As you research platforms that will serve as your centralized hub for HR processes, you might see two different systems labeled as such: HRIS and ERP. While their functions sound very similar on paper – both being data hubs that theoretically support human resources management – you should take care not to conflate them in practice.
In this post, we’re going to take a deeper look at what these differences are, and which system is best for HR departments to handle their operational and data management needs.
What is a HRIS and ERP?
A HRIS (Human Resources Information System), HCM (Human Capital Management), or HRMS (Human Resource Management System) is defined as the system for managing HR processes. It used to be that HRIS, HCM, and HRMS meant different things based on which processes were supported on those platforms: for example, supporting payroll, recruitment, or performance reviews on top of hosting employee data. These days, HRIS platforms have evolved to the point that these terms are all interchangeable. While you can see significant differences from platform to platform, these differences are so individualized that they don’t warrant separate product categories on their own.
An ERP is generally defined as a centralized system that tracks and manages processes for an entire organization. These can run the gamut from finance, SKU management, sales, project management, services, or procurement: it all depends on what your business needs from an operational standpoint.
The data needs of an HR department
Among their many features, ERPs do often support human resource management. After all, is it not true that employees are the main resource of any enterprise? If an ERP can support these features, why bother segmenting these functions?
In practice, an HR department should really maintain their own data hub, meaning the HRIS. While an ERP can theoretically host employee or payroll data, it’s not practical for the everyday functions of an HR department. ERPs are built to serve as a repository for the entirety of an enterprise’s operations, but not necessarily with the understanding of how an HR department works on a day-to-day basis.
An HR department not only needs the central HR system to host an employee’s vital information, but it also needs to be able to handle processes as varied as talent management, archiving paperwork, tracking training progress, or enabling employees to submit reimbursement and PTO requests. (Among many other processes – check out the example system below!)
For hire-to-retire processes in the real world, HR departments only occasionally interface with ERPs to obtain information about payroll or expense requests. When an ERP is conflated with a dedicated HR system, HR must compromise their functionality for a “one size fits all” solution. SHRM summarizes other inefficiencies resulting from consolidating HR processes into an ERP as follows: “Among the drawbacks of consolidation can be the loss of “best of breed” HR or talent management systems on a unified platform. As vendors make trade-offs and strive to meet the widest variety of client needs, HR technologies on consolidated platforms may not always represent the best in the market.”
Bridging gaps between HR systems – and everything else
That being said, it is completely understandable that maintaining separate HRIS and ERP systems can cause logistical issues. There is a need to have a quick and easy reference to all of your data, and ensure that there aren’t any blind spots for visibility. In the article linked above, SHRM highlights that a unified platform carries some benefits, namely that they reduce integration and other maintenance needs.
However, integration shouldn’t be a barrier holding you back from choosing the best applications for your HR operations. An iPaaS (integration Platform as a Service) lets you build, deploy, and manage all of your integrations in one place, greatly mitigating the issues that come with implementing multiple best-of-breed systems. While integration sounds fairly technical on paper, a user-friendly iPaaS like Celigo’s integrator.io is designed to be accessible for non-developer users.
Ultimately, you should choose the applications that work best for how HR works within your organization. As long as you work an iPaaS into your HR system architecture, don’t pigeonhole yourself into a consolidated system that doesn’t support everything you need.