Your Guide to Software Selection

HCM vs HRIS vs HRMS, the Difference Between Them & Does It Really Matter?

When it comes to describing HR software — HCM vs HRIS vs HRMS — it can feel like a situation of “you say po-tay-to, I say po-tah-to.” Analysts, vendors and marketers toss the terms around everywhere you look, and it can be hard to distinguish them.

Such systems have become increasingly complex — and increasingly useful — in recent years. Along the way, however, the industry buzz phrases have created a guessing game. What do the terms really mean or represent? Does each system serve a unique need in HR management? If so, how are they different?

Even industry experts can’t agree on a universal definition. Plus, vendors don’t always clearly mark a line in the sand to help you distinguish if their solution is, for instance, an HRIS or HRMS. Talk about confusing.

Hopefully, this post helps straighten things out a bit. Choosing software is complicated enough without having to dance through the HCM vs HRMS vs HRIS debate.

By understanding what these terms represent and what you’re likely to get by investing in any of the systems they describe, you’ll have an easier time selecting the right solution.

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The Basics

So far, the acronyms are flying around like Quidditch players before a match. Let’s take a moment to define them:

  • HRIS: Human Resource Information System
  • HRMS: Human Resource Management System
  • HCM: Human Capital Management

No matter which one you’re talking about, they all describe software that incorporates cloud computing, databases and other elements to create an overarching solution for handling workforce management needs.

If you’ve followed the evolution of human resources software at all, you’ll quickly notice these systems include elements that were once marketed as standalone solutions. Now, however, they’re bundled together to produce a streamlined human resources software offering.

Are HCM, HRIS and HRMS Interchangeable Terms?

It depends. Not super helpful, I know: but let me explain.

At a basic level HCM, HRMS and HRIS all describe the same thing. So, why are there separate terms? It’s most likely due to the rapid development of these technologies, which prompted the sudden creation of various terms all at once.

That said, there are sometimes subtle differences between the three types. Think of them like three different restaurants. Each one serves food, and while there’s overlap, their menus aren’t identical.

On top of that, vendors often use the terms interchangeably. That’s why it’s wise never to assume that a system that’s marketed using a particular term automatically includes certain features or offers specific capabilities.

In the past, the differences were more pronounced, so it was likelier that you could depend on the terms to mean what they said. Products were narrower in focus, and intended to serve only specific needs for companies. That naturally created a greater divide between the systems, since they focused on different areas.

As the industry has progressed, however, the gap has shrunk. Rather than opting for several solutions from different vendors to meet HR needs, companies have shifted toward the single solution model.

Today’s companies want an integrated suite of features from one provider. Why? It’s much easier to get unified, 360-degree visibility and streamline management. As companies become more complex and produce more data that requires tracking, it’s more of a hassle to deal with data silos and disparate systems.

Vendors have accommodated the market demands by extending the capabilities of their products to incorporate more functions. The downside is that you can never be quite sure what a term refers to anymore. And what something means today may not be the same a year from now.

Where does that leave your company? You’ll need to dig deeper to ensure you’re getting what you need.

Top Goals of HR Technology Solutions

Regardless of the term, HRMS, HRIS and HCM all share the same basic aim: allow business owners to manage employees. A few of the most common goals of these systems include:

  • Automating work progress reviews
  • Monitoring hours worked by employees
  • Tracking pay histories, including overtime and bonuses
  • Maintaining contact information for applicants, potential hires and current employees
  • Administering and tracking benefits
  • Providing progress reports for career and employee goals
  • Identifying workforce needs

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Comparing Key Capabilities of HRIS vs HRMS vs HCM

Now that we have some background out of the way, it’s time to get specific. To ensure that you’re as informed as possible about the available HR technology solutions, let’s take a closer look at each of these terms and what they usually include.

As you read the lists, keep in mind that we’re staying super general. There’s not enough agreement across the industry to confidently pinpoint the differences between each product down to the last detail.

To illustrate, it’s helpful to apply the pirate’s code from the “Pirates of the Caribbean” movies. Think of each of these descriptions as guidelines rather than hard-and-fast rules. With that, here we go!

HCM vs HRIS vs HRMS

HRIS Core Features

First, let’s consider HRIS, the most “basic” option according to the general consensus. Although many HRIS solutions include these attributes, the terms have become so muddled that you still need to read the fine print before pulling the trigger.

