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:
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:
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.
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:
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.
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:
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.