Integrate Your HCM and ERP for Effective Resource Planning

Organizational leaders often face technology tradeoffs: Should they choose the most powerful platform that potentially sacrifices user experience or the platform with a people-friendly approach that doesn’t meet all the organization’s needs?

You don’t have to choose. Instead, you can integrate human capital management (HCM) and enterprise resource planning (ERP) systems, creating one hub for organizational leaders who need a complete, uniform set of data for smarter resource planning decisions.

This ebook explores what it means to integrate your HCM and ERP, walks through the benefits, shares success stories and helps you decide whether you’re ready, regardless of your company size or current HCM-ERP setup.

Pairing Up HCM and ERP

Best-in-class companies know that their people are their most valuable resource. That’s why an effective HCM system is essential for managing recruitment, onboarding, benefits and payroll, performance and much more. 

The best HCM systems go beyond traditional operational tasks. They provide support for leaders who need to strategically manage the workforce, and they provide employees with easy-to-use, instant access to data that they need. HCM systems are functional for users and, ideally, also interface seamlessly with other critical software, such as ERP systems.

Similarly, modern ERP systems provide a comprehensive, on-demand overview of business operations, helping leaders control costs while maximizing available resources. Not only is data available, but users can easily analyze that data for forecasting and other strategic endeavors. 

Many companies appear to succeed with separate HCM and ERP systems. So why integrate these two critical platforms? 

Both systems empower people to access key information that grants them a holistic view of the business. With that data and insight, leaders can make better-informed decisions, especially about when and where to allocate resources and at the right cost. 

Integration takes that a step further by unifying data that might be incomplete when living in disconnected systems or silos. Efficiency and agility are improved when leaders and employees can turn to one trusted source of information without worrying about missing data. The user experience improves, too, when people don’t have to input or track information in as many systems. All of this improves productivity and cost efficiency, both for IT and for the overall business.

Let’s explore what the benefits of HCM-ERP integration look like.

Hiring and Onboarding Costs

The average cost per hire in 2022 was nearly $4,700, although that figure can spike to three or four times the position’s salary, according to the Society for Human Resource Management.

Hiring decisions are about skills and job fit matched against a salary and benefits, but there are many financial considerations beyond that. Employers must consider the total cost of compensation, which can include taxes, paying for equipment and training employees need to perform their jobs, and the loss of productivity for the business while the position is vacant.

When your HCM and ERP systems are separated, information from your HR department and finance department are less likely to intersect. Both data sets are vital to personnel decisions, but without a single trusted source, employees can struggle to access data, collaborate effectively and understand the full picture. 

Integrating your HCM and ERP systems helps your company get a clear understanding of all the costs — and potential benefits — of new and current hires. By having all information in one place, smarter analysis can be conducted that, in turn, informs more cost-efficient decision-making around resource allocation. Being efficient doesn’t mean you’re not competitive with talent acquisition, but it can help your organization make smarter hires and waste less money on bad hires or chasing the wrong applicants.

Increasing Employee Engagement

HCM-ERP system integration can also contribute to increased employee engagement. This might not seem obvious at first glance. After all, employee engagement is often considered a soft skill measuring the loyalty and enthusiasm an employee has to a company and its business objectives. Employee engagement is also usually considered an HR issue.

However, HCM-ERP integration does have a role to play in engagement. The secret is in understanding how systems integration helps HR and finance pursue outcomes that drive higher engagement. 

For example, HCM-ERP integration doesn’t do the work of managers in guiding and molding effective teams. But integrated systems can reduce duplicative paperwork, empower better tracking of employee performance and goal-setting, and increase HR’s response time to employee concerns. Employees also benefit from clear, unified data around benefits, time off and other issues.

When finance and HR are looking at the same data in the same place, they have a head start on forecasting workforce needs, setting budgets and creating plans for leadership development and succession planning. All of these things create positive effects for the workforce and the day-to-day environment, gradually increasing employee engagement as they experience a more efficient and effective workplace. 

