Blog Post
Quick Read
September 19, 2019

What is HCM software and why do strategic HR leaders use it?

The complex world of human capital management is constantly evolving, and it can be difficult to make sense of this quickly advancing space. This introduction to HCM software will help you understand the different uses so you can ultimately make the right decision for your organisation.


The employee experience is – and will continue to be – a key differentiator that gives companies an edge in the war for talent. In fact, 71% of CEOs say human capital is a key competitive advantage.

To remain relevant in today's competitive market, leading organisations across all industries are recognising their people as their most strategic asset and leveraging the right human capital management (HCM) technology to build and develop a future-ready workforce.

In addition to enhancing the overall employee experience, the right HCM software can also help elevate the HR function as a strategic partner in the business. Streamlining manual processes and having a single, complete view into organisational data can empower HR leaders to develop more progressive people strategies, and better contribute to the long-term growth of the business.

Here, we provide an overview of HCM software so you can understand the differences and ultimately make the right decision for your organisation.

What is human capital management software?

HCM software encompasses many functions within the employee experience including HR, payroll, benefits, talent management, and workforce management. The term HCM software is often used interchangeably with human resource management system (HRMS), or human resource information system (HRIS).

HCM software, however, offers a more comprehensive suite of functionality spanning the entire employee lifecycle, from attracting and recruiting talent, to developing, retaining, and engaging the workforce. For business leaders, HCM software provides a single view into employee records, and key human capital data that impacts the company’s bottom line.

What are the differences between HRIS, HRMS, and HCM software?

Technology is changing quickly, and technical terms used even a few years ago in the HR space may not mean the same thing as they do today. The differences between HRIS, HRMS, and HCM are mainly centered around the functionality of each system.

A human resource information system or HRIS typically allows HR teams to manage the information of employees, policies, and procedures. This may include payroll and tax compliance, benefits administration, employee contact and personal information, attendance tracking, and reporting.

A human resource management system or HRMS can often provide HRIS functions mentioned above and may also include talent management functions such as creating employee performance reviews and basic succession plans.

The differences between HRMS and HCM software, on the other hand, can get a bit blurry. There are a few main similarities between the two solutions such as the ability to house and manage information while also incorporating talent management functionality such as employee onboarding, performance development, succession planning, and people analytics. A holistic HCM solution often offers more advanced capabilities such as predictive analytics so HR can take a more strategic role in managing the workforce.

A human capital management system can include administrative functions, such as payroll processing and administration, employee data storage, benefits administration, and employee self-service tools. HCM software can also include extensive talent management capabilities including recruiting, employee onboarding, learning and development, performance management, and employee engagement.

Additionally, an HCM solution may have workforce management functions that can help organisations decrease labor costs with smarter scheduling, improve operational efficiency, and monitor the ever-evolving compliance landscape.

As competitive pressures, job market, and emergence of new technology continues to transform the world of work, there’s a greater need for more sophisticated HCM capabilities. For example, managing complex data in disparate systems is cumbersome and can take a lot of time. For this reason, a single application HCM solution can provide greater value as organisations can get a holistic view of their workforce.

The shift towards a modernised HCM approach

Companies will struggle to win the war for talent and remain competitive using an antiquated human capital management approach. Smart HR leaders looking to build future-ready workforces are looking to invest in technology to recruit, manage, develop, and optimise talent. As Ron Hanscome, VP, Analyst at Gartner says, “If you’re not constantly looking to apply HCM technologies, all you can do is incrementally refine processes.”

Related: Future-proofing your workforce: five global trends that will impact your talent strategy

Choosing the right HCM software solution for your organisation will help enhance the employee experience while streamlining efficiencies for HR teams so they can focus on strategic parts of the business. Download A complete buyer’s guide to HCM technology to learn how to search for the right solution. This guide will help you:

  • Understand key HCM technology differentiators
  • Know what to look for during the evaluation process
  • Ask each vendor the right questions
  • Determine the ideal vendor to partner with

Read next: The 2020 Gartner Magic Quadrant for HCM Suites for 1,000+ Employee Enterprises

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