The Difference Between HRIS & ERP—A Comprehensive Explanation
Filip Dimkovskion September 21, 2022.
Over the last few years, HR teams have been increasingly using software solutions to help them better manage the workspace. Namely, there are many types of these solutions, with HRIS (Human Resource Information Systems) and ERPs (Enterprise Resource Planning) being some of the most popular ones.
Despite their popularity, there is still a lot of confusion surrounding the two types of systems. Many believe that they are one and the same, yet this couldn't be further from the truth. In reality, HRIS and ERP systems are quite different, albeit complementary, which is why it's important to understand the difference between these two types of solutions prior to choosing one.
What Is HRIS?
At its core, an HRIS is a system that helps organizations manage and store employee data. This data can range from contact information and addresses to payroll records and time-off requests. Additionally, an HRIS can also help with talent management and performance tracking.
Thus, the main purpose of an HRIS is to make it easier for HR teams to access employee data, as well as use this data for improvements in the future. In doing so, an HRIS can save the organization time and money while also improving the overall efficiency of the HR team.
Some of the main features of an HRIS solution include:
- Managing employee data from a single system.
- Simplifying hiring and onboarding.
- Ranking employees based on objective performance.
- Allowing employees to request sick days and vacations without contacting the HR team.
What Is ERP?
An ERP, on the other hand, is a much broader solution that helps organizations manage and automate multiple aspects of their business, from finance and accounting to inventory and manufacturing.
While an HRIS focuses exclusively on HR data, an ERP system covers all areas of the business. As such, an ERP is a more comprehensive solution that can be used by all departments within an organization.
Some of the main features of an ERP include:
- Integrating multiple pillars of a business.
- Unifying business operations.
- Offering a one-in-all solution for marketing, sales, and accounting.
- Real-time insight on important metrics like gross income and revenue.
5 Key Differences Between HRIS & ERP
Now that we've looked at the main features of each type of system, let's take a more in-depth look at the key differences between HRIS and ERP:
The purpose of an HRIS solution is to allow the HR department to easily store and manage the company's information through the system. Usually, this type of system also features other HR activities like employee training, onboarding, and recruiting new talent.
An ERP's purpose, on the other hand, is created to support all departments within an organization—not just the HR team. Namely, this is done by providing a system that can automate various business processes, which often include accounting, manufacturing, customer relationship management, and so on.
An HRIS is mainly used to store employee data and help the HR team with the basic functions. It is a solution that provides functions that can only be used by the HR department
ERPs, however, allow businesses to unify different business operations, including marketing, finance management, accounting, and more. Contrary to HRIS, an ERP offers functions that can be used by accountants, marketing experts, and even managers.
The database offered by an HRIS solution is only used to store employee information.
In contrast, an ERP database can be used to store customer data, supplier data, and inventory data. So, an ERP solution's database is more extensive, but it's also much more difficult to maintain and manage.
4. Specialized HR Functions
Some HRIS solutions offer specialized functions for payroll management, attendance tracking, and managing employee benefits. They are solutions that are specifically tailored for the HR team.
On the other hand, ERP solutions do not offer any specialized HR functions.
» Struggling to cope with business payroll? Try automated payroll software instead.
5. Cost & Difficulty of Implementation
HRIS solutions tend to be less expensive and easier to implement than ERP solutions. This is because HRIS systems are designed to meet the specific needs of the HR department.
In contrast, ERPs are more comprehensive solutions that require a larger investment. Moreover, ERP solutions are generally more difficult to implement because they need to be customized to the specific needs of the organization. This process can be quite time-consuming and costly.
Understanding the Needs of Your Organization
Even though HRISs and ERPs are oftentimes mentioned in conjunction, the truth is that they offer different features to businesses. This is why it's important to understand the needs of your business and to adequately coordinate your priorities.
So, if you think that your company would benefit from a solution that lessens the burden on the HR team, then you probably need HRIS. This solution will manage recruiting, onboarding, offboarding, and even compliance management for you. On the other hand, an ERP will help you manage multiple aspects of the business, not just human resources, but is far more difficult to maintain and not necessarily suitable for smaller businesses.