What is Human Capital Management (HCM) Software?

Written By: Eric Kimberling
Date: July 5, 2021

Human Capital Management is one of the most important technologies that organizations can deploy as part of their business transformation. In short, Human Capital Management is more important than ever. It's a technology that helps HR departments automate their business processes and it also supports employees in taking control of their personnel file..

Today, I’ll dive into the question - “What is HCM”? These are the three topics I will cover:

  • Different components of Human Capital Management
  • What you can expect from Human Capital Management software
  • How it relates to your organization

Overview of HCM Processes

First, it helps to understand what types of business processes our Human Capital Management or HCM technologies are designed to address. In a nutshell, HCM software covers any business processes that tie back to HR or employees in their personnel files.

For example, a lot of HCM systems will cover an entire hire to retire business process. Basically, an employee is recruited or is applying for a job until they're hired, they're onboarded, then they are asked to apply for benefits.

In their careers, they are developed within the company through performance management, coaching, and manager feedback. In the end, they ultimately leave or retire from the company. That entire process is something that can be automated through Human Capital Management.

HCM technology is intended to automate these processes for your HR department but it's also designed to give your employees direct access to HR files that relate to them. If the employee needs to apply for benefits, or they have payroll questions, those sorts of things are typically stored in an HCM system. In addition to some of these processes related to employees, HCM can also help with things like tracking organizational charts and reporting relationships within the organization.

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A lot of organizations rely on tribal knowledge and hearsay to keep track of who reports to whom and how the organization is structured. HCM systems can be a way to track in real-time how the organization is designed and how reporting relationships work, in addition to some of the other processes that I mentioned above.

Why HCM is so Important?

I mentioned that HCM is very important, but why is it important? The reason is because HR and Human Capital Management in general are becoming a core competency and a competitive advantage for companies that can manage their talent better than others. When you think about an industry, that's a commodity-based industry where there are very low margins, the products or services being offered by a company aren't that different from other products and services that are being provided by competitors.

The one thing that these companies can use to differentiate themselves in an industry like that is their Human Capital Management. The level of commitment, engagement, excitement, and tenure that employees have within the organization is essential in the process. This is a way to automate processes and make it more effective, which will then allow you to build a team and build talent within your organization that will help fuel your success and helps you be more effective, efficient, and productive in the longer term.


When we talk about HCM, it's important to recognize that there are two buckets of technology you might be considering for your HCM needs. First, are the standalone HCM software solutions. These standalone HCM systems only do HR technology. They're designed specifically for all the things that I am covering in this blog. You then also have another bucket which is ERP software, or Enterprise Resource Planning software.

ERP is a type of technology that automates an entire organization and enterprise - even outside of HR. That could include things like CRM, manufacturing, financials, etc. Many of these functionalities are not related to HR, but it's a way that ties together the entire organization into one platform. When you're looking for HCM technology, you can either look at standalone HCM technologies, or you might look at broader ERP technologies that have HCM modules, or capabilities within that broader system.

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One of the first things you want to do as you're evaluating potential HCM vendors is to decide - are we just looking for an HR technology or an HCM system or are we looking for a broader, more comprehensive you ERP system?

Leading HCM Systems

In general, there's a number of vendors that specialize in HCM and our leaders in the HCM space.

Workday is an HCM only type of solution that's cloud-based and has been around for about 20 years and is very successful. SuccessFactors is now owned by SAP. SAP acquired SuccessFactors a while back, which is another large company robust Human Capital Management system. Oracle ERP can also include HCM as part of their overall ERP offering. Microsoft Dynamics has some limited HCM capabilities but still gets the job done.

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There's a number of different vendors in the market that provide HCM software and again, the key here is to look and ask ourselves, do we want to look at just HCM systems or do we want to look at other broader ERP capabilities as well? This is something you can discuss as a team as well. It is important to figure out which system works best for you.

Key Takeaways

HCM technology can be a game-changer for your digital transformation and your overall business transformation. It's a way to retain talent, (especially in today's tumultuous environment). It can be a great way to ensure that you're hiring the right people, keeping them engaged within the organization and managing them well. It's very important that you have technology that can help enable some of those processes. I encourage you to take a look at our 2020 HCM Report which captures all the best practices and things you need to know before embarking on your HCM initiative.

If you have any questions or would like to brainstorm ideas related to all things HCM and even ERP please reach out to me directly. I’m always happy to be an informal sounding board for you and your team.

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Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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