisition technologies are planning new investments, with top deployment priorities relating to employee 1 onboarding, learning management and skill development, and knowledge management. Figure 1. Top Priorities for Deploying HR and Talent Acquisition/Development Technologies Which of the following HR and talent acquisition/development business applications does your organization plan to deploy in the next 12 months? (Percent of respondents, N=486, multiple responses accepted) Employee onboarding 30% Learning management and skill development 30% Knowledge management 26% Project management 23% Automation 23% Employee experience management 23% Employee performance management 22% Employee self-service 21% Workforce management 20% Employee wellness 20% Talent acquisition and recruitment 19% Core HR software/HCM 19% Diversity and inclusion 16% People analytics 15% Source: Enterprise Strategy Group, a division of TechTarget, Inc. 1 Source: TechTarget, 2023 IT Priorities Study, April 2023. © 2023 TechTarget, Inc. All Rights Reserved. 3

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions The needs and expectations of the workforce are changing as workers have become accustomed to intelligent technologies that allow them to quickly and easily access the information needed and perform the tasks that are required of them. Expectations are changing, and workers demand that their employer delivers them a modern and tailored experience to empower them to understand and negotiate the tasks required of them, learn and grow, and receive fair and transparent pay and recognition based on their performance rather than their position. Organizations need to become more agile across all functions of the business and move toward simple but efficient digital platforms that put them in a better position to execute on business priorities and enable their incoming, outgoing, and existing workforce. Shifting from an admin-centric on-premises platform to an employee-centric cloud platform enables modern organizations to do just this. Many companies struggle to take the first step to overcome common hurdles like creating a business case to get funding and overcoming organizational readiness concerns. An ROI analysis should consider moving to pay for a service-based model on a modern platform with the opportunity to transform business processes and clean up and carry forward essential and relevant data over to the new system. Potential pitfalls can be avoided, and projects can be accelerated and made more successful by choosing a trusted and experienced partner and a proven platform. SAP SuccessFactors HXM Solutions SAP SuccessFactors HXM solutions offer a comprehensive suite of offerings for organizations looking to optimize their HR operations and create a positive employee experience through cloud-based human resource management software that helps organizations manage their total workforce throughout the entire employee lifecycle, from recruitment to retirement. SAP SuccessFactors HXM solutions include capabilities for all HR processes, delivering individualized experiences that empower and motivate an organization’s people, enabling the organization to attract and retain talent, develop employee skills, and foster a positive workplace culture. SAP SuccessFactors solutions can help organizations lower costs while improving productivity, employee engagement, and data security. SAP SuccessFactors HXM solutions include a range of modules for core HR (SAP SuccessFactors Employee Central), time and attendance management (SAP SuccessFactors Time Tracking), payroll (SAP SuccessFactors Employee Central Payroll), performance and goals (SAP SuccessFactors Performance and Goals), learning (SAP SuccessFactors Learning), recruiting (SAP SuccessFactors Recruiting), onboarding (SAP SuccessFactors Onboarding), compensation (SAP SuccessFactors Compensation), succession and development (SAP SuccessFactors Succession and Development), skills, analytics, and more. These modules are designed to integrate seamlessly with one another, providing a unified platform for managing all aspects of HR operations. SAP SuccessFactors HXM solutions maintais a focus on employee experience and provides a single portal for all tools and resources to help managers and HR professionals engage with employees, understand their needs and preferences, and tailor their development and career paths accordingly. SAP provides a simplified and accelerated path for existing customers looking to modernize from their current SAP ERP HCM on premises to SAP SuccessFactors HXM solutions. SAP provides customers with the expertise, tools, assets, and services to ensure success in planning, designing, implementing, and supporting their move. SAP provides their existing customers with features and results that would be extremely difficult for any other provider to deliver, while greatly reducing the risk of running into potential roadblocks and functional tradeoffs. 4

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions Figure 2. SAP SuccessFactors Solutions Source: Enterprise Strategy Group, a division of TechTarget, Inc. Enterprise Strategy Group Economic Validation Enterprise Strategy Group (ESG) completed a quantitative economic analysis of SAP SuccessFactors. ESG’s Economic Validation process is a proven method for understanding, validating, quantifying, and modeling the economic value propositions of a product or solution. The process leverages ESG’s core competencies in market and industry analysis, forward-looking research, and technical/economic validation. ESG conducted in-depth interviews with end users and reviewed customer sentiment shared on TrustRadius to better understand and quantify how SAP SuccessFactors has impacted their organizations, particularly in comparison with previously deployed and/or experienced SAP ERP HCM on-premises solutions. The customers that ESG spoke with were organizations that had recently made a complete or partial transition to SAP SuccessFactors from their on-premises SAP solution. ESG reviewed vendor-created solution pricing analyses, leveraged existing case studies and third-party analyses, and leveraged our own expert analyst opinions and knowledge of the industry, markets, and alternative technologies. The qualitative and quantitative findings were used as the basis for a simple economic model comparing the cost and benefits of managing HR functions and providing services to employees with SAP SuccessFactors versus leveraging their existing on-premises SAP ERP HCM solution. SAP SuccessFactors Economic Overview Enterprise Strategy Group’s (ESG) economic validation revealed that SAP SuccessFactors has provided its customers with significant savings and benefits in the following categories: • Improved Experience for all Employees – SAP SuccessFactors improved the end-user experience for all employees of the organization, including end users, HR professionals, IT teams, and business decision- makers. • More Efficient HR and IT Operations – SAP SuccessFactors provided a single, unified platform that reduced complexity and provided automation, allowing HR resources to manage the entire platform with less effort and freeing resources to achieve more. 5

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions • Improved Business Agility and Enablement – The benefits of using SAP SuccessFactors helped to modernize the business, providing faster adoption of innovation, improved business agility and decision- making, and cost savings. • Unique SAP Advantages – SAP provides unique advantages to organizations modernizing from SAP ERP HCM to SAP SuccessFactors that cannot be delivered by alternative HR technology providers. Improved Experience for all Employees SAP SuccessFactors is designed to optimize the user experience and provide customers’ employees with a unified, self-service platform that was easy to access and simple to use. Customers reported that they were able to provide an optimal employee experience through: • Improved ease of access: SAP SuccessFactors customers reported that their employees were able to access all the information that was important to them, including payroll, compensation, development, and training, far easier than they were able to previously. Employees, managers, and HR users could access the self-service portal 24/7 from any device and from “SAP SuccessFactors has improved the any location, without having to install software and experience for our employees, who now without any of the painful and complex access have access to better tools, more dependencies that used to exist. information, and expanded learning Customers reported that employees could access opportunities.” services up to 93% faster to submit and complete (All quotes in this report are from ESG’s required actions in only a few minutes versus the 30 interviews with SAP SuccessFactors customers) minutes or more it took previously through telephone calls and paper forms supported by a manual data entry process with their former SAP ERP HCM solution. • Improved end-user engagement: SAP SuccessFactors provided employees with a single platform to access all the information that they required, including pay, vacation, benefits, org charts, training, etc., all in one place. The easy self-service processes reduced the need to locate and manage telephone numbers, emails, links, and login information and “search and find” the latest physical forms and resources. By making this information available to employees in a central self-service portal and with a more human- friendly experience, customers reported far greater employee engagement. Customers estimated that SAP SuccessFactors helped increase the use of employee services and made employees less likely to delay transactions. Customers estimated that they felt that these time savings also contributed to a small improvement in overall employee productivity. • Improved transparency for employees: SAP “Our employees are now much more SuccessFactors provided individual end users with engaged and are less likely to delay more transparency around their compensation, making necessary changes because it is performance and goals, job requirements, pay, so much less complex now.” vacation, and diversity and inclusion. Since making the switch, organizations felt that they now had more empowered and knowledgeable employees. The employees felt that the company cared more about them and was better aligned with their own values. This could lead to improved employee retention. • Improved employee collaboration: One customer we interviewed reported that the SAP SuccessFactors portal helped to improve collaboration between employees, HR, and management. Employees felt more connected to their company and to other employees, and HR felt like they were able to better offer employee 6

