HCM Vendor Selection When Integrating with an ERP

When Your ERP Is Not Enough: Making the Right HCM Vendor Selection

 

If your organization is like most, you’ve already implemented an Enterprise Resource Planning (ERP) solution to streamline your business processes. But no matter how good the system, it still doesn’t capture a vital part of your business: your employees. Without that view, you’re able to see, measure and manage only part of the business. 

To accurately envision the impact your people have on the organization, you need a human capital management (HCM) solution that focuses on employees--their recruitment, retention, performance and growth. With the right Human Capital Management vendor selection integrated with your ERP, you’ll have the 360° perspective to create the right strategy to grow your business. 

 

ERPs: The Business Back End Specialists

 

As businesses expand, they need more than Excel spreadsheets to organize and track data. Enterprise resource planning systems may look like the complete solution-- at least initially. The problem is, ERPs are built for the financial side of the business. They collect and mine information across different functions, such as accounting, manufacturing, and shipping and receiving. 

ERPs are widely used: one study found that 81% of businesses either have an ERP or are in the process of implementing one. But despite their popularity, they do not provide the all-encompassing view that many businesses hoped for when they selected the ERP. ERPs can handle some aspects of the people side of the company, like payroll, but don’t have the flexibility to dive into HR-specific needs. 

 

HCMs: The HR Growth Specialists

 

No question, streamlining business processes is vital. But focusing on the people who power those processes is also critical. As leaders increasingly understand the value employees provide to financial success, businesses are zeroing in on the best ways to hire, retain and motivate employees so they’ll be productive and thrive. 

Like ERPs, HCMs automate benefits and payroll processing, but unlike ERPs, HCMs also provide an in-depth view of recruiting, performance, and learning and development activities. These people-management aspects are essential in developing the workforce needed for the business challenges of the future.

 

Integrating ERPs and HCMs (Right Hand? Meet Left Hand)

 

Integrating an ERP with an HCM helps businesses see not just the processes, but also who is involved in them. When you don’t have an integrated system, it’s like the right hand doesn’t know what the left hand is doing. 

For example, if your company gets a new customer, but the annual budget, set months ago and housed in the ERP, doesn’t account for the new hires or additional training you may need to support the extra work. In the same vein, an HCM can provide information on which employees have the skills required for the new positions, and may have salary information, but doesn’t tie to the payout budget. 

However, when you integrate data from your ERP with your HCM, you get visibility into core business metrics. That visibility ensures you’re working from real-time, accurate information, so you have timely insight and flexibility to make the best business decisions.  

 

Benefits of implementing the two systems include:

  • Time savings. There’s no need to manually reconcile data by comparing it between each system. 

  • Increased accuracy. The finance team doesn’t have to create annual budgets or departmental allocations based on historical information from multiple systems. 

  • Teamwork. Integrating information allows your finance and HR teams to work closer to compare your budgeted/planned activities against actual quarter-end or year-end reports. This way, both departments can determine if you’ve reached your goals and tie those findings back to business results.

 

How to Evaluate HR Software to Integrate with an ERP 

 

ERP implementations are complicated, so the thought of undergoing another process for HR software is understandably daunting. But there’s good news; because an HCM implementation primarily involves one function, HR, it is typically simpler than a new system affecting departments across the company. 

Top-rated ERPs include Netsuite, SAP, and Microsoft Dynamics. But be aware that even though each of these ERPs has an HR component, that component does not replace a fully HR-dedicated platform. An integration between an ERP and an HCM solution like SyncHR will give you the full scope of insights needed to manage both processes and people.

 

When looking for a successful integration, make sure your HCM includes: 

  1. Automatic organizational structure syncing. This allows you to simultaneously add locations, departments or divisions between the HCM and ERP.

  2. Bi-directional syncing of employee data as new people are hired and as former employees are removed. This benefit ensures both parts of the system are always up to date.

  3. Self-balancing sub-ledgers and streamlined account summarization. Payroll data, including assets, expenses, and liabilities, are summarized to confirm a balanced journal entry.

  4. Robust, configurable reports that let you drill through to employee-level detail. With the flexibility to tailor the data, you can gain the insights you need most. 

 

Contact us for more information on how to integrate your ERP with an HCM to provide the complete insight you need to power your business forward.

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The SyncHR Team

The SyncHR Team

This is the team behind the articles that feature how to take the weight of People Management off your shoulders and shift your focus to business growth & culture.

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