Confused about the types of HRIS systems: HRIS vs. HCM vs. HRMS when researching new HR technology solutions? These acronyms have befuddled many in the industry as vendors, marketing professionals and analysts seem to interchange the use of these terms when marketing their technology solutions. There are lots of other acronyms being used to describe HR software solutions such as HRM (Human Resource Management), TMS (Talent Management System), ATS (Applicant Tracking System) and LMS (Learning Management System), but the three most commonly used terms to describe HR, Payroll and/or Talent Management software are:
- HRIS (Human Resource Information System)
- HCM (Human Capital Management)
- HRMS (Human Resource Management System)
So, what’s the difference between these types of HRIS systems: HRIS vs. HCM vs. HRMS? Is there a defined definition or any type of consortium like SHRM or IHRIM that exemplifies which technology solutions are mapped to which acronym?
Would some of the best-known HR technology experts (i.e. Naomi Bloom, Jason Averbrook, Bill Kutik or Josh Bersin) agree on the definition of these acronyms? I’m not entirely sure they would, but let’s start with Wikipedia and see if that helps. That should be simple enough right?
I’ll spare you trip to their site and just show you what it says….
“HRIS” = Redirects you to Human resource management system
“HCM” = Redirect to HRM Human Resource Management – (HRM, or simply HR) is a function in organizations designed to maximize employee performance in service of their employer’s strategic objectives. HR is primarily concerned with how people are managed within organizations, focusing on policies and systems. HR departments and units in organizations are typically responsible for a number of activities, including employee recruitment, training and development, performance appraisal, and rewarding (e.g., managing pay and benefit systems). HR is also concerned with industrial relations, that is, the balancing of organizational practices with regulations arising from collective bargaining and governmental laws.
“HRMS” = A Human Resources Management System (HRMS) or Human Resources Information System (HRIS), refers to the systems and processes at the intersection between human resource management (HRM) and information technology. It merges HRM as a discipline and in particular its basic HR activities and processes with the information technology field, whereas the programming of data processing systems evolved into standardized routines and packages of enterprise resource planning (ERP) software.
If those definitions helped provide you with clarity on the difference, then please, go no further. My assumption, however, is that this still remains unclear. Having worked in the HR technology industry for more than 20 years, here is my point of view at the difference between HRIS, HCM and HRMS.
The HRIS vs. HCM vs. HRMS chart below shows the major functional differences between the three acronyms and what functionality that should be associated with each.
HRIS (HUMAN RESOURCE INFORMATION SYSTEM)
HRIS software is designed to manage people, policies and procedures. Unless the employees reside outside the U.S., the majority of vendors pitching HRIS only cater to businesses that employ U.S. citizens.
Keeping this at a high level, I have categorized (9) major capabilities that define an HRIS. There is absolutely no doubt that this is open to interpretation, but I feel these are the major characteristics.
- Recruiting / ATS (Applicant Tracking System)
- Core Human Resources
- Benefit Administration /Open Enrollment
- Absence Management
- Compensation Management
- Training & Development
- Self-Service (Candidate / Employee / Manager)
HCM (HUMAN CAPITAL MANAGEMENT)
HCM software includes every element of an HRIS, but adds Talent Management and global capabilities such as multi-lingual, multi-currency, country-specific formatting and possibly localization.
Listed below are what I believe to be the major functional elements for a vendor to call its solution an HCM.
- Performance and Goal Management
- Position Control / Budgeting
- Succession Planning
- Salary Planning
- Learning Management System (LMS) – This functionality is not typically part of an HCM since the primary purpose is the actual content and delivery of e-learning vs. the technology or the mechanism to track employee development.
HRMS (HUMAN RESOURCE MANAGEMENT SYSTEM)
HRMS software providers typically cover every element of an HRIS and many include the capabilities of an HCM. Because the HRMS business is so massive and covers such a wide range of employee size and functional requirements, not all HRMS providers have a progressive Talent Management component included in their offering. Some of the HRMS vendors look like this [HRIS + (Payroll + TLM) = HRMS] while others have built their offering to look more like this [HCM + (Payroll + TLM)]. Two characteristics of any true HRMS are the following:
- Time & Labor Management (TLM)
- Scheduling – Not all HRMS providers offer Scheduling capabilities within their offering.
That should provide some clarity to these three acronyms, but it is easy enough to get sucked backed into the confusion about the types of HRIS systems. Below are two simple scenarios where the lines can get blurred even further:
- Talent Management vendors commonly refer to their offerings as HCM vs. Talent Management (TM) because it elevates their identity and solution beyond a best-in-class application(s). Many of the pain points that convince prospective executives to invest in new HRIS, HCM or HRMS systems are those surrounding the Talent Management capabilities, which can be overlooked as the fundamentals are taken for granted. Should TM be included under the acronym HCM or remain on its own?
- Stand-alone Time & Labor Management vendors typically refer to their offering as Workforce Management, but may fall under the umbrella of HRMS. Does Workforce Management fall under the acronym HRMS or should it be labeled as Time & Attendance?
The hot HR technology industry continues to move at the speed of light with the addition of new cloud vendors and consistent M&A activity. I don’t foresee the vendor and analyst landscape getting to the point of 100% agreement on these definitions, but I do believe that by putting definitions to the acronyms and applying a specific level of expected functionality to each term, provides some clarity to individual’s better evaluating HR technology vendors.