Every year, small and medium-sized businesses (SMBs) get excited about the latest HR software that promises to “streamline everything.” From onboarding and performance to payroll and compliance, Human Resource Information Systems (HRIS) are marketed as the ultimate fix for efficiency and insight.
But most SMBs never unlock even half of their system’s potential. They pay for monthly subscriptions, use a few basic functions, and then wonder why their HR processes still feel disjointed.
The problem often begins with software excitement. A demo shows off slick dashboards, automation, and integration claims, and what seems like the solution to every HR headache.
Fast-forward six months and the system has become a glorified database.
This isn’t about bad tech. It’s about poor alignment, rushed implementation, and missing integration.
There are a few common pitfalls small businesses fall into:
No system audit before purchase. Decisions are made on features, not fit. Existing tools and processes aren’t reviewed first.
Lack of stakeholder involvement. HR, finance, payroll, and team leaders are rarely brought together early in the selection process.
Data silos and poor integration. The HRIS doesn’t properly connect to the payroll or finance systems, leading to duplicate data entry and errors.
Underuse or over-customisation. Some teams try to make the system do everything, while others barely scratch the surface.
No ownership post-launch. Without training, accountability, and regular reviews, adoption drops fast.
One of the biggest mistakes SMBs make is implementing an HR system in isolation. The HRIS must talk to your finance and payroll systems, seamlessly.
When HR and finance operate in separate silos, problems arise: inconsistent employee data, double entry of pay details, errors in leave accruals, and poor visibility of labour costs.
Integration between HR, payroll, and finance isn’t optional; it’s the backbone of efficiency.
Many SMBs chase the idea of one system that does everything perfectly. It sounds idea but even enterprise-level businesses rarely achieve it.
What works better is fit-for-purpose alignment: a system where HR, payroll, and finance tools each do what they do best but share data through secure integrations. For example, your HRIS might handle onboarding and performance, while your payroll software manages superannuation and tax compliance. Together, they create one clean flow of employee data without duplication.
Every HRIS impacts multiple areas, HR, payroll, finance, operations, and team managers. Yet too often, the selection process is owned by just one person or department.
Before choosing or changing systems, involve everyone who’ll use the platform. Ask:
What are your biggest pain points?
Where does data get lost or duplicated?
How would you measure success six months post-launch?
When all stakeholders are heard early, you’ll likely choose software that truly meets business needs.
List every existing system, payroll, scheduling, finance, recruitment, and map where data overlaps or doesn’t connect. Identify gaps first. Sometimes, improving what you already have delivers more ROI than starting over.
Define success upfront: fewer manual entries, faster onboarding, improved compliance visibility, or reduced payroll errors. These goals become your benchmark for evaluating vendors.
You don’t need the “gold standard” in every area. What you need is a connected ecosystem. Ensure your HRIS integrates cleanly with your payroll and finance tools, whether via API, single sign-on, or automated exports. This ensures accurate data, streamlined approvals, and fewer headaches.
Implementation is where many systems fail. Allow proper time for data migration, testing, and training. Appoint an internal system owner to manage updates, provide refreshers, and act as the go-to support person.
Schedule quarterly check-ins to review data quality, adoption, and new features. Use analytics to see what’s working and where workflows can be improved. A system that evolves with your business delivