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