Creating True Visibility

Visibility is the capability of accurately and completely viewing processes, transactions and other actions that take place within your business. HCM systems provide visibility into HR processes such as talent acquisition and retention, onboarding, workforce training and employee engagement. ERP systems provide visibility into financial processes, business operations and resource planning.

Separately, HCM and ERP are like puzzle pieces. Business leaders get value from each, but they can’t see the complete picture until the pieces are connected. HCM-ERP integration provides the most visibility through heightened information sharing and faster communication between departments. When company leaders have a holistic view of all company operations, they’re better equipped to make sound decisions for the business.

Both systems are vital to company success, so integration is the next logical step. Combining your HCM and ERP systems doubles down on the visibility you’re already enjoying. It’s also a bold statement that your company prioritizes a holistic understanding of conditions and all your capital — human and financial — as you make strategic decisions.

Once integrated, you can use the power of HCM-ERP to find shared areas of concern and combine knowledge for new insights. Your data and analytics capabilities are improved because you have the latest, most complete data to use in post-mortems, forecasting and scenario planning. 

For example, you’re probably already measuring the effects of HR activities such as recruitment, retention and performance. With an integrated system, it’s easier to discover how those activities influence sales, customer success and productivity. Those insights can inform your organization about where it’s excelling, where it can improve and where it’s missing opportunities.

Supporting Advanced Technology

A combined HCM-ERP solution supports your company’s IT department by reducing their maintenance, support and troubleshooting duties, which can be major cost centers for the business. A well-implemented integration builds on those savings by providing a user-friendly interface and a single access point for all employee data needs.

IT departments can then use their reclaimed time and resources to pursue advanced and cutting-edge technology services that dramatically affect your company’s ability to deliver, grow and innovate. The possibilities are endless and include the application of artificial intelligence, machine learning, robotic process automation and other emerging technologies. These can benefit not only your internal business processes but also the products and services you offer.

Protecting Information Across the Business

Keeping data secure is an increasing concern for organizations of all sizes and in all sectors. 

The average cost of a data breach is well over $4 million, according to IBM and the Ponemon Institute. Organizations with more remote and hybrid workers face additional risks as sensitive data is on more networks and more devices, including personal devices.

Businesses have a responsibility to prepare for and mitigate cyberattacks. While meeting this challenge isn’t easy and requires vigilance, the task is much more difficult when sensitive data lives on multiple platforms, each with their own access permissions and security vulnerabilities.

An integrated HCM-ERP system consolidates many of these risks into one platform that your IT and security teams can focus on. Integrated systems are a risk factor because they are a single source of truth, but they also can be safeguarded with an organization-wide approach to access, permissions, data sharing and other security best practices.

When data is kept in silos, your organization’s defenses are spread thin. Communication is more difficult, and breaches might not be detected as quickly, which incurs additional costs and risk. Silos often house legacy systems that aren’t regularly updated or aren’t designed to meet today’s requirements for security and compliance. HCM-ERP integration closes those gaps, creating a single secure environment for your data.

Seamless HCM-ERP integration ensures that the information accessed by anyone throughout your business is readily available, accurate, and consistent. While the risk of cyberattacks is ever-present, the benefits of an integration outweigh the risks of many disparate data silos.

Case Studies

Many organizations understand the intuitive benefits of HCM-ERP integration but aren’t sure how it would work in practice. Criterion HCM has helped many businesses successfully implement HCM-ERP integrations. Here are two success stories.

Britton Electric

Britton Electric replaced its ERP system, but the new solution didn’t include certain operational aspects its predecessor had covered, such as payroll. Because payroll accounted for over 50% of Britton’s operating expenses, the company realized that it needed payroll software that integrated with the new ERP.

“Payroll is half of our cost in our business, more than that, and 80% of our workforce is unionized. We need some intricacies with that,” said Joe Vinski, Director of Finance at Britton Electric.

Criterion’s integration capabilities were an initial point of interest for Britton, which soon realized the additional value of Criterion’s ease of usability, dashboards and extensive data collection. It became clear that Criterion offered the right solution for Britton to bridge the gap between legacy and new systems.

Six months after partnering with Criterion, Britton praised Criterion’s user-friendly interface, ease of searching capabilities, data-capture capabilities and speed. 

