Digital Transformation and HR Management

Digital transformation has become a recurrent and clichéd buzzword. But what does it entail, and how does it integrate with HR management? By definition, digital transformation is the deployment of any sort of technology for business automation. HR management software like HCM (Human Capital Management), Human Resource Information Systems (HRIS), and Human Resource Management Systems (HRMS) have not only reduced the time span required to carry out traditional HR processes but have also made them more efficient and productive.

Other technologies appertaining to digital transformation include but are not limited to:

• ERP software (Enterprise Resource Planning)
• CRM software (Customer Relationship Management)
• SCM software (Supply Chain Management)
• Business Intelligence
• AI
• Prognostic analytics
• Automation
• Internet of Things (IoT)

Before moving on to explore the role of digital transformation in the HR management, let's first understand the essence of digital transformation.

Digital transformation involves significant changes to your business processes and people management, which is even more important than the technology itself. Simply put, it is a broader business transformation.

The beginning of digital transformation can be traced back to the eighties and nineties when companies were first beginning to make use of spreadsheets and word processors and other types of rudimentary technologies. Over the years, mainly in the 90s, enterprise management was revolutionized to cover a broader range of digital services beyond spreadsheets and word processing and allowed companies to track orders, manage finances and hold sales information. What started off as material resource planning on behalf of manufacturing companies trying to track their inventory evolved into what is now known as Enterprise Resource Planning. With that, many businesses began to implement more robust accounting and financial software, thus initiating the era of digital transformation.

Over time, the digital management market has grown to include a wide variety of technologies adapted to address different enterprise needs along with a simultaneous increase in demand. These new and revolutionary technologies (blockchain, machine learning (AI), prognostic analytics, IoT, etc.) enable enterprises to function more effectively.

The term "digital transformation" has become a sort of catch-all bucket for all these technologies. As such, the definition of this term varies according to the type of technology being used. For example, for some, digital transformation may just refer to implementing an ERP system, while for others, it may be implementing a financial system, etc. However, the general definition comes down to the integration of digital technology in business processes, fundamentally transforming the way you operate and deliver value to clients.

In other words, digital transformation is basically business transformation, for it is driven by enterprise needs such as better customer experience, better efficiency, and changes to them. It is just by chance that technology is one avenue to facilitate those changes, and so the keyword here is "transformation," for there is a lot more to it than just the technology itself. Moreover, one cannot define digital transformation without taking into account the organizational change or the people side of the equation, as it plays a vital role in enabling the desired changes. 

Perhaps, the primary reason why more digital transformations fail than succeed is the failure on the part of businesses to consider the organizational or people side of the equation. Integrating new technology will not prove very effective if no changes have been brought from within, i.e., organizational changes. Therefore, it is imperative to recognize that digital transformations will only thrive when you invest greatly in the people as well as the process side of things along with the investment in technology.

Human Resource Management

Advancements in digital technology bring about new prospects for Human Resource Management. In the contemporary world, in order to efficiently manage HR, more and more companies begin to count on IT applications, be it on-premises or SaaS HR Management Software. 

As mentioned earlier, some of the online systems concerned with HR management are:

• Human Resource Information System

HRIS is the most fundamental solution for the management of HR, referring specifically to an employee database designed for keeping records. It includes basic HR modules, such as payroll processing, a tracking system for applicants, leave management, reportage, etc.

• Human Capital Management

HCM dives a bit further into HR management. Along with the rudimentary functions provided by HRIS, it offers talent management-focused systems, involving recruiting automation, managing performance, benefits management, income benchmarking, etc.

• Human Resource Management System

The most comprehensive HR solution is HRMS, as in addition to the functionalities provided by HRIS and HCM, it contains such elements as Talent Optimization, Talent Procurement, Talent Management (Time, Labor).

HR Management Software: Modules to apply

• Talent Acquisition 
• Talent Optimization
• Payroll
• Personnel Tracking
• Attendance Tracking
• Recruitment 
• Performance Management
• Benefits Administration
• Onboarding System
• Compensation management
• Learning Management 
• Leave Management 

Custom Software VS SaaS

At present times, the market for Human Resource Management is ruled by two leading innovations including customized solutions and SaaS. 

Software-as-a-Service (SaaS) application implies any software that is managed over the internet by a third-party vendor and is not situated on the premises of the company. SaaS HR online systems are operated in the cloud, its resources are supplied remotely and are not contingent on a particular location. This software, which is concerned with the managing of HR, can be retrieved from any gadget through any search engine. Software-as-a-Service is a sort of all-purpose/versatile solution that mainly addresses only the fundamental requirements of HR management.

The alternative is a custom-built HR online system, which is adapted to the unique needs and objectives of the businesses. Customized HR Management Software is tailored to cover the individual needs of various departments in the company and manage the people assets under the corporate company standards.

Depending on the size, requirements, and aims of a company, a particular option may be more or less appropriate. However, the latest research reveals a significant shift in the direction of highly customizable HR software solutions.