An Enterprise Resource Planning platform, or ERP software system, is primarily used for businesses who need to integrate and establish a means of communication between departments to share data and other workflows with one another. Organizations love the functionality of these systems because they are used for automating and streamlining those tedious tasks that have traditionally been done manually. By automating these job duties, employees become more in-tune and productive in their roles.
The software also provides real-time insights into the inner workings of their operations, allowing leadership to make strategic business decisions with data to back up their visions.
ERP systems can collect and store data in a centralized location from the following areas of business operations:
- Human Resources (HR)
- Finance and Accounting
- Customer Relationship Planning (CRM)
- Warehouse Management
- Supply Chain Management
- Business Intelligence
- Production Management
- Point-of-Sale (POS)
At its nucleus, an ERP system is primarily used as a financial system to track goods, expenditures and revenue. As human capital is factored in with an organization’s revenue tracking, some companies will rely on their ERP platform in place of a true HCM solution.
This is not good.
Any HR executive or manager will tell you that if you want to attain and retain your top talent, you’re going to need to lean on a platform that is a people-based solution. You can only find that with a true HCM platform.
An HCM system is built with modules that are specifically designed to automate and enhance the workload for the HR administrators operating the technology, as well as the employees who rely on it every day to check PTO balances, complete workflows, review benefits and more. You can typically find the following modules in a human capital management platform, like Arcoro for example:
- Applicant Tracking
- ACA Compliance
- Benefits Management
- Time and Attendance
- Employee Self-Service
- Performance Management
- Workflow Management and Reports
Not all ERP systems are built the same
An ERP system is typically made up of a suite of third-party applications created to touch upon the differing needs of each department within a business. Based on this, there are a few variables that make each ERP vendor different in their own way.
- Not all ERP systems even have an HR component included within their suite
- Some ERP offerings are partnered with a few different organizations that offer the same solution in a specific department of an organization such as HR, manufacturing, finance, etc.—giving end-users more customization options
So, depending on how an ERP consultant is packaging their ERP solutions to their clients, they may or may not even have an HCM solution offering to provide as an option. This could be a missed opportunity because there are many organizations who are struggling to keep create efficiency within their HR department due to slow manual processes and human error that can be avoided through an automated human-based solution.
These organizations are also at risk of losing their top performers to greener pastures as well as struggling to recruit new talent for the following reasons:
- There is no clear central location for important policies, procedures and other documents to access easily
- Benefits management is too confusing to maneuver due to a manual process in place
- There is no clear onboarding plan or it’s dysfunctional—leading new employees to question their decision to join an organization who seems in constant disarray and confusion
- The review process seems unorganized and at times or is unfair—especially if there isn’t an easy way to keep track of goals accomplished or a place to upload documents proving the worth of an employee looking for a fair raise
You can’t rely on an ERP system to have the same capabilities as an HCM platform
While some ERP systems can hold a few HR data elements such as personal record keeping, payroll, and a job description database—they are not constructed to screen applications, identify talent, onboard new employees and keep top talent to name a few.
An HCM system is designed as a growth-minded solution with a purpose to develop and retain top talent. A quality HCM platform will allow HR managers, department leadership, managers and employees to navigate benefits, performance management, workflows, hiring and onboarding efficiently and seamlessly.
A dedicated HCM solution will outperform an ERP system
With functionality that focuses on saving time, eliminating manual processes and error through automation, a dedicated HCM solution will outperform an ERP system any day regarding the needs of what a typical HR department is looking for. Some examples include:
- Integrating job postings to job boards and social media
- Tracking interview schedules
- Identifying qualified candidates quickly through set keywords
- Setting up detailed and organized onboarding processes
- Sending automated communications internally and externally
- Setting up and implementing custom surveys and workflows
- Dispatching important policy and procedure updates into a single location and more
Now that we know more about the capabilities and differences between an ERP system and an HCM solution. ERP consultants will be able to address these issues with their clients and help support them by offering them a true, automated human-based solution that will create efficiency, save hours of wasted time and money not just for the human resources department employees, but also for the rest of the human capital that lives in an organization’s ecosystem.