The HR function has steadily evolved from its early days when it was known as personnel administration and only focused on hiring, performance management, and compensation. With the business landscape changing and organizations now facing globalization, competitive pressure, reskilling their talent, evolved workforce demands, and more, leaders need to find ways to better utilize their employee base.
One avenue to maintain competitiveness is the use of technology to complement workforce management. Fortunately, today’s modern HR department has more resources at its disposal than ever before. A cursory look at the market reveals a variety of solutions that serve numerous use cases across employee benefits, maintaining compliance with government regulations, or attracting new talent. These solutions are complemented with acronyms like Human Resources Management System (HRMS), Human Resources Information System (HRIS), or Human Capital Management (HCM)—terms that can confuse even the most competent of HR leaders—and require differentiation before moving forward.
If you’re one of those HR professionals confused by acronyms and want to know the differences between these solutions as you explore spending your organization’s hard-earned technology dollars, you’ve come to the right blog. Read on to see the differences between HRMS, HRIS, and HCM so you can make the strategic choice for your workforce.
The origins of modern HR systems lie in the HRIS, otherwise known as the HR Information System, used to manage employee data and records. As HR functions increased in complexity, HRIS began to incorporate recruiting, talent management, and performance management functions.
HRIS systems offer the basic infrastructure for companies looking to manage their workforce and supporting contextual data, including roles, functions, and reporting hierarchies. Combined with record-keeping capabilities, HR leaders then use this data to map their workforce to the correct roles, identify critical skill opportunities, and accomplish the appropriate business goals. However, even with all this information, data privacy and security remain a concern given how challenging implementing access controls can often be.
HR leaders and service providers sought more effective solutions as workforce demands increased, leading to the rise of the HR Management System, or HRMS. Such platforms grew in popularity at the turn of the 21st century as many companies turned to on-premises software to address HR operations around talent management, benefits, employee engagement, recruiting, and more. HRMS platforms are still prevalent and refer to both on-premises systems and those hosted in the cloud but are not referenced towards natively-built solutions.
The newest term now making the rounds—and interchangeable with HRMS—is HCM or human capital management. HCM is used today to describe a complete suite of cloud-based HR applications designed to enhance the employee user experience beyond traditional administrative tasks that can be costly and inefficient.
The functional components of HCM platforms support:
Many of these elements within HCM are being further enhanced now with emerging technologies that support employee self-service, including digital assistants, automation, and machine learning—all built with data privacy and security in mind—to help leaders understand, manage, and incentivize their workforces on an even deeper level. Long aspired-to HR initiatives like diversity and inclusion can now become a reality.
One of your responsibilities as an organizational leader is to pay attention to how you can evolve and better serve your workforce as needs change. If an HCM solution is on that roadmap, we invite you to explore what the Oracle Cloud HCM platform offers. Just point your browser to www.oracle.com/hcm where you’ll discover our industry-leading platform, perspectives on HR, and more.
Albert Qian is the senior content marketing manager for the Oracle Cloud HCM Campaigns team and the editor-in-chief for this blog. He's passionate about telling the story of HR technology and how it can create better workforces.