HRIS vs. HRMS vs. HCM: What’s the difference?

Whether you’re new to the world of HR software or have used many systems over the years, you’ve likely come across the acronyms HRIS, HRMS, and HCM:

• HRIS: Human Resource Information System 
• HRMS: Human Resources Management System
• HCM: Human Capital Management 

While these are three different HR solutions that evolved individually and each has distinct functions and use cases, the terms HRIS, HRMS, and HCM are often used interchangeably in practice, which can create confusion around what each system does—and which one is right for your needs.

In this article, we’ll explain how HRIS, HRMS, and HCM systems evolved to build upon one another as HR systems advanced over time—and how Rippling modernized these systems even more, building the first-ever fully integrated workforce management platform that brings together HR, IT, and Finance all in one place.

HRIS

To help you understand all these HR systems and how they came to be, we need to start all the way back before the digital age—when HR processes were done on paper. At that time, all your employee information existed in paper files, stored in file drawers. HR took tons of manual, administrative work, because any time an HR task (like running payroll or administering benefits) required you to retrieve an employee’s information (like their date of birth, social security number, or withholding information), you had to go find the right file drawer and the right paper file. Sounds exhausting, right?

That’s why Human Resource Information Systems changed the game. These were the first pieces of HR software, bringing human resources departments into the digital age by digitizing all those paper files of employee information. Instead of file cabinets, an HRIS gave HR professionals a centralized database of information about their organization's employees, making it easy for them to manage their employee records and store, access, and analyze employee data.

While an HRIS system can’t run payroll or administer benefits on its own, it can help you automate and streamline those tasks (plus others, like onboarding, performance management, and more). All you have to do is integrate your HRIS with other HR tools to provide the employee data they need to run processes with less manual work.

Note that HRIS software still provides the foundation for HRMS and HCM systems, which came later—but many people still use the term HRIS to refer to these more robust and powerful systems (more on that below).

HRMS

Human Resources Management Systems began to emerge in the early 2000s. These were more robust HR software suites, built on top of the centralized database HRIS software provided. The first HRMS systems were on-premise solutions, before most software became cloud-based.

The difference between an HRIS and HRMS is that an HRIS simply provides the employee data to integrations with third-party tools that perform other HR tasks. With HRMS software, those other HR tools start to be built into the same platform, so on top of storing and managing your employee data, you can manage recruiting, employee onboarding, time and attendance tracking, payroll, benefits administration, talent management, and more—all in the same platform.

In other words, HRMS software is a more complete HR management solution, designed to help HR professionals manage a modern workforce. While people often use the terms HRIS and HRMS interchangeably, HRMS software is more robust—but it requires HRIS as the foundation that provides the employee data it needs to run its other HR functions.

HCM

Human capital management refers to two different things:

• A set of practices an organization uses to recruit, manage, develop, and, ultimately, optimize its workforce, and
• The technology tools it uses to facilitate those practices

That brings us to HCM software, a sophisticated, powerful, complete set of HR tools, built in the cloud, designed to help organizations close the gap between HR initiatives and their overall business strategy.

At first glance, HCM software may look similar to HRMS software:

• It’s built on top of a foundational HRIS that supplies the employee data to support its other HR functions
• Its built-in suite of HR tools typically includes talent acquisition and recruiting, employee onboarding, time and attendance tracking, payroll processing, benefits administration, training and development, and more

What sets HCM solutions apart from HRMS software is the level of complexity of the tools built into the HCM system. HCM software is meant to drive employee engagement as you develop and optimize your workforce. It should help you maximize the employee experience—across the entire employee lifecycle—to increase your ROI on your employees.

Today’s HCM solutions often incorporate more advanced tools like AI and data analytics. They can often handle strategic talent management tasks like employee performance management, succession planning, and compensation planning. The important thing to know is that they go beyond just accomplishing HR tasks—they turn HR into a part of your larger business strategy, helping you leverage your workforce in the best way possible to meet your bigger-picture business goals.

An HCM solution has a lot in common with an HRMS solution—and it also requires an HRIS solution to be its foundation. And keep in mind once again, people tend to use all three terms interchangeably, even though, as you can now see, the differences between them are distinct and important.

HRIS vs. HRMS vs. HCM

To better understand these solutions and how they differ from one another, here’s a side-by-side comparison:

If you’re considering implementing one of these software solutions, it’s important to not only understand the differences between the three types of software, but also the specific needs of your organization. Consider these questions to evaluate your HR needs and choose the best HR technology for you:

• How big is your company and your HR team?
• What are your plans to scale?
• What primary capabilities does your core HR department need? 
• How does HR fit into your organization’s big-picture, strategic goals?
• How many HR systems are you currently using? Do you want multiple systems, or are you looking for an all-in-one solution?

Introducing Rippling: The next generation of HR software

Just like HRMS solutions built on HRIS software, and HCM solutions built on HRMS software, Rippling builds on HCM solutions to create the next generation of HR software.

Rippling is the next iteration beyond HRIS, HRMS, and HCM: It’s a workforce management platform—the first platform to offer HR, IT, and Finance all in one place. 

With Rippling, you have all your HR tools built in:

• Pay your entire workforce, in the US and globally, in their local currency and in a single pay run
• Easily track employees’ time and attendance and seamlessly sync hours to payroll—no manual data entry required
• Administer benefits, from 401(k) to health insurance, in the same system with no busy work
• Keep all your recruiting data up-to-date and sync changes across applications
• Additional tools for headcount planning, compensation bands, learning management, performance management, employee engagement, and more

Plus, IT tools:

• Automatically and securely connect employees with app accounts when you onboard them—because IT and HR are in the same system
• Remotely set up, secure, and manage your employees’ devices
• Single sign-on, password management, device shipping and storage, and more

And Finance tools:

• Review, approve, and reimburse employee expenses
• Issue branded corporate cards, control employee spending, and reconcile accounts
• Create custom spending policies based on any employee data—because it’s all in the same system

Plus, unlock the most powerful workforce reporting and analytics capabilities in existence. With other systems, data is scattered across your HR, IT, Finance, and third-party tools. With Rippling, it’s all in the same platform, so you can create any report you want—including calculating and combining multiple datasets and filtering them in endless different ways.

Rippling is the only fully integrated workforce management platform, designed to meet today’s business needs.

Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.