HRIS vs HCM vs HRMS: What’s the Difference?

According to a recent global report, nearly 50% of companies are currently using some form of HR software-as-a-service (SaaS) or platform or a hybrid solution. In 2019, only 20% of companies had adopted such strategies. 

Are you thinking about implementing HR software? If so, it’s important to know your options.

The world of HR software is full of acronyms that sound similar but have critical differences. It can be challenging to navigate the HRIS vs HCM vs HRMS decision, so we’re breaking down how each solution works.

What is HRIS?

HRIS stands for human resources information system. An HRIS system provides a centralized hub for all your core HR data. This includes employee information, as well as administrative and process-related documentation. 

Examples of records that you can store in an HRIS include:

• Employee files
• Job descriptions
• Compensation plans
• Benefits administration
• Payroll data
• Timesheet/absence management
• Organizational charts

In most organizations, these files are scattered among disparate systems, both digital and physical. An HRIS platform consolidates these items into a virtual repository that authorized users can access at any time, from any location.

Many companies hire a designated HRIS administrator when implementing this type of software. This individual is responsible for updating and maintaining the HRIS database, as well as training other employees on its use. 

An HRIS can deliver many business benefits, including:

• Higher employee retention rates
• Lower turnover rates
• Increased productivity
• Lower labor costs

What is HCM?

While an HRIS system can help companies organize the administrative parts of the job, an HCM is focused more on the “softer skills” of HR. Standing for human capital management, an HCM system includes tools to support and motivate a company’s most important asset: its team members. 

Within an HCM platform, you’ll find tools and practices designed to strengthen employee engagement, recognition, and professional development. There are also functions to help HR managers find, recruit, and manage talent. 

Some of the most common features of an HCM system include:

• Employee performance trackers
• Onboarding processes
• Position control metrics
• Data analytics

While HCM software can stand alone, it’s more common to find platforms that combine core HRIS functions with HCM capabilities. Known as HCM suites, these solutions include everything you’d expect to find in an HCM platform, with the addition of advanced talent management tools. 

What is HRMS?

HRMS stands for human resource management system. It’s typically considered the most advanced and comprehensive type of HR software, as it includes the features of both an HCM and HRIS platform. 

In addition to those capabilities, you’ll also find more managerial tools within an HRMS system. These usually include payroll processing resources, as well as features designed to support time and labor management (TLM).

HRIS vs HCM vs HRMS: Which One Should You Choose?

As you can see, these three different systems overlap in many areas. Each one is designed to digitize and automate the work of a typical HR department, including performance management, employee recruitment, employee training, and more.

These are all functions that most organizations require. As such, it can be challenging to pinpoint exactly which platform will work best.

There isn’t a one-size-fits-all approach that works best for every company. While one organization might decide to go with an HCM solution, another may prefer the tools available within an HRMS or HRIS.  

Defining Your HR Needs

The main consideration when choosing HR software is making sure the platform you select will meet the short-term and long-term needs of your organization. 

To understand what these needs are, the first step is to define overall organizational goals. Then, seek to understand the pain points your HR team is currently facing and improve your processes as necessary.

All these activities should involve the following HR stakeholders:

• Executives
• IT leaders
• Department managers

With this team in place, you can conduct requirements gathering sessions to uncover exactly what the new HR software system needs to do. A list of high-priority business requirements is helpful when evaluating vendor options. 

Once you’ve identified a few promising solutions, you can request vendor proposals from these vendors. Then, you can user vendors’ responses to narrow your list even further and ask the finalists to come in for a software demo.

This process can make it easier to choose the exact type of HR software that can move your business forward. Without a focused requirements planning stage, it can be easy to get caught up in the bells and whistles of a particular solution, even if you don’t really need them. 

On-Premise vs. Cloud-Based

Today, most HR software solutions are available in the cloud, though some remain on-premise.

An enterprise software consulting company can help you research deployment and hosting options and decide which will help you reach your goals.

Optimize Your HR Approach With Enterprise Software

If you haven’t already automated most of your HR efforts to streamline operations, improve communication, and increase efficiency, then the time may soon come when you’ll be required to. Whether you implement an ERP system with human resources functionality or some type of dedicated HR system, making the move sooner rather than later will help you remain competitive and relevant. 

In the debate between HRIS vs HCM vs HRMS, there’s no clear winner. Rather, the best solution will be the one that solves your HR pain points and equips you for an uncertain future.

To learn more about these platforms and how they can benefit your organization, contact us below for a free consultation.