SAP ups AI factor in its SuccessFactors HCM suite

The launch by SAP of new AI capabilities in its SuccessFactors HCM (human capital management)  suite Monday is a case of “better late to the party than never,” according to an analyst with Info-Tech Research Group.

Scott Bickley, advisory fellow with the firm, said, “Workday launched its Skills Cloud back in 2018, and has been a thought leader in forecasting the enterprise shift from pre-defined roles to skills-based capabilities that allow an organization to dynamically pull from a skills pool the resources best suited to a task or goal.”

New capabilities

SAP, which announced the upgrade at SuccessConnect, its annual human resources customer event taking place this week in Lisbon, Portugal, introduced:

• Enhancements to its Talent Intelligence Hub, which it said, “provides organizations with a centralized system for skills that drive career development and strategic workforce planning.”
• The ability for SAP user sites to “aggregate and harmonize data from assorted skills taxonomies, with the first inclusions being Beamery, Degreed, IMOCA INC, Korn Ferry, Lightcast, Pheonom, TalenTeam, and Techwolf.
• The SAP SuccessFactors Career and Talent Development offering, which uses skills data from the hub to allow employees to “set career growth goals aligned with personal aspirations and organizational needs.”
• Enhancements to SAP’s AI copilot, Joule, which allow it to guide employees through the onboarding process. In the first half of next year, they will  also be able to ask Joule complex questions about their pay slips and receive contextually relevant information.
• An intention to add pre-built workflow execution across business software applications into SuccessFactors, the result of SAP’s acquisition of the WalkMe digital adoption platform in September, in the first half of 2025, allowing customers “to improve employee experience and adoption across common workflows,” SAP said.

Mitigating skills shortages

Asked what prompted the launch, Lara Albert, global vice president of product marketing for SAP SuccessFactors, said in an email that the offerings “deliver a personalized, data-driven talent experience where employees can easily discover and navigate recommended career paths. They can also get AI driven insights to help them improve their preparedness for certain roles, such as recommended learning activities, development goals, mentorships, job assignments, and more.”

Albert added, “today, organizations often have skills in numerous systems. By opening the talent intelligence hub to skills partners, we are making it possible for customers to consolidate all skills into a single system of intelligence.”

Bickley said it appears that SAP including third-party integrations to various skills-based repositories and its Learning Management System (LMS ) to assist it in building the skills inventories required to advance workforce planning. “Is this because the native skills inferencing functionality is subpar? Or because SAP missed the boat on this trend and is now playing catchup to Workday?” he asked. “It feels like the latter; many SAP clients have likely forged ahead and contracted with these independent skills-based platforms and LMS solutions, and now SAP seeks to pull this data into the Talent Intelligence Hub.”

Asked if there are any direct benefits for IT departments as they seek to mitigate skills shortages or retrain staff, he said, “[there are] direct benefits to them, and in fact all functions within the enterprise, with regards to sourcing in-house talent that might otherwise fly under the radar, as well as identifying adjacent skill sets ripe for reskilling.”

For example, IT departments, said SAP’s Albert, “frequently need to upskill as new technologies emerge. This need is only increasing with the prevalence of generative AI. With greater skills intelligence, IT teams can identify what skills gaps they need to fill and find the right talent.”

Robert Kramer, vice president and principal analyst with Moor Insights & Strategy, added, “AI can help with that intelligence component to help identify skills gaps that need to be targeted for specific departments or people.”

It can, he said, “also identify employees who are best suited for retraining. If employees are not producing, there is a reason why, so why would you want to get rid of them versus retraining? This [the SAP launch] can help in the ability to train and upskill them.”

It is, said Kramer, also an example of Industry 5.0, in which the emphasis is on a combination of humans and robots. “The humans make the big decisions, whereas the robots do the tasks that are more common to help humans work smarter and be more efficient,” he explained.

Skills are not an IT problem to solve

Akshara Naik Lopez, senior analyst with Forrester Research, said, “skills are not an IT problem to solve and neither can we depend just on IT to turn organizations into skills-based organizations. Skills is an overall organizational strategic challenge to tackle to stay competitive. There are massive benefits to what SAP has essentially done.”

They are, she said, “widening their Talent Intelligence Hub to allow for every skill and skill tech vendor or third-party solution to create an open skills ecosystem and have a single view of skills. The third-party providers that they have listed will feed the SuccessFactors skills system, and there will be more to come. Also, by creating a massive open system like this, large customers may not have the need to use some of these other third-party products, as they will not partner with SAP.”

When it comes to creating modern ways of career pathing, or succession planning, or talent development, said Lopez, “the key stakeholders are really CHROs and CIOs, and they are going to be looking to software vendors to offer a modern comprehensive solution, instead of piecemealing their own custom skills solution, when they neither have the capacity or right subject matter expertise to do so.”

ROI of Joule updates?

However, the announcements around Joule, Bickley said, “are less compelling in terms of real ROI. SAP is rapidly expanding its copilot/chatbot features across its vast product lines, like every other enterprise vendor. This falls into the productivity enhancement camp, at best, as it relates to the payroll/paystub query functionality. I do not see that feature moving the needle on anything material. More of a ‘bells and whistles’ feature.”

Lopez countered that, at any given point, an employee “can have questions on their benefits deductions, tax calculations, pre-tax and post-tax contributions, and retirement contribution. All these questions would traditionally go to the payroll department via payroll helpdesk tickets. Having an AI capability to answer the majority of these questions can help alleviate workload on the payroll staff, who can then focus on only highly complex queries. This has a huge ROI for them.”