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions services and provide them with the information that they required. In addition, HR received more positive and constructive feedback. More Efficient HR and IT Operations SAP SuccessFactors provides a cloud-based unified platform that helps to reduce the operational complexity of providing employee-related services, helping to reduce the dependency on IT and security teams and making HR teams more efficient and empowered. Customers reported efficiency improvements provided by: • A single global HR platform for all operations: SAP SuccessFactors removes the burden on IT organizations and developers to administer and support the HR platform and gives the power to HR teams to completely manage a single system of record for all organizational activities pertaining to employees. Most of the HR organizations that we spoke with felt that they now had a greater understanding of and influence over the platform and operations. “Before we had multiple SAP instances • Cloud-native flexibility and simplicity: SAP in different countries. With the SuccessFactors is a cloud-native application that can SuccessFactors cloud-based solution we be accessed and administered completely by HR have one integrated system. The process through an internet browser. The greatly improved is easier from recruitment to payroll. and intuitive user interface made it easy for HR With one system we can have a better teams with no development experience to deploy and view of the whole company and manage most modules. 2 standardize globally.” Customers felt that the platform was also more secure, with the added benefit of a lower impact of security and compliance audits versus their on-prem deployments, as a majority of the certification is handled by the cloud providers. Organizations reported that they were able to free up IT teams, security teams, and developers to focus on supporting other areas of the business. Some teams chose to partner with managed services to help them cost-effectively customize and administer advanced functionality on the platform, while others reported freeing up the 3 full-time employees who used to support the hardware, databases, and security functions. • Less time spent organizing HR information and functions: By having all employee-related “SAP SuccessFactors allows us to be so information available in one place (SAP much more efficient that we were able to SuccessFactors Employee Central), HR teams were double the number of employees that our able to gain visibility into and quickly access all the team provides services for without information that was needed, including organizational increasing headcount (a 100% charts, positional information, roles, responsibilities, Improvement in operational efficiency).” etc. Customers reported that there was less HR time wasted collecting, compiling, and correlating information across different interfaces, resulting in greater HR operational efficiency. On average, teams reported that SAP SuccessFactors allows them to provide services for twice as many employees without having to increase the HR team headcount—a 100% improvement in operational efficiency. • Streamlined HR workflows: Moving to SAP SuccessFactors provided the opportunity for HR teams to redesign their processes away from being reliant on reactive manual operations and data entry toward providing proactive self-service operations, efficient reuse of entered data, and automated and streamlined workflows. 2 Source: SAP SuccessFactors Customer, Financial Services Company (source: TrustRadius) 7

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions HR personnel were able to easily create and modify workflows and reduce the time spent on security and process authorizations. Without being tied to an installed application that required network access, it “SAP SuccessFactors has provided a was easier for HR teams to access and provide a consistent platform, foundation, and quick mobile signoff to keep processes moving and avoid roadblocks. It was also easy for teams to governance for our local, regional, and temporarily delegate authority and hand off work to global processes and allowed us to keep co-workers to better accommodate vacation and them consistent as we innovate and leaves. integrate new services.” • Faster onboarding and training: SAP SuccessFactors provided tools and modules designed for onboarding and the training of new and existing resources. Less of HR’s time was spent developing, maintaining, coordinating, and supporting learning plans and performing manual onboarding activities. One customer reported that the time their team dedicated to supporting onboarding was cut in half and that they were able to shift these resources to other functions. Employees could perform self-guided courses and spend less time to become adept at what they needed to do. Records tracked employee progress and provided proof of completion. In addition, HR was able to provide users with a clear path for growth, allowing HR to act as a partner and better support the employee’s chosen path. • More efficient management of talent: HR teams were able to use simple and re-usable workflows to spend less time on requisitions, compensation, succession planning, etc. One of the major benefits was that information provided during the application process was propagated to the hiring and onboarding process, helping to accelerate each function. Because of the simplicity of SAP SuccessFactors, HR teams were able to manage larger workforces with the resources that they had instead of having to grow and were able to use less-experienced HR resources to achieve certain tasks that previously had required more senior resources. • Simplified support: SAP SuccessFactors customers were able to offload most of the burden to support the platform (previous platform, database, and hardware-related issues), as SAP provides the required support burden to deal with any issues in the platform and software itself. There were far fewer issues to deal with and no need for IT teams to support hardware and developers to patch and support custom implementations. With “With SAP SuccessFactors, we were able SAP SuccessFactors, all customers across all to transition our HR team away from organizations are running on the same platform, and acting as ‘keyboard warriors’ that enter SAP can do a better job pre-testing, patching, data for people to focusing on delivering detecting, and remediating bugs that could be benefits and education and forming a discovered at any one implementation but that are tighter connection with our employees.” then fixed for all customers. This results in a more stable and tested platform with fewer issues, with HR and IT teams spending far less time to support it. Improved Business Agility and Enablement Customers reported that SAP SuccessFactors also helped to drive greater business agility and innovation for providing new employee services and enabled improved visibility and insight when making workforce-related decisions. These benefits included: • Improved business agility: For both new deployments and HCM modernization efforts, SAP SuccessFactors helped to provide improved business agility for organizations to make changes quicker. Organizations benefited from faster initial implementation for new business initiatives with tools that provided the ability to mass load data to speed changes, migrations, mergers, and acquisitions. Simplified data entry made all tasks much faster to achieve while enforcing consistent business rules. 8

