HRIS Vs. HCM Vs. HRMS post image

HRIS, HCM, and HRMS differ in three key areas: focus, functions, and features. While these three titles are regularly used to describe human resource software in general, they don’t all provide the exact same service. They diverge in terms of metrics tracked and services provided.

As a software buyer, it’s vital that you understand the subtle differences between these three HR software types – which is exactly what this article aims to help you do. Once you can identify an HRIS from an HRMS, you’ll be able to invest in a new HR solution with greater confidence.

What is HRIS?

HRIS stands for Human Resource Information System and focuses solely on delivering key HR functions. It helps HR professionals manage such employee data as date of birth, contact information, tax-related information, employment contracts, and payroll records.

Beyond storing and maintaining this information, HRMSs also leverage employee data to perform and streamline routine HR tasks such as:

  • Payroll
  • Time tracking
  • Attendance tracking
  • Benefits administration
  • Reporting
  • Document management
  • Remote schedule management
  • Training records

The centralised nature of this HR solution keeps your data organised and allows you to gather basic employee information instantly. Rather than using spreadsheets, you can store all this information in a single database.

HRIS software can be installed on the cloud or your company’s private server. Alternatively, it could be hosted by a third-party vendor.

In terms of who HRIS is for, it’s best suited to small and mid-sized businesses who are looking for an affordable means of upgrading their HR processes.

Benefits of an HRIS

  • Greater efficiency and productivity
  • Centralised employee data
  • Simple set-up
  • Easy to use
  • Higher data security

Drawbacks of an HRIS

  • Limited features (when compared to HCM and HRMS)
  • Limited scalability
  • Limited analytics
  • Limited automation

What is HRMS?

HRMS stands for Human Resource Management System. It provides a more comprehensive system than an HRIS, with a wider range of functions, automated services, and increased monitoring and analysis.

HRMS goes beyond simple data entry and management: it automates routine tasks related to recruitment, applicant tracking, and onboarding. Specifically, it can be used to automate job posts, CV reviews, and interview arrangements. The sophisticated recruitment features provided by HRMSs make attracting and retaining talent a lot easier.

It can perform the same basic HR tasks that an HRIS can, in addition to the following:

  • Advanced onboarding
  • Applicant tracking
  • Recruitment
  • Learning and development
  • Employee engagement
  • Advanced analytics
  • Advanced payroll solutions – i.e., bulk processing

With more features, an HRMS can deliver more advanced and insightful analytics. Most come with predictive capabilities, financial analysis, and real-time reporting. With this software, you can easily generate reports for meetings. Plus, the data-driven focus of HRMSs allows you to make better-informed business decisions.

Due to their comprehensiveness, HRMSs are suitable for businesses of all sizes. Their function range and scalability mean they can be both built to support large businesses and scaled back to suit smaller enterprises.

Benefits of an HRMS

  • Increased data security
  • Better data management
  • Automation reduces HR workload
  • Reduced risk of human error
  • Data compliance
  • Increased employee self-service options
  • Sophisticated analytics
  • Employee development functionality

Drawbacks of an HRMS

  • More expensive than an HRIS
  • More complicated to set up
  • On-going costs
  • Staff training

What is HCM?

HCM, which stands for Human Capital Management, is the most comprehensive type of HR software you can get – it is also the most expensive. HCM has become the most common way to describe a full, cloud-based HR suite. It typically consists of several integrated HR tools, including the likes of Learning Management System (LMS), succession planning, performance management, and business intelligence.

While it serves primarily as an HR tool dealing with the likes of payroll and attendance, an HCM also offers more advanced functionality.

Through the inclusion of LMSs, HCMs can be described not only as employee management systems, but also workforce enhancement platforms. They serve to improve the knowledge and performance level of all employees, which ultimately leads to a higher return on investment (ROI) for companies.

In addition to the features provided by an HRMS, an HCM also includes the following:

  • Advanced reporting
  • Advanced learning and development
  • Industry benchmarks
  • Compensation management
  • Performance management
  • Succession planning
  • Business intelligence

This advanced reporting allows you to conduct talent optimisation strategies. By identifying weaknesses in learning and development, you can conduct more targeted training sessions.

HCMs also come with a strong focus on integration. Premium HCMs are compatible with sales, supply chain, and marketing business solutions.

Benefits of an HCM

  • Oversees full employee lifecycle
  • Helps optimise your workforce
  • Full comprehensive tool
  • Great for large companies
  • Maximum scalability

Drawbacks of an HCM

  • Most expensive HR option
  • Potentially too advanced for small businesses

What are the similarities between HRMS, HCM, and HRIS?

These titles are used interchangeably given the fact that they do fall in the same category of software. As this article has established, each name is typically used to describe different tiers of comprehension. However, there is a large degree of overlap between each type.

For example, an HRMS serves as the core of an HCM system. Similarly, an HCM could be described as the foundation in which an HRIS is built upon. So, they’re similar in that they deliver the same product but diverge in that they each offer their own unique set of tools and modules.

Which HR solution should you choose for your business?

When it comes to selecting a HR platform, it’s not as simple as HRISs are best for small businesses and HRMs are best for large enterprises. While the limited features found on an HRIS may be better suited to smaller businesses, it does not mean this level of functionality could not also benefit a larger business.

As with all business software, it really depends on your own business needs. Before selecting software, you need to review your current business processes and define limitations. These drawbacks should be the non-negotiable features you look for in your new software.

How YourShortlist can help

Navigating the market of HRISs, HCMs, and HRMSs can be confusing. Not only are there different tiers of HR software, but there are also many different vendors out there.

How do you find the right solution for your business?

Contact us today to receive a bespoke shortlist of software vendors, specially selected to meet your business needs. Tell us the non-negotiable features you require, and we’ll narrow down the selection to include only solutions that can provide.