Pepper Construction

Pepper Construction is a general contracting company with five offices across the Midwest, employing more than 750 people and generating more than $1 billion in annual revenue by building marquee and specialty projects that use sustainable materials and efficient systems.

The team at Pepper Construction started out with a limited benefits administration system, over time adding modules and heavily customizing the software. The company then adopted a popular ERP for North American architectural, engineering and construction organizations. While this industry-specific ERP offered a payroll module, it lacked any administrative or HCM support.

When Julie Kellman, Director of Compensation and Benefits at Pepper Construction, began to search for a better solution in early 2018, she talked to 24 vendors. Once those vendors found out the connection was to a custom platform, most found it too challenging. Then, she discovered Criterion’s HCM solution.

“The required integration with the ERP payroll module was a conversation-ender with everyone else. Pepper is known for leveraging the most advanced technology available to deliver real value,” Kellman said. “I needed a state-of-the-art HR system, and Criterion were the only ones who could partner with us to deliver what we need.”

Are You Ready For Integration?

How do you know if your business is ready for an HCM-ERP integration? Review this list of common solutions setups and see how your business can move from its current state to an integrated approach. 

No HCM Solution

Many businesses, particularly small and midsize businesses, invest in an ERP first because of the focus on finance, business operations and cost analysis. While some HR responsibilities are addressed by finance and accounting, many HR management tasks are not addressed by an ERP alone. As businesses grow, they quickly realize that they can’t ignore or manually track HR functions. If your business struggles to meet its basic HR needs, it’s time for an HCM solution. 

Businesses benefit from a comprehensive, user-friendly HCM system to manage their HR needs in a cloud-based digital platform. Staying competitive in the marketplace means optimizing every resource you have. And an HCM system helps efficiently deploy your most valuable resource — your people.

If your company is already looking for a comprehensive HCM solution, consider a solution that also integrates with your ERP system? This approach can save money, prevent new data silos and ensure information is accurate, up to date and accessible across your business.  

Legacy Systems

We all understand the concept of working with the resources you have, especially when trying to manage a tight budget. Legacy systems can persist well beyond their shelf life because the cost of doing nothing appears to be less than the cost of implementing a modern system. 

Legacy systems have hidden costs, however. They can be more difficult to maintain or require extensive — and expensive — customization to meet your workforce’s needs. Legacy systems can struggle to communicate with other systems, and they often carry significant data security risks that are especially fraught for highly regulated organizations. While your company may save money upfront by sticking with a legacy system, the longer-term outlook is less rosy.

When you decide to upgrade legacy systems, consider how a modern, integrated ERP and HCM system can benefit your organization, especially if you already plan to update (or install) both types. You’ll see long-term benefits in terms of smooth data sharing between departments, quicker communication, increased efficiency and a better user experience.

Separate HCM and ERP Systems

Many organizations have functional HCM and ERP systems but are operating them separately. Consider how integration can benefit every level of your organization in resource planning and execution — from the C-suite all the way down to daily actions by employees and customers. Integrated systems save time and money, improve data quality and sharing, and empower employees so they can better serve your customers.

Do any of these scenarios sound like your business? Then it’s time to consider an HCM-ERP integration as the next step in your company’s growth. It’s time to transform your organization’s information infrastructure and resource planning to win the future.

Recognizing the Benefits

As you consider the benefits of integrating your HCM and ERP systems, don’t forget the big picture.

An HCM-ERP integration creates the true visibility necessary for key stakeholders within your organization to make informed strategic decisions. It helps leaders allocate organizational resources through the best possible workforce and financial data. And it does all this while reducing the footprint your IT team needs to cover, which improves technology development and security.

Don’t miss out on the benefits of HCM-ERP integration. Take the next step today.

About Criterion

Criterion provides human capital management (HCM) software for midmarket organizations in construction, financial services, nonprofits and higher education, empowering them to streamline their critical HR, payroll, talent engagement and workforce management processes. 

Criterion HCM is available direct to customers and through a global partner network in more than 10 countries.