HRMS vs ERP: The Payroll Cycle

Payroll is a complex topic. In comparing the options of managing payroll in HRMS software or ERP software, which is better? The answer to this question is “it depends”.

Integrated tasks

An ERP system that manages payroll also integrates many different types of data into one system, so it will often do a better job of ‘feeding’ the payroll with these data elements. For example, ERP allows the employee to request training via the system and once approved, it triggers other data and tasks, such as sending the coding to the payroll system for training pay for those days, blocking the employee from being placed on the shop floor schedule, as well as recognizing that the employee is eligible to receive a certificate, once the training is completed. In a non-ERP environment, those would be separate tasks and dependent on manual intervention.

User-centric viewpoint

Compared to ERP, HRMS is often seen as more user friendly and specialized in functionality, especially among the mid-sized systems. When new tax updates are released, for example, it’s often a faster effort to test these changes. As well, these systems are often able to implement from a user-centric point of view as they are exclusively focused on the HR user base.

ERP payroll has an advantage where financial data elements such as account codes, project codes, or currency conversions are needed. Often these data elements already exist in the financials module and therefore can be utilized by payroll in the HR module without extra effort. With only an HRMS module, it may require additional effort such as manual data entry or the definition of an interface from a financial system to be able to utilize this data in payroll.