The advantages of integrating an HRMS alongside your ERP

Traditionally (if such a word exists in the rapidly evolving world of business technology), ERP systems were designed to facilitate the management of all resources in an organization: finance, inventory, people, etc. This meant that ERP systems would (and do) include HR databases. In other words, so long as your HR technology needs are reasonably modest, a good ERP could probably handle your people management needs without recourse to an HRMS.

However, over the years, the functionality of the two system types has converged somewhat. ERP systems increasingly handle not just employee information, but also recruitment, pensions and payroll. Meanwhile, most modern HRMS integrate data from other business functions to offer sophisticated analytics.

This raises an important question: Is integrating an HRMS with your ERP worth the potential cost and time investment?

Reducing data entry redundancy and errors

One of the most significant advantages of integrating an HRMS with your ERP is the reduction in data entry redundancy, which translates to cost savings. Non-integrated systems often require the same data to be input multiple times across different platforms, leading to increased labor costs and a higher likelihood of errors. Each instance of data duplication not only consumes staff time but also introduces the potential for mistakes.

These errors can skew analytics and reports, leading to inaccurate insights that could adversely affect business decisions. By integrating your HRMS with your ERP, you streamline data input, thereby cutting down on errors and reducing the time spent on data management.

Recommended download: HRMS comparison guide - Find HRMS vendors able to integrate with ERP systems

Unified data for comprehensive insights

Secondly, those reports and analytics (from both systems) that offer a more complex view of staff and productivity are easier and smoother (and probably quicker) to run, purely because the technology only has to visit a single database for the information it needs.

When HR data is stored in a single, unified system, the process of generating reports becomes more straightforward and efficient for all users. This eliminates the need to pull data from multiple sources, such as disparate databases, files, or spreadsheets. In the era of Big Data, having access to unified data enhances the quality and depth of insights derived from analytics, enabling better decision-making across the organization.

Enhanced control over HR processes

The size of your organization plays a significant role in determining the best approach to HR technology. ERP systems are typically designed to manage large-scale operations, with HR being just one of many functions they support. This can make ERP systems less flexible when it comes to meeting specific HR needs, particularly for small to medium-sized businesses.

These organizations might find that their ERP system requires them to adapt their HR processes to fit the software, rather than the software adapting to their needs. As such, an HRMS will typically provide a more effective solution than an ERP alone. However, by integrating the two systems, you can leverage the strengths of both, achieving a level of performance and efficiency that neither system could provide on its own.

Specialized HR solutions for optimal performance

Finally, it’s important to recognize that ERP systems, while comprehensive, are often designed to be generalists rather than specialists, regardless of the size of an organization.

After all, an HRMS is designed with a people focus in mind; specifically the user looking for HR-related functionality, whereas most ERP designs are trying to be a jack-of-all-trades, combining HR features with broader resource functions. For the best HR ‘service’, an HRMS will usually come out on top, and having both systems (properly integrated, of course) is the route to the best of both worlds.

Can small businesses benefit from integrating an HRMS with an ERP?

Yes, even small to medium-sized businesses can benefit from the enhanced control and flexibility that an HRMS offers when integrated with an ERP.

Is an ERP system alone sufficient for HR management?

While an ERP system can manage basic HR functions, an HRMS provides specialized tools and features designed specifically for HR, making it a more effective solution for comprehensive HR management.

Conclusion

Integrating an HRMS with your ERP system offers several compelling advantages, including reduced data entry redundancy, unified data for more accurate insights, greater control over HR processes, and specialized HR functionality.

While the integration process may require an upfront investment of time and resources, the long-term benefits can significantly enhance your organization's human resource management capabilities, making it a worthwhile endeavor for businesses of all sizes.