Traditionally, ( ERP systems were designed to facilitate the management of all resources in an organization: finance, inventory, people, etc. This meant that ERP systems would (and do) include HR databases. In other words so long as your HR technology needs are reasonably modest, a good ERP could probably handle your people management needs without recourse to an HRMS.
However, over the years, the functionality of the two system types has converged somewhat. ERP systems increasingly handle not just employee information, but also recruitment, pensions and payroll. Meanwhile, most modern HRMS will access production and other resources data, combining it with people-related information to produce sophisticated analytics.
So, is there any reason to go to the trouble of a time-consuming and possibly costly integration exercise?
Halving Data Input
The first advantage to integration is one of cost. The main drawback of non-integrated systems is multiple data entry. The need to input data into more than one system can create expense in the form of additional time taken and increased errors. The simple arithmetic is that having two systems needs twice as much staff time to input the data, resulting in twice as many errors (and every error potentially skews the results of reports and analytics, casting doubt on the resulting insights).
Secondly, those reports and analytics (from both systems) that offer a more complex view of staff and productivity are easier and smoother (and probably quicker) to run, purely because the technology only has to visit a single database for the information it needs. There’s no need for a patchwork of databases, files, and even spreadsheets. In other words, in this era of Big Data, the benefits are increased by having access to ‘Big unified Data’.
Putting you in Charge
Thirdly, the size of your organization is likely to be a significant factor. To generalize, ERP systems are focused on managing larger concerns. Add to that the fact that HR is just one function that the ERP software is handling and small to medium businesses may find the flexibility of their ERP to be limited. In practice, the easier route tends to be customizing your HR processes to fit the ERP rather than the other way around. If you’re looking for HR technology that is fit for your purpose then using an HRMS and then integrating it with your broader ERP functionality may the way to go.
HR Systems for HR Processes
Finally, purely on the HR side, an ERP tends not to be the best solution, regardless of size of organization. After all, an HRMS is designed with a people focus in mind; specifically the user looking for HR-related functionality, whereas most ERP designs are trying to be a jack-of-all-trades, combining HR features with broader resource functions. For the best HR ‘service’, an HRMS will usually come out on top and having both systems (properly integrated, of course) is the route to the best of both worlds.