Weighing the Decision to Unify HR, Finance and ERP Systems

​Amid the growing movement toward consolidating HR and talent management technologies into one unified "suite," another issue is confronting HRIS leaders: Does it also make sense to consolidate HR, finance and enterprise resource planning (ERP) systems on one platform, rather than keep HR technologies in their own separate system?

The debate over unifying technologies from different disciplines isn't new, but it has assumed new vigor as more vendors have released full, cloud-based suites featuring HR, finance, ERP or supply chain technologies. Vendors are consolidating in this fashion largely because it allows them to extend their products into natural workflows and take advantage of investments in research and development.

[SHRM members-only online discussion platform: SHRM Connect]

Advantages of Consolidation

Experts say there is a handful of ways in which consolidated platforms can benefit organizations. One of the biggest challenges companies face is being able to connect finance or ERP data with HR data to analyze the impact of HR strategy on business results. It's common for organizations to have different databases for HR and finance, for example, which can impede effective decision-making.

"Moving to one common cloud platform can create more-consistent and effective reporting," said Sheryl Johnson, a principal at consulting firm PricewaterhouseCoopers (PwC) who specializes in HR technologies. "It is not unusual to see finance produce an employee head-count report that is different from the one HR produces, for example. But when you're on a common platform, everyone reports from the same structure and the same data."

Franz Gilbert, vice president of solution provider programs for HR research and consulting firm Bersin by Deloitte, said unified platforms allow for more-advanced data analysis. "For example, sales might be up, but how do you correlate that with the HR side?" Gilbert said. "How many people were hired, what kind of training did they receive, and what is their tenure?"

Consolidating on one platform also reduces integration needs. "You no longer have to create and monitor multiple integrations to different systems," Johnson said. "And on the HR side, all of your talent management and core HR records are consolidated."

There also can be technical advantages to common technology platforms, such as consistent software-patching schedules, which allows for more-efficient staffing. "You no longer have to plan for every different app being patched or upgraded at different intervals, and then have to conduct a regression analysis every time one of those points has been upgraded," Johnson said.

In addition, a unified platform from one vendor typically means you don't need specialized technical support staff to support a variety of different vendor technologies. "That's because data security will be the same, how you orchestrate automation will be similar and there will be a similar nomenclature within the underlying structure so technical support staff can be repurposed across multiple functions," Johnson said.

While some view the creation of a common user interface on a single platform as another advantage, others believe that feature is overrated, especially for those in HR who use the platform.

"The payroll people rarely use the finance application, and HR people are rarely doing expense management," said Jason Averbook, the founder and CEO of Leapgen, an HR technology consulting firm in Manhattan Beach, Calif. "HR users and even employees rarely use all the apps on these unified platforms at the same time, and the use of different interfaces doesn't cause as many problems as often assumed."

Downsides of Consolidation

Among the drawbacks of consolidation can be the loss of "best of breed" HR or talent management systems on a unified platform. As vendors make trade-offs and strive to meet the widest variety of client needs, HR technologies on consolidated platforms may not always represent the best in the market.

Averbook predicts that there will always be advantages to HR's use of best-of-breed solutions. "Does that mean HR always should use them?" he asked. "No, because it's important that any HR function ask itself, 'What do we want to be great at, and where is it OK to be average?' If you want to be great at talent acquisition or performance management, for example, then you need to find a solution that gives you that capability, and you won't always find it on a unified platform."

It wasn't long ago that HRIS leaders dreaded the prospect of consolidating their systems with other disciplines' technologies because their needs often took a back seat, and HR systems used on enterprisewide platforms were less than optimal. But that has changed with the rise of innovative cloud-based HR technologies.

"It's fair to say HR cloud applications are more advanced in terms of maturity than finance cloud applications," said Dan Staley, global technology leader for PwC. "That's largely because HR got an earlier start in cloud. Now the question more often with unified platforms is, can you live with finance cloud apps that may not be as mature and are lacking certain functionalities?"

Another challenge for HR when moving to single platforms can be reaching consensus with leaders from other disciplines on technology or data-related decisions.

"HR, finance and others now are in the same sandbox and have to learn to play well together," Staley said. "Finance might want a structure more aligned with cost centers, for example, while HR might want a structure more aligned with the organizational chart. There are ways to configure systems so everyone gets most of what they need, but functions have to learn to work together effectively in these scenarios."

Dave Zielinski is a freelance business writer and editor in Minneapolis.