HRIS, HRMS and HCM: The difference between them and what suits best to your organization
If you’re in human resources and have ever had to explain the difference between HRIS, HCM, and HRMS, you know it can be confusing.
In this article, we’ll break down each of these acronyms and explain to you the difference between HRIS, HRMS and HCM.
All these three terms are often used interchangeably but there is a significant difference between all three of them.
As the HR department has evolved with time the HR Automation technology and the concept have also evolved with changing time, HRIS from simply managing employee database and payroll to becoming a complete suite of employee life cycle management as HRMS to more data-driven, more strategic and focused on employee experience as complete Human Capital Management (HCM).
What is HRIS?
HRIS is a software system that manages the employee lifecycle. It’s used to manage employee data and processes, including things like payroll, benefits, and core HR.
HRIS helps to manage standardised HR Processes, automate many HR Tasks, and accurate record keeping.
HRIS helps to free up HR professionals from the daily manual tasks so they can focus on more value drive strategic work.
What is HRMS?
The HRMS is more comprehensive and built over HRIS and offers a complete range of Human resource management solutions to manage end-to-end employee life cycle management.
HRMS is more modern than HRIS and helps organisations manage a more modern workforce. HRMS offers a wide range of capabilities, including:
- Recruitment and assessment tools (e.g., applicant tracking system)
- Employee Onboarding
- Leave & Attendance Management
- Payroll processing
- Employee self-service (e.g., benefits, time off)
- Employee Engagement
- Performance management tools
What is HCM?
HCM (human capital management) is a software system that helps companies manage their workforce.
It is more advanced and focuses more on employee experience and mostly it is deployed on the cloud to ensure accessibility from anywhere and anytime.
HCM includes features like a Learning Management system (LMS), Succession planning, advanced Talent management, and Compensation and Benefits management.
HCM also includes advanced features like AI, Chatbot, Employee connects and mobile application.
Benefits of Cloud-based HRMS Application
- Access anywhere anytime: Cloud-based HRMS application helps the employee to access the application anytime anywhere at their convenience. It allows them to access all HR policies and their benefit on the go.
- Better usability: Cloud-based system helps employees to adopt the system easily and faster, as it can be accessed on any device anywhere, is easy to use and provides a consistent experience.
- Provides Flexibility: Cloud-based system provides flexibility to manage a hybrid workforce and it helps to manage a workforce spread across multiple locations easily.
- Easy to configure: Overall implementation cycle for could based system is 3 times faster than the on-premise software implementation process. The cloud-based system provides more flexibility to manage complex configurations from the front end than changing the code from the backend.
- Data Security: Most organizations who implement HRMS software are not aware of the data security norms and database access control and they are more dependent on their internal IT team if they do not have experience in the IT team data security is compromised most of the time. With cloud-based HRMS companies, they ensure their client’s data is secured in the best possible manner as this is their main business and they have a team of expert resources to manage the data security better.
- Pay as you use: Cloud-based system helps to save on your Capex expenditure, it saves your infrastructure cost. You have the flexibility and you pay only for what you use. If you are not satisfied with the product and services you can switch off the subscription and move to other service providers.
Cloud-based HRMS system helps the organization to accomplish
- Helps your business to scale faster: Cloud-based HRMS system helps your business to simplify and streamline your Human resource management and helps you to provide a better employee experience through the employee self-service portal. Helps you to automate employee onboarding, employee benefits administration and performance management, organization becomes better at managing productivity and ultimately helps the business to scale faster.
- Enhance overall employee experience: HR helps an organization manage employee productivity and enhance overall employee experience. Cloud-based HRMS helps the HR team to deliver a superior experience to their employees through its intuitive web and mobile application. It allows employees to access their benefits and perks on the go anywhere.
- Convert HR function to strategic Business function: Cloud-based HRMS helps an organization automate most of their manual HR tasks and free up HR professionals so that they can focus on more value-driven business outcomes. By automating HR operational tasks HR can focus more on Business partnering activities attracting the right talent, retaining employees, and skill enhancement of employees to make them ready for the future work requirement.
Now that you’ve learned the differences between these three software systems, you’re ready to make an informed decision about which one is right for your company.
In order to do this, consider the following questions:
What is the implementation time?
Ask for the organization and team structure of the vendor.
Can I manage all my employee information in one place from hire to retire?
Do you have a house Development team or your product development is outsourced?
Does your system have the capability to get integrated with other cloud-based software?
What is your product roadmap for the next 2 years?
How secure your data is with them; do they have any security certification?
How frequently do new product release happens in your organization?
Based on your requirement and future growth you should select a product which can grow along with you and if you are still confused about selecting the system which suits you best please feel free to set up a free consultation call with our team of HR experts.