ERP vs. HRMS: which should manage your payroll?

Everybody knows payday is the best day of the week. In addition, the most-liked person in any organization is the one who prepares the payroll.  What is the better tool: ERP or HRMS?

HRMS advantages

Most HRMS systems come with an assortment of handy, useful tools such as employee appraisals, loan balance and payment calculations, miscellaneous deductions, and time off balances.  Do you need help attracting new employees? Maybe your staff needs some motivation. How about legal help with employment laws and regulations? Your annual employee performance reviews are coming shortly.  Many HRMS systems have the answers you want to find. Generally, these tools are easy to use and user-friendly too.

HRMS disadvantages

What is not to like?  A big disadvantage of most HRMS systems is that they are stand-alone and not integrated with your ERP, the official record of your business.  You want to charge some of a person’s time to a project. You can add the project code easily to HRMS but you still need to use the total page of the HRMS report to justify a journal entry.  On the other hand, that project exists in ERP and the accounting for that person’s time is handled completely within ERP.


You certainly can develop your own integration or hire someone to perform the work.  Your HRMS and ERP salespeople probably told you how easily and quickly this can be accomplished.  Check with your own IT staff and you likely will learn it is not a simple task and they already have work on other projects lined up well into the future.

Find the features your new ERP system needs with our free ERP features guide

Your ERP

Your ERP already can produce paychecks accurately.  Your staff knows how to use the system and is familiar with the screens and processes.  ERP payroll is 100% integrated with accounting and project management with no additional work.  Some of the features that make HRMS attractive are already contained in your ERP. Check with your ERP provider and other features might be available for a small cost.

Bottom line

So, should you manage your payroll with ERP or HRMS?  The choice is yours and the answer is: it depends. Either tool can help you manage payroll.  Both alternates offer advantages and disadvantages. Your task is to add up the value of the advantages and compare the value against the costs involved.  If you have the resources required and the advantages outweigh the costs, then maybe that HRMS is in your future. If not, the ERP you already have works well, everyone will continue getting that paycheck, and your payroll people will remain everyone’s favorite employees.

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Tom Miller

About the author…

Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at

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Tom Miller

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