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions This helped to reduce the number of manual errors and helped to reduce both the chance and duration of potential roadblocks to getting projects completed. • Faster time to adopt innovation: Switching to SAP SuccessFactors allowed businesses to take advantage of new innovations in people management technologies and grow their capabilities quicker. Automatic releases provided by SAP continuously enhanced or added new functionality with zero risk to the organization, as features they wished to use could simply be turned on or off. The new features came pre-tested and were far easier to learn and support. Newly released features were easy to integrate with custom data and extensions. This provided organizations with faster time to new features and functionality without running into the roadblocks caused by technology, a disagreement between groups, or a lack of information that can happen with a self-managed and on-premises-developed HCM deployment. • Improved decision-making: The improved monitoring and reporting capabilities provided by “Our business team had instant visibility SAP SuccessFactors provided businesses with near- to see how things were proceeding— real-time updates on all information related to their before we had to manually send requests employees and locations in a consistent and for information and then collect and repeatable format. This helped business teams make organize the responses.” quick assessments of trends and changing situations regarding employees and allowed them to make more informed decisions. This added insight, driving timely and informed decisions around payroll, benefits, hiring, and time management that could have a positive effect on revenue, the company balance sheet, and stock price. • Avoided costs of on-premises hardware: By modernizing to the cloud, companies avoided having to make an upfront investment and ongoing payments to manage, maintain, operate, and refresh on-premises hardware and software. Even if equipment is currently owned, it is often refreshed or upgraded within a five- year window. Organizations were able to shift from a CapEx model to an easy-to-scale OpEx model and reduce reliance on IT services to power the HR systems. In addition, some organizations were able to free up and power down the infrastructure that they were previously running on, helping to lower power usage and contribute to company-wide sustainability initiatives. Unique SAP Advantages For large and established organizations, planning for and executing a move from SAP ERP HCM to a cloud-based solution can be a daunting task and a risk to their business. SAP provides the unique synergies, experience, tools, and expertise to help reduce the time, complexity, and risk of moving to a cloud-based HR platform through: • Experience and expertise of SAP technologies: When compared to alternative offerings, SAP technologies and services have a much greater understanding of SAP ERP HCM deployments and have successfully migrated more SAP HCM environments to SAP SuccessFactors than any other vendor. SAP customers choosing to modernize to SAP SuccessFactors reported that they felt that SAP expertise and technologies provided them with an opportunity to avoid potential issues in the process and reduce risk “Our organization was very familiar with to the organization. SAP products and services, and that • Faster analysis and design: Customers were able gave us great confidence that we could to leverage SAP tools and services to speed make the move in under a year. I don’t assessment and analyze and characterize the think we could have accomplished this if existing SAP ERP HCM deployment to identify we were moving from or to another reusable data and schema, categorize requirements, vendor.” and list dependencies. SAP services also helped to plan and optimize the design of the new SAP 9