At its core, HRIS manages people, procedures and policies. It typically includes the following capabilities:

  • Recruiting: Post job descriptions, manage interviews, store resumes and more with the help of applicant tracking systems (ATS).
  • Absence Management: Manage unplanned absences due to situations such as sickness, injury, unauthorized leave and maternity leave.
  • Workflows: These solutions help ratchet up productivity.
  • Training and Development: Provide a way for employees to continue developing skills.
  • Benefits Administration: Employees can enroll in health insurance, manage a 401K and track their information.
  • Self-Service Portal: Gives each company member, from employees to managers, the ability to manage and change their information.
  • Compensation Management: Handle forms of compensation like salary, paid time off (PTO), overtime pay, a bonus program, company-funded activities and more.
  • Personnel Tracking: Maintain a record of employee details such as contact info, position and personal info.
Oracle HCM Benefits View

This HRIS displays employee benefits in a user-friendly way.

HCM Core Features

Next on our list is HCM, which refers to the overarching management of your employees. This is where the water becomes murky. Not everyone agrees on the difference between HCM and HRMS. Some consider HCM the most extensive solution, while others reserve that distinction for HRMS (we’ll get to that in a minute).

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One thing you can count on is that HCM is more comprehensive than HRIS. This type of system includes all the features offered by HRIS and adds talent management capabilities to the mix. These include compensation planning, learning and development, succession planning and career planning.

Some of the most common functions offered by an HCM system include:

  • All HRIS capabilities and features
  • Employee Performance: Track performance, productivity and more.
  • Onboarding: Helps new hires get up to speed quickly by streamlining the process.
  • Analytics: Get an in-depth view of key metrics.
  • Position Control: Ensure that the right employee has the right responsibilities.
  • HR Services: Provide access to a company knowledge base, policies and procedures, documentation and data.
  • Global: Multi-currency and multilingual features support international needs.
Dayforce HCM Analytics

HCM software typically includes analytics for summarizing critical data.

You probably noticed the overlap with the HRIS functions talked about in the last section. Like I’ve been saying, it’s a tricky subject. While an HRIS may have some talent management features, HCM software usually goes deeper.

HRMS Core Features

Finally, we have HRMS. Again, some consider this the most comprehensive and involved HR solution. It usually includes all of the features offered in HRIS and HCM systems. Therefore, you can expect most systems that are billed as HRMS systems to include the following:

  • The most common features and capabilities of HRIS and HCM
  • Payroll Processing: Automatically calculate pay, deduct taxes, send direct deposits and more.
  • Time and Labor Management (TLM): Control employee schedules, track project times and more to increase productivity and profitability.
Criterion HCM Payroll

Payroll capabilities are a common feature in HRMS software.

Which Solution Is Right for You?

You can see that the lines between the three types of systems are blurred. Unfortunately, that means confusion will likely continue unless the industry reaches a definitive definition of each type of system.

As nice as it would be to say that if you need X, Y and Z, there’s a specific solution that will work, that’s just not the case. There’s no right or wrong answer 100 percent of the time.

No matter what type of business you have, you can benefit from HCM, HRMS and HRIS software. The lynchpin in ending up with the best platform, however, rests in your hands — research.

You need to devote time and effort to determine which specific product suits your needs the best. More importantly, it’s important to understand what vendors mean when they talk about their solutions. If your company only needs the basics and you’ve decided an HRIS is your best choice, don’t assume the vendor will be on the same page. Their definition of the main HRIS features may differ from yours.

To illustrate, a quick search of the top HR vendors on our Leaderboard shows that the majority of those companies describe their HR software as HCM software. You may want features more closely associated with HRIS but don’t discount products because the acronyms don’t line up. The vendor might package and describe the software differently, even though it does exactly what you’re looking for.

Keep carefully reading product descriptions to ensure you’re getting a solution that addresses all your requirements. Asking questions and performing due diligence up front will save you a lot of potential confusion and frustration as you drill deeper into your search.

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You Know the Difference Between HRIS, HRMS and HCM — Now What?

To get started, take a look at our free HR comparison report. Quickly compare all the top vendors based on criteria like ratings, reviews and price. With so many products and terminology differences, you’ll do yourself a favor by conducting plenty of research before investing in and implementing a new system.

Another essential step in picking the right HR software is figuring out your requirements. If you’re fuzzy on the exact features you need and which are most important to help your operations run efficiently, you’ll have a much harder time knowing what to look for.

Our free HR requirements template is designed to simplify and speed up the process so you can spend more time looking at solutions and less time debating about your software criteria.

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Wrapping it Up

Hopefully, we’ve helped clear the muddied waters a bit. Now that you understand the gist of each of these systems and what they typically include, you should be able to zero in on viable options without as much trouble.

What do you think are the main differences between HRIS vs HCM vs HRMS? Let us know in the comments!

Zachary TotahHCM vs HRIS vs HRMS, the Difference Between Them & Does It Really Matter?

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