The terms human resources information system (HRIS), human resources management system (HRMS), and human capital management (HCM) are often used interchangeably. However, there are subtle differences between the three due to the progression of more sophisticated technologies. Over time, HRMS and human resources (HR) solutions evolved into a more data-management focused HRIS which then led to today's more complete and strategic, employee-focused HCM.
HRIS is synonymous with connected data management of various HR processes such as benefits, workforce management, payroll, and core HR. As HR teams began to take on additional responsibilities such as talent acquisition and recruitment, the HRIS helped maintain, manage, and process detailed employee information and human-resources–related policies and procedures. The most sophisticated HRISs are interactive systems of information management, standardizing HR tasks and processes while facilitating accurate recordkeeping and reporting. The HRIS offers more efficient interactions between employees and the companies they work for and frees HR professionals to perform more strategic, high-value work. Many people still use the term HRIS today.
HRMS expanded on the HRIS to offer a more complete suite of software that organizations could use to manage internal HR functions. HRMS was used by analysts as the term to describe HR software suites during the early 2000s when on-premises systems were the primary type of software used. From employee data management to payroll, recruitment, benefits, training, talent management, employee engagement, and employee attendance, an HRMS helped HR professionals manage a more modern workforce and put information about a company’s most valuable assets in front of the people who needed it. Although people still use the term HRMS to describe systems that are now hosted in the cloud, this term is not used as widely when referring to natively built cloud applications. The terms HRMS and HCM are still interchangeable and you will find information on both if you do a web search.
HCM is now commonly used to describe a complete suite of HR applications, built in the cloud, that are designed to improve the employee experience. It was used in the pre-cloud era as well, however a clear transition of analysts referring to the space as HCM continues to help this term gain traction with customers and vendors. An HCM solution today often incorporates digital assistants, AI, and other tools that enable users to collaborate and share information across teams. Additional functionality includes advanced talent management tasks such as performance management, learning, succession planning, and compensation planning. In addition, business planning capabilities are included such as strategic workforce planning and workforce modeling. HCM covers the range of HR functions, whether they are data-based, transactional, or strategic. It transforms the traditional administrative functions of human resources departments—recruiting, training, payroll, compensation, and performance management—into opportunities to drive engagement, productivity, and business value. HCM considers the workforce as more than just a cost of doing business; it is a core business asset whose value can be maximized through strategic investment and management—just like any other asset.
New innovations in technology are changing every aspect of how we live and work, making the workforce more mobile, global, and diverse than ever. To keep pace with change and ultimately thrive in the digital age, companies need HR to play a critical role in their organizations.
Today, HR teams are expected to take on a more strategic role in the business. They must find ways to optimize the workforce and plan for future organizational changes such as mergers and acquisitions, business expansions, and reorganizations. They’re also expected to make the employee experience exciting and engaging, help executives and individual contributors make faster and smarter decisions, and boost employee engagement and business performance.
To successfully meet the challenges they face, HR organizations need a flexible, highly secure and scalable HCM solution. Yet many organizations still rely on on-premises systems that lack agility and are costly and time consuming.
Deploying an HCM system in the cloud has numerous benefits over an on-premises system, including the following:
Research collected on businesses that have used a cloud-based HCM system for more than six months reported significant benefits, including the ability to:
As HR software has evolved, many software vendors have assembled their existing applications to deliver a piecemeal solution. But these solutions won’t be able to easily integrate with future technology innovations such as chat-based interfaces and AI. Look for a solution that is built from the ground up to take advantage of the latest innovations and integrate easily with other solutions as HR responsibilities expand.
The following are important things to look for in an HCM system:
Answers to the following questions can also help you find the right HCM solution for your needs:
Ensuring that employee data is protected is a critical capability for any HCM system. Make sure the system you choose is architected on security-first design principles including isolated network virtualization and pristine physical host deployment, which provide superior customer isolation and reduced risk from advanced, persistent threats. Look for a solution with tiered defenses and highly secure operations that span the physical hardware in the data centers to the web layer, in addition to the protections and controls available in the cloud. Ensure that those protections also work with third-party clouds and on-premises solutions to help secure modern enterprise workloads and data where they reside.
As you evaluate solutions, confirm whether or not the system can recognize a threat such as an employee receiving the wrong amount of money, or an unauthorized system access. The use of AI can help organizations instantly flag such scenarios and detect threats and anomalies before they become security issues.
The workforce is transforming into flatter, more agile networks of teams and becoming more mobile, global, and diverse. HCM is evolving rapidly to keep up. Expect to see accelerating adoption of and focus on the following technologies and areas: