Although it may seem like semantics, understanding the difference between HR and human capital management applications can save HR departments a lot of money, according to Nucleus Research.
In a research note entitled ‘Understanding the difference between HR and HCM solutions’, the company defined the former as traditional systems that deal with personnel management, payroll, benefits and, on occasion, workforce management and recruitment issues.
HCM packages, on the other hand, focus on career development, succession planning and learning, but may also comprise core HR and workforce management modules.
While more and more enterprise resource planning systems now come with HR modules too, very few provide pure HCM functionality, the researcher said, although the two areas may overlap in certain fields such as training.
In order to understand which kind of offering your organisation requires, Nucleus recommended assessing the following:
- How many staff do you have and how many are likely to require support with their career development? For instance, high-tech or pharmaceutical firms are more likely to need HCM apps as they employ highly qualified personnel, who are difficult to find and retain. Transport companies that employ mainly truck drivers and warehouse staff, on the other hand, would definitely require HR packages, but are less likely to need HCM software.
- What are the pros and cons of outsourcing services such as payroll, benefits or even recruitment?
- How much integration work would need to take place to get your HR, HCM and other applications such as ERP working together properly and how much would it be likely to cost?
In order to avoid spending money on the wrong technology, unnecessary applications or extra software maintenance costs, the researcher suggests HR departments should ensure that they:
- Understand whether their current system really needs replacing or whether it can be added to by introducing third party tools – or if it could even be outsourced
- Really require the functionality that they intend to buy- for example, will social recruitment activities work in their industries or company type?
- Can integrate their new purchase with their existing software without spending a lot of extra money or having to tackle data management issues
- Consider the organisation’s future requirements
- Don’t introduce overlap between new and existing applications, which could lead to duplication of effort if data is entered or processed twice
- Don’t disrupt existing business processes and generate the need for costly integration work.