HCM Integration With ERP Fuels Financial Decisions with Reliable, Compliant and Secure Data
Part of a series | CFO Insights Series
When you're in charge of making strategic financial decisions for your organization, having reliable, compliant and secure data to fuel your analysis and insights is crucial for success.
For chief financial officers, data is a key resource. Your enterprise resource planning (ERP) and human capital management (HCM) platforms each hold gold mines of operational and employee details that can inform your best decisions.
Much rests on this multisystem intersection of data providing reliable figures and records for your accounting, compliance and strategy needs. But outdated systems that lack fluent ERP and HCM integration can mean resorting to manual data entry and using spreadsheets to manage information.
In research commissioned by ADP1, 66 percent of finance executives say their existing, older systems are complex and create challenges in reliability. They identify data accuracy, compliance issues and security risks as their most critical pain points and note that manual processes severely impact their department. Most of the finance leaders who took part — 83 percent — are planning to invest in new finance and HR tech that solve these problems.
How HCM integration with ERP benefits fiscal operations
An ERP platform with smooth HCM integration can eliminate the need for manual data entry and the potential loss of data integrity — leading to more accurate, compliant and secure information to support your financial strategy.
Data accuracy that supports reliable and informed decisions
When HCM data is siloed in a disparate system that doesn't communicate directly with your ERP, compiling information can be a manual, error-prone process. To complete, for example, a workforce cost analysis or to assess net pension obligations, you may have to rely on another department to gather data for you, or your team may have to extract data by hand. This can result in delays, missteps and miscalculations that affect the accuracy of your budgeting and financial planning.
When ERP and HCM systems are integrated, 31 percent of finance executives say the data flow necessary for collaborative decisions is faster, and 34 percent say it boosts data integrity.1 Having a process where accurate data is readily available via the systems you're already using lays the groundwork for keen insights and effective financial management.
Compliance reporting that simplifies complexity and mitigates risk
Regular reporting of taxes, retirement, labor regulations and other statutory requirements demands precision and consistency. The absence of an ERP and HCM integration can complicate these tasks, creating cumbersome, error-prone and disjointed reporting that may raise red flags for regulatory agencies.
In the research commissioned by ADP, 64 percent of finance executives say their legacy systems left them struggling with accurate reporting because of incomplete data sets.1 Among 21 percent of the CFOs, compliance impediments are a top pain point that severely impacts financial functions, and another 21 percent say they can't create the required reports without a unified source of data.
In the event of an audit, it can be difficult and time-consuming to demonstrate compliance if you have data systems that don't work well together. An integrated HCM/ERP system automates crucial aspects of compliance reporting, reducing manual intervention and the associated risk of errors. And if regulatory agencies need to investigate, your unified system can provide a transparent audit trail.
Security safeguards that protect sensitive, private information
Data breaches and cyber threats are becoming increasingly common and costly. According to IBM's 2023 report, the global average cost of a data breach is $4.45 million, a 15 percent increase over the past three years.
The challenges of maintaining data security and privacy are exacerbated when HCM integration with ERP platforms isn't seamless. Vulnerabilities are exposed anytime you need multiple people or processes to transfer information between systems. You risk revealing sensitive employee and corporate information.
Centralizing data access in an integrated HCM/ERP system reduces the likelihood of unintentional or unauthorized exposure, helping to preserve your organization's data security.
Embracing HCM integration for a unified, confident future
For CFOs and their teams, the choice to integrate HCM and ERP platforms is more than a technological upgrade. It's a strategic imperative that aligns with the broader goals of operational efficiency, strategic clarity and risk management.
Organizations can significantly reduce the challenges of data inaccuracy, compliance complexities and security concerns when using systems that are designed to work in harmony. By adopting integrative HCM solutions, financial leaders can move forward with confidence and assurance, knowing that decision-making processes are supported by a robust, unified and forward-thinking platform.
ADP's solutions offer seamless data integration between your ERP system and HR, payroll and HCM systems. Learn more about ERP integration.
1 March 2023, CFO Dive/ADP, "How Are CFOs & Finance Teams Tackling Today's Challenges Through Technology?"