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions SuccessFactors deployment by identifying and adding what may be useful to the organization and eliminating what is no longer needed. • Efficient migration of existing HR installation: SAP customers can leverage more of their existing HCM installation with delivered tools to migrate their existing employee data that are pre-mapped from the old system to the new one, which can save significant time. These SAP-delivered tools can reduce the risk of a project for customers. Rather than having to write custom code to extract and transform their existing data and schema to fit an alternative vendor’s required configuration and map. • App store and partner ecosystem: SAP partners have developed their own accelerators that can move additional data, including configuration, pay history, and more, which are available on the SAP app store. There 3 are case studies available that show the impact of these tools. Customers that had migrated from SAP ERP HCM felt that these advantages and expertise provided by SAP helped them to be up and running with their new SAP SuccessFactors environment months earlier than if they had chosen another cloud service vendor. They felt that these advantages were unique to SAP and no other vendor could have delivered this functionality. Customers that had considered other vendors felt that partnering with an alternative vendor would have resulted in increased risk and a longer time to migration and could have limited the success of their move. Enterprise Strategy Group Analysis Enterprise Strategy Group (ESG) leveraged the information collected through vendor-provided material, public and industry knowledge of economics and technologies, and the results of multiple customer interviews to create a five- year TCO/ROI model that compares the costs and benefits of delivering employee services with SAP SuccessFactors with delivering equivalent services with their existing SAP ERP HCM solution. ESG’s interviews with customers who have recently made the transition, combined with experience and expertise in economic modeling and technical validation of ERP, HCM, and cloud-based as-a-Service solutions, helped to form the basis for our modeled scenario. Our model assumed a large organization with $2B in annual revenue and 10,000 employees. We assumed that HR operations were administered by a distributed 60-person HR organization, with 10 of these full-time resources dedicated to operating human resources information systems to handle onboarding, training, education, time management, and payroll. The organization in our model was currently assessing the situation to determine if they should upgrade and retain their existing SAP ERP HCM solution or migrate to the cloud-based SAP SuccessFactors platform. For the on-premises HCM solution, ESG priced the expected costs to refresh the hardware (servers/network/storage) and extend the software and licenses for another 5 years against the expected 5-year subscription costs of SAP SuccessFactors. We then compared the expected costs of administering the systems and databases. This included the number of resources required to support systems upgrades, maintenance, and patches and administer security for various databases, operating systems, and hardware. We assumed that on- premises operations could be phased out after 1 year for SAP SuccessFactors to accommodate the migration. Next, we considered the expected cost of managing, maintaining, and supporting updates to the required SAP ERP HCM applications and modules to continuously deliver services. For the SAP SuccessFactors implementation, we assumed full cost for on-premises operations for the first year and then 50% reduced costs for the remaining years. 3 Source: TIK Case Study: Coles Group. 10

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions Finally, we considered the internal and external costs required to manage the implementation, perform advisory services, and handle change management. While this cost was initially higher for SAP SuccessFactors to accommodate the new implementation and migration of data, the annual cost was eventually far lower for SAP SuccessFactors by year 3. As shown in Figure 3, our analysis determined that over five years, the total cost of the SAP SuccessFactors implementation was 13% lower than the SAP ERP HCM solution. Figure 3. Expected 5-year Cost of Implementation Source: Enterprise Strategy Group, a division of TechTarget, Inc. Next, we modeled the expected costs for the 10-person team to administer and facilitate functions related to the SAP ERP HCM solution (often requiring manual data entry of employee information submitted through paperwork, request tickets, or support calls) versus through self-service modules or automation-assisted functions with SAP SuccessFactors. ESG modeled the expected time spent dealing with HR tickets and transactions (fewer and faster transactions with SAP SuccessFactors), finding/hiring and onboarding/offboarding talent (self-service and propagation/reuse of information), training employees (self-service modules), managing payroll and time/attendance (self-service/mobile access), documenting HR policies and creating reports (automation), and expected time spent dealing with platform and user support issues (offloaded or reduced burden of support). Our models predicted that SAP SuccessFactors could help to make HR resources 58% more operationally efficient. 11

