SAP takes AP shared services to new level

What started as an idea with strong business value potential has become a key strategy for software giant SAP across the globe including the Asia-Pacific region.

SAP has embraced the shared services model, establishing centers in the Asia-Pacific as well as Europe, Middle East and Africa (EMEA) regions, to centralize the transactional processing and administrative functions. The German giant earlier this month took this further and launched its HR Shared Services Center (SSC) for the Asia-Pacific region, including Japan.

Located in Singapore, the new HR SSC follows the success of SAP's Asia-Pacific Shared Service Center, which was set up in the island-state in 2003 and the first for the company. Similar HR SSCs have been established in EMEA and the Americas, too.

SAP Executive Board Member Claus Heinrich, who was in Singapore for the launch, told ZDNet Asia in an interview that the HR SSC is part of the company's strategic focus on its human capital.

Emphasizing the importance of creating a supportive environment for SAP employees worldwide, Heinrich said: "It's important to treat people equally, to give them a sense of security that HR...is not just there to service the line of business or manager, but to take care of all employees."

One of the biggest challenges for a global company such as SAP in maintaining a rewards framework is taking regional and cultural differences into consideration, and accordingly managing expectations of employees who work together in global virtual teams, or take assignments or transfers in different regions.

The scope of services offered by the HR SSC includes HRdirect, an employee helpdesk and call center; recruitment, compensation and benefits administration; employee records maintenance; HR data management; mobility services; and HR information services.

According to SAP, a large part of the HR SSC team is co-located in the same office with the other Asia-Pacific SSC groups. This ensures tight integration between the teams to facilitate seamless processes, for example, in the area of employee data and payroll administration.

SAP's HR SCC is run by SAP's HR Operations APJ (Asia-Pacific Japan) team which, as of July 2007, has 27 employees. Once the ramp-up is completed in 2008, SAP expects that headcount to grow to about 50.

Based on other shared services benchmarks, Heinrich said, the HR SSC should also bring about overall savings of between 30 percent and 40 percent.

"But shared services is not just about cost savings," Heinrich maintained.

International mobility is a prerequisite for many SAP employees due to the nature of its business, and that is one of the areas where the HR SSC will benefit SAP, he said.

According to SAP, the SSC provides a higher level of operational efficiency and transparency for standard administrative HR processes across the globe, such as vacation requests, relocation, and online access to pay records.

Shared services is only one area that reflects a company that has evolved and embraced new ways of doing business to keep a competitive edge. According to Heinrich, who has been an SAP employee for some 20 years, "SAP is not the same company that it was 35 years ago".

For one, Heinrich said, SAP has long shed its stiff image and has over the years recognized the importance of excelling in engineering, as well as sales and marketing.

SAP has also evolved into a global company employing more than 34,000 people in over 50 countries, although it is still very much a German company at heart and is headquartered in Walldorf.

Martin Prinz, head of SAP's HR Operations APJ team, added that the company has a culture that encourages SAP employees to come up with new ideas that SAP could take to market, because it is, after all, the employees who define the company's success.