Centralization has been an overarching trend in HR software for a while now. As disparate systems and processes like applicant tracking, HRIS, and employee engagement consolidate into broad Human Capital Management (HCM) suites, it begs the question: Are we now in the Endgame of HR software?
While the impulse to centralize all of your HR software may be persuasive, some industry leaders still make the case for separated and specialized solutions. There are important differences between applicant tracking systems, HRIS databases, and HCM suites, and these differences are worth considering before making your next software purchase.
The Differences between ATS vs. HRIS
The core difference between an ATS and an HRIS is timing. Applicant tracking systems keep track of candidates in the pre-hiring phase, while HRIS systems keep track of employees after they’ve been hired.
In a recent interview with TrustRadius, SmartRecruiters’ Director of Product Marketing Jack Wei framed this distinction around the different functions that each tool provides. ATS tools support recruiting, which faces external candidates and should, therefore, be treated as a “sales and marketing function” according to Wei. This framing leads vendors like SmartRecruiters to emphasize authenticity and candidate experience when engaging talent. In contrast, HRIS products support internal HR functions, which are more akin to “back office operational duties.” These functions, and the software that support it, focus more on operational efficiency and quantitative reporting.
Features and supporting functions also differ between ATS vs. HRIS. ATS tools have built on their primary function (applicant data storage) to support other aspects of the recruiting process including the job posting, interviewing, and job offer management. In contrast, as the core database for employee data, HRIS systems almost always include demographic data, payroll, benefits, and other administrative tools.
Since ATS products and HRIS products serve two separate functions, there’s not an either/or decision to be made here. You need both. HR software vendors recognized these converging needs and saw the value of consolidating both tools into a single platform. Thus began the rise of the HCM suite.
HCM Suites—The Infinity Gauntlet of HR software?
HCM suites essentially evolved out of HRIS systems. Over time, HRIS tools grew to incorporate a broader range of strategic HR functions and ATS capabilities. Today, this combination is nearly ubiquitous—you’re unlikely to run into an HRIS-only product unless you’re a startup or very small business.
There are two main incentives for adopting a comprehensive HCM suite over an ATS:
#1 Bundling HR functions with recruiting into one platform could save your company a lot of money when applied at scale. This is particularly relevant if you need to use more strategic functions like workforce management and corporate learning management, which are more likely to be integrated into the larger HCM tools.
#2 Beyond the financial aspect, HCM suites’ biggest boon is their native integration across HR functions and the natural data flow that integration enables. This integration allows you to more easily automate processes and use data from multiple HR processes simultaneously.
The value of integrating data flows between ATS and HRIS products are particularly evident in the liminal space. Personnel data is at its most volatile in the transition from “candidate” to “employee,” because these individuals could be changing their addresses, contact information, financial information, insurance and benefits information, etc. The more naturally that recruiting and applicant tracking are integrated with the rest of your HR systems, the lower the risk of errors, manual data entry, and a very frustrating onboarding process.
According to Wei, there’s much to gain from securing functional data flows both out of and into an applicant tracking system. Aligning all these functions on a single platform creates not only the data flow itself, but makes the workflow between both functions more smooth. On the topic of integrating HR processes, Wei said:
“You want to make integrations ready out of the box, and you want to open up those connection points. From our standpoint, it’s in our best interest to make that connection as seamless and painless as possible.”
While point solutions like SmartRecruiters are always improving their integration capabilities, the native connections between functions with HCMs are still likely best-of-breed on the topic if that’s your top priority. However, like some purple supervillains, HCMs would be premature to claim that “they are inevitable.” Standalone ATS tools still have a strong case to make.
The Case For Standalone ATS Tools
While the trend may be towards HCM adoption, there are tradeoffs to big software suites and advantages to point solutions that you should be aware of.
An HCM suite could be roughly described as a “Jack of all trades, Master of some.” From the perspective of standalone ATS advocates, recruiting is not one of the trades that HCM software has mastered. Your recruiting functions may fit better with the rest of your HR tech stack as part of a consolidated HCM. However, there’s a high risk of losing out on the range and quality of recruiting features at your disposal.
Candidate Relationship Management (CRM) features are an excellent example of the difference you can experience between standalone and suite options. According to Wei, “most HCM suites don’t have… a pre-integrated CRM, which is where you can look at best of breed recruiting software and see a lot of investment and innovation happening.”
HCM suites also tend to lack advanced candidate sourcing, filtering, and strategic functions like interview support and skills assessments. If these features are crucial for you, a standalone ATS solution might be a smarter choice.
For smaller organizations with less complex HR needs, pairing point solutions like an ATS with an HRIS may be more financially viable than investing in a full HCM suite. Buying a big HCM software just for the core HRIS and ATS functions could be more expensive than paying for an HRIS or small-scale HCM upfront and then adding point solutions as necessary. Unfortunately, most HCM products don’t advertise pricing upfront, so it may take some exploration to find out what that math looks like for your business.
Finding Your Ideal HR Software Solution
HCM vendors are ever-expanding the breadth and depth of their offerings to unify all your HR functions. Still, there will be businesses that benefit more from point solutions. To make your life easier during the decision-making process, keep a close eye on software integrations and feature discrepancies for all of the products on your shortlist. And keep in mind that many key differentiating factors can’t be reduced to a list of features. There may be benefits or challenges that you have to experience first hand—or learn from the experience of other users.
For example, one UltiPro user found that customer support was a key differentiator when their company struggled to implement and access the software. According to Ted:
“When we attempted to use the Recruiting and Onboarding modules, we faced a number of issues that would have stopped us from using the products. They assembled a team to address our most important issues and had them resolved before the go-live date.”
To learn more about how specific HR software vendors support their users and discover more key experiences with ATS vs HRIS vs HCM suites, we recommend consulting trusted reviews from users like you. In the fight between HCMs and point solutions, your dollars are the Endgame—have trust in how you use them!