Why all-in-one HCM solutions are not the great panacea

Some have recently said the “single HCM system has become the new iPhone.” But the reality is that there is not a single human capital management system in the market that provides best-in-class capabilities across every functional area that is important to HR.

The iPhone metaphor breaks down when you consider that some of the magic behind the iPhone was its ability to access our favorite external applications on one device, as opposed to relying on Apple to create all of this functionality by itself.

Let’s use benefits administration as an example. Some HCM providers offer benefits functionality; however, most are not able to support the complexity of modern benefit programs. These benefit programs often include multiple plan options by eligibility group, voluntary benefits, plans with multiple contingency rules, coverage that must be pended while awaiting proof of eligibility or insurability, wellness credits, and many other facets that increase programming complexity. While most HCMs have years of experience managing payroll, it’s difficult to argue that the benefit functionality they offer is on par with stand-alone solutions in the market.

Moreover, benefit “point solutions” are delivering tremendous innovation when it comes to redesigning the employee experience. Mobile dashboards that incorporate all benefit information in one place are just one example. Therefore, over the next few years as HCMs continue to tackle the basic transactional components of benefit administration, they may find that they’re still a decade behind when it comes to employee engagement and helping employers optimize their benefits investment.

Rather than argue that the “all-in-one” HCM is the panacea for efficiency, I suggest a better solution incorporates the ability for employers to have one platform that can interface with multiple external applications. For example, many HCMs have created — or are in the process of creating — marketplaces whereby employers can tap into these external solutions via API. They’re not giving up on owning these solutions, just recognizing the reality that employers want a choice and that it would be foolish to force a client into every new feature that an HCM introduces.

See also: A single HCM system ‘is the new iPhone.’ Why aren’t HR pros buying in?

Therefore, the more effectively an HCM can integrate other technologies into a cohesive and engaging experience for employers and their employees, the better off everyone will be — including the HCMs. I have tremendous respect for most HCMs, mainly due to their payroll and HRIS capabilities, but I challenge the notion that any of them can provide a best-in-class solution across every functional area that is important to HR professions.

Most of us in the HR space have heard loud and clear from employers that even the best HCM system will have at least one, if not several, functions that are inadequate to addressing their needs.

One significant source of employee dissatisfaction is that they simply don’t understand all the benefits they’re receiving, and this really undermines the trust they have for their employer. Said differently, when an employee is asked to use inadequate software to choose and use their benefits, they become increasingly frustrated with those benefits and the employer who provides them.

The bottom line: I agree the market is ready for an improved experience that includes multiple capabilities — but relying on one HCM vendor for all HR functionality does not appear to be the answer. Certainly not at this time. And based on innovations across so many different areas of HR, probably not in the future either. The answer should look like an iPhone, but one where the user can go to an app store and choose from multiple plug and play solutions.

Feel free to share your opinion below in the comments section or directly to me via email: mikeehrle@hodgesmace.com or cell phone: (312) 523-1059.