With HR’s role becoming more strategic, HR and business leaders are looking for a system that brings together all areas of HCM – core HR, payroll, benefits, workforce management, recruiting, performance, learning, etc., in a bid to enhance efficiency, access better analytics, and improve employee experience.
But, while evaluating such systems offered by a crowded field of vendors, leaders get bombarded by messages about “single” HCM and “integrated” HCM systems. What is the real difference between these two types of end-to-end HCM? Here’s what you need to know.
Simply put, a single HCM system possesses a single database across all HCM areas (or modules). Also, all these modules have a consistent user experience.
On the other hand, an integrated HCM solution has different databases for different HCM modules and these modules typically have inconsistent user experiences. While it might be marketed under a single brand, it is usually the result of bringing together applications that were developed and built separately (typically through acquisitions or partnerships).
As an HR or business leader, the difference between single and integrated HCM should matter to you because an integrated system may expose you to the following issues:
Often, an integrated system requires you to bridge gaps between modules by transferring data between them. For instance, you may need to (manually) transfer time data in a batch to the payroll module before processing payroll, or transfer recruitment data to the core HR module after a candidate accepts a job offer. This consumes time and creates room for errors. There is no such integration overhead in a single system, since all data lives in a single database spanning all modules.
In an integrated HCM system, it could be hard to combine data from different modules for advanced analytics and data-driven decision making. You may need to rely on time-consuming support requests to make that happen. In a single system, analytics spanning multiple HCM areas can be run easily because of availability of all data in a barrier-less database.
Your employees will likely need to familiarize themselves with the different user interfaces of modules in an integrated HCM system. This means more training costs for you. Differing browser requirements for different modules will likely further worsen user experience. In a single system, the same design principles are applied to all modules, so your employees will experience the same user interface across the entire system.
It’s especially true that you’ll have less control and weaker support if the integrated HCM vendor relies on a partnership to offer a module. In these cases, the vendor may not have complete authority to act on your feedback on that module. You may also not be able to influence the module’s roadmap much. Additionally, you may find your support requests being passed on to the vendor’s partner, thus increasing resolution time.
You should look under the hood of the end-to-end HCM system that you are evaluating to understand if it is a single system or an integrated one. Otherwise, ironically, you may end up back at square one, with greater efficiency, analytics, and employee experience remaining a false hope.