Is the Human Capital Management (HCM) Module Under Utilised in Enterprise Resource Planning (ERP) Systems? A Literature Review

Abstract

Enterprise Resource Planning (ERP) systems have revolutionised how organisations integrate and manage their operations by providing a unified platform for various business functions. While widely adopted for finance and supply chain management modules, the Human Capital Management (HCM) module often remains underutilised, particularly in developing nations like Sri Lanka. To investigate the use of ERP systems with an emphasis on the HCM module, to assess the HCM usage, to identify adoption barriers, and to evaluate its impact on HR efficiency and workforce management, this research undertakes a review of the literature. The evaluation outlines the key characteristics, advantages, and disadvantages of HCM module and how they could improve workforce management through compliance management, performance monitoring, and talent acquisition. This study identifies key insights into successful adoption strategies and common pitfalls by analysing practical implementations of ERP systems from leading vendors such as SAP, Oracle, and Microsoft Dynamics. By filling in the gaps in the literature on HCM module adoption and providing practical suggestions for resolving these issues, the findings add to the scholarly conversation. This evaluation, which highlights the significance of HCM module, is an essential tool for researchers, ERP vendors, and corporate decision makers who want to improve personnel management and the strategic worth of ERP systems. Thus, vendors can boost adoption by improving user experience, licensing models, and training, while HR and IT leaders should align HCM adoption with digital transformation for seamless integration.