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions This is shown as annual HR operational savings in Figure 4 and can be considered the value of additional hours of HR productivity “gained” by the organization or the ability of the existing HR resources to provide services and manage the system for a much larger number of employees without having to hire more resources. Figure 4. Annual Modeled Cost of HR Operations (SAP SuccessFactors and Process Improvements) Source: Enterprise Strategy Group, a division of TechTarget, Inc. ESG then modeled the additional benefits of avoided cost to localize HR operations to 5 additional localities (assuming a one-time cost to localize currency and regulations and an ongoing cost to maintain functionality and compliance), improved employee productivity achieved by faster time to growth in capabilities (derived through improved collaboration and training and self-service transparency into performance objectives and improvement plans), and improved business agility (positive impact to revenue derived from the ability to make near-real-time decisions regarding the workforce like hiring, overtime hours, etc.). Taking the costs, savings, and benefits into consideration, ESG calculated the expected ROI that could be achieved by using SAP SuccessFactors. The ROI considered the following costs and benefits: • Cost of SAP implementation: All SAP costs shown in Figure 3. • Avoided cost of on-premises hardware and software: Hardware and software costs shown in Figure 3. • Avoided cost of application administration: The difference in cost of systems and application administration shown in Figure 3. • Avoided cost of localization: ESG’s modeled costs for initial and ongoing localization for 5 localities. • HR operational efficiency savings: Savings shown in Figure 4. • Improved employee productivity: ESG’s modeled benefit for improved employee productivity based on time savings and growth in capabilities. • Improved business agility: ESG’s modeled benefit for positive impact to revenue based on more informed decisions. 12

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions As shown in Figure 5, our conservative models predicted a 107% ROI over a five-year period. Figure 5. Expected 5-year ROI Achieved by Migrating to SAP SuccessFactors Source: Enterprise Strategy Group, a division of TechTarget, Inc. Considerations Enterprise Strategy Group (ESG)’s models are built in good faith upon conservative, credible, and validated assumptions; however, no single modeled scenario will ever represent every potential environment. Each organization has a unique set of considerations that will determine how much of an impact SAP SuccessFactors will have for their organization. ESG recommends that you perform an analysis of your situation and goals and then consult with your SAP representative to understand and discuss the potential benefits that may be achievable for your organization. Conclusion Today’s organizations know that they need to reduce complexity and streamline operations across all areas of the business. A company’s most important asset is the people that work for it and a successful business must be able to quickly hire, train, and grow the capabilities of its people while giving them the tools they need to better focus on their job. SAP ERP HCM plays a vital role in consolidating employee data for functions like time & attendance management, payroll, and downstream ERP business processes, but requires IT support and presents unnecessary complexity for tasks such as hiring, onboarding, learning, performance appraisals, and other HR-led operations. Organizations understand the benefits of moving these operations to cloud-based services but often struggle to get past the first steps around collecting information, architecting, planning migrations, and getting approvals. Choosing the right HR platform and partner are the two most important decisions that a company can make to ensure a successful transition. Enterprise Strategy Group (ESG) validated that, since migrating operations to SAP SuccessFactors, customers were able to provide a better experience for their employees, onboard and grow talent faster, significantly reduce 13

Economic Validation: Analyzing the Economic Benefits of Moving from SAP ERP HCM to SAP SuccessFactors Solutions operational complexity for HR teams by 50% or more, and better enable the business to innovate and make more informed decisions. Our five-year modeled scenario predicted that SAP SuccessFactors could save organizations millions of dollars in avoided costs of on-premises solutions, systems and application administration, localization costs, and HR operations, while providing the tangible benefits of improved employee productivity and positive impact to revenue. Our models predicted that moving to SAP SuccessFactors provided an ROI of 107%. More importantly, customers felt that choosing SAP as both a solution and partner played a critical role in the success of their move to SAP SuccessFactors and in the benefits that they were able to realize. SAP’s experience and track record of successfully migrating hundreds of on-premises solutions to SuccessFactors gave organizations the confidence to move forward and helped to speed the time to collect information, plan timelines, architect a solution, and migrate customer data. Customers felt that SAP was the only vendor that could have made their move a success in the timeframe provided. For customers who do retain some of their existing on-premises environment (Ex: Payroll) and move to a hybrid deployment, using a different vendor for partial operations comes with significantly higher risks, including ongoing integration concerns. Every organization has a different set of requirements, and some organizations may find that keeping some functions running on their SAP ERP HCM environment makes the most sense for them. If you are looking to reduce operational complexity and provide a better experience for your employees, whether you plan to take a hybrid or an all-in-the-cloud approach, ESG suggests you consider SAP SuccessFactors. Click here to learn more about the SAP SuccessFactors program focused on helping SAP ERP HCM customers move to the cloud. 14

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