Will your ERP's HRMS module do enough to meet your needs?
Many Enterprise Resource Planning systems (ERPs) come with an assortment of integrated modules that can handle an organization’s baseline HR functions. This is no surprise given that an ERP generally aims to be an all-in-one package. The question of whether you should opt for having HR technology that is integrated in your ERP or purchase a separate HRMS comes down, in practical terms, to whether the ERP's HRMS module will meet your people software needs.
The advantages of ERP-integrated HRMS modules
The advantages of the ERP route include easier tracking of data and workflow across the various departments. This in turn can cut out the staffing costs involved in running dual systems, duplicating data and possibly having to manually track information across the organization.
Similarly, when it comes to reporting, a single system can more easily synthesize and evaluate data from all the various specialist modules that an ERP might include – for example, not only HR but also finance & accountings, manufacturing, marketing & sales, supply chain & warehouse management, CRM, etc.
What if you want to take things a step further?
However, there’s little doubt that for anything more than basic HR functionality, an HRMS designed from the ground up with HR and people processes in mind will do the job better. Beside which, ERP integrated HRMS modules may carry some disadvantages: deployments can be lengthy (sometimes measured in years rather than months), opportunities for customization can be limited, and the sheer size of the ERP can result in being locked into a single vendor as each of the various departments come to rely on the technology.
The question of whether an ERP HR module will meet your needs really requires you to drill down into what those needs really are. For any technology purchase you need to identify exactly what benefits and functions you need, and why, and what specific and measurable returns you expect. If you’re comparing two different kinds of system – ERP and HRMS – then that drilling down becomes even more essential; especially if you already have a legacy HRMS and are considering streamlining.
For example, if you want to use the ERP for payroll, the system needs quick and seamless access to your time and attendance data. If that data is in a separate HRMS or even a stand-alone time and attendance system, it can be tempting to swap the whole collection of applications for a single, combined ERP (and that’s probably what the sales pitch will tell you). But you should take the time to identify exactly what use you put that data to at the moment and how you might benefit from using it in the future. Will and ERP module with its often limited functionality do the job?
Most ERP systems include HR modules and if your HR needs are modest and are likely to remain so for the next few years, the right ERP will probably handle your needs without the need for an HRMS. Just bear in mind that no ERP is designed from the ground up with people processes in mind – by nature, and ERP is a jack-of-all-trades and usually master of none.
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