Your Guide to Software Selection

The Difference Between HRIS vs. HCM vs. HRMS

When it comes to workforce management solutions, human resources software systems have become increasingly complex – and increasingly useful – in recent years. If you’re interested in investing in one for your business, however, you’re likely confused by the many acronyms used to describe them.

Terms like HCM, HRMS and HRIS are bandied about constantly, but what do they really mean or represent? Further, how do they differ from each other? Do they differ at all? By understanding what these terms represent and what you’re likely to get by investing in any of the systems that they describe, you’ll have an easier time selecting the right solution.

The Basics

HCM, or human capital management; HRMS, or human resource management software; and HRIS, or human resource information system, are all terms that are used to describe software that incorporates cloud computing, databases and other elements to create an overarching solution for managing all workforce management needs. If you’ve followed the evolution of human resources software at all, you’ll quickly notice that these systems include elements that were once marketed as standalone solutions but that are now bundled together to produce a streamed human resources software solution.

Interchangeable Terms?

For all intents and purposes, HCM, HRMS and HRIS all describe the same thing. Why are there separate terms at all, then? It’s most likely due to the rapid development of these technologies, which prompted the sudden development of various terms all at once.

That being said, there are sometimes subtle differences between the three types. Still, you should never assume that a system that’s marketed using a specific term automatically includes certain features or offers specific capabilities. Unfortunately, you still have to dig deeper to ensure that you’re getting what you need.

Top Goals of HR Technology Solutions

Regardless of which term that is used, all three of these terms share the same basic goal: to allow business owners to control all aspects of talent and personnel management. A few of the most common goals of these systems include:

  • automation of work progress reviews
  • monitoring hours worked by employees
  • tracking of pay histories, including overtime and bonuses
  • maintaining contact information for applicants, potential hires and current employees
  • benefit tracking
  • career and employee goals progress reports
  • identification of workforce needs

Popular Options for HR Technology Solutions

As further evidence that these three terms represent the same concept, let’s consider the most popular ways in which they are implemented. You can take your pick from three options:

  • Subscription – With this option, the software is hosted by the vendor. You typically pay an initial setup fee, and there’s a recurring subscription fee thereafter. The primary drawback of this option is that it leaves little room for customization.
  • In-House – In this case, you pay a purchasing or licensing fee which gives you more control over how you use the software, so it allows for a lot more customization. The main drawback here is that you must have your own in-house IT team to implement and manage the software.
  • Hosted – Hosted solutions tend to be the most popular because they incorporate elements of the two other options. In this case, you purchase or license the software itself, but the solution is still implemented, managed and hosted remotely by the vendor. You get the best of both worlds in that you can still customize the system to suit your organization’s needs, but you don’t have to worry about implementing or servicing it yourself.

HRIS – Basics

To ensure that you’re as informed as possible about the available HR technology solutions, we’re going to take a closer look at each of these terms and what they ostensibly entail. First, let’s consider HRIS, which may be considered the most “basic” option. Keep in mind that 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 is designed to manage people, procedures and policies. It typically includes the following capabilities:

  • Core human resources functions, including payroll processing
  • Recruiting capabilities, including applicant tracking systems
  • Absence management
  • Workflow solutions and automation
  • Training solutions and automation
  • Benefits administration
  • Self-service reporting
  • Compensation solutions and automation

HCM – Basics

Next on our list is HCM, which is a bit of a step up from HRIS. In most cases, this type of system includes all of the capabilities that are offered with HRIS, but they build upon them by adding talent management capabilities. Therefore, you can expect most systems that are billed as HCM systems to include the following capabilities and features:

  • The most common features and capabilities of HRIS
  • Performance tracking of employees
  • Salary planning solutions
  • Onboarding automation to ensure that new hires get up to speed quickly
  • Succession solutions and automation, so disruptions are kept to a minimum
  • In-depth analytics of employee performance, productivity and other metrics
  • Position control features to ensure that the right employee is given the right responsibilities

HRMS – Basics

Finally, there’s HRMS, which is typically the most extensive and involved type of human resources technology solution. This type of software usually includes all of the features that are offered in HCM and HRIS systems. However, they don’t always offer extensive talent management features, and not all products include scheduling capabilities–but many do, so if that’s what you need, you should be able to find an HRMS solution that will suit your needs well.

Some of the most common features and capabilities that are offered by an HRMS system include:

  • HRIS and HCM capabilities and features
  • Payroll processing automation and solutions
  • Time and labor management, or TLM, which enhances productivity and, in many cases, improves profitability

Even in the description above, you can see that the lines between the three types of systems blur a lot. Until a definitive definition of each type of system is made–and somehow enforced–this confusion is likely to continue, and business owners like you will have to keep carefully reading product descriptions to ensure that you’re getting a solution that addresses all of your requirements.

Speaking of requirements, instead of been driven by a list of software features on vendor pages, consider a requirements gathering exercise instead.

Free HR Management Software Requirements Template

Which Solution is Right for You?

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. All businesses can benefit enormously from HCM, HRMS and HRIS systems, but they must devote a little time and effort into determining which specific product suits their needs the best. Now that you understand the gist of each of these terms and what they typically include, however, you should be able to zero in on viable options a lot more easily. There are dozens of products out there, and it’s well worth it to do plenty of research before investing in and implementing one.

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