HR Software Alphabet Soup: HRIS, HRMS or HCM
There are three main types of HR software that you should be familiar with before choosing which is best for your business. Their names are similar with similar acronyms which can make distinguishing among them rather confusing. The terms human resources information system (HRIS), human resources management system (HRMS) and human capital management (HCM) are often used interchangeably, but there are subtle differences between them.
As technology and the field of HR expanded over the years, so did the software systems to enable them. HRIS and HR software solutions evolved into more data-management focused HRMSs which then morphed into a more complex and strategic system on the cloud, HCM. Still confused? Let’s take a closer look.
HRIS: Human Resources Information System
HRIS is computer-based software, designed to connect data and its management of core HR functions such as benefits, employee records management, payroll and reporting. As HR teams took on talent acquisition and retention, the HRIS expanded to include the basic documentation and administrative tasks of talent acquisition, such as recruiting, tracking, training and performance management, along with HR policies and procedures. The most sophisticated HRISs are interactive systems of information management, standardising HR tasks and processes while facilitating accurate record keeping and reporting, many people still use the term HRIS today.
HRMS: Human Resources Management System
In the early 2000s, when software was still on-premises systems, HRIS evolved into HRMS which offers a more complete suite of software solutions that businesses can use to manage internal HR functions. In addition to the elements that HRIS offers, most HRMS solutions also contain functions to assist with time and labour management and other features to manage payroll. There are a wide variety of HRMS systems; some may focus on organising employee information, while others offering scheduling functions, to give just a few examples.
HCM: Human Capital Management
And then came the cloud. HCM now commonly describes a complete suite of HR applications, built in the cloud, that are designed to improve the employee experience, as well as HR functions. HCM solutions cover the range of HR functions found in previous HR software and add in more technologically sophisticated elements such as digital assistants, AI, language translators, currency converters, and other tools that enable users to collaborate and share information across teams. Additional features can help businesses with planning (salary, goal setting, budgeting and succession) and analytics and performance assessments.
While HCM refers to cloud-native systems, the term is still often used interchangeably with HRMC.
Native Speaker
Google ‘HR software’ and you will be bombarded by choice. You can think of HRIS as version 1, moving to HRMC (v2) and to HMC (v3), with each version gaining more functionality and eventually the ease and efficiency of the cloud. Armed with the knowledge of what these confusing acronyms mean, you can begin to evaluate what best suits your business. It is important to make sure you find the system that offers all the features that your business needs, without paying for those it doesn’t – regardless of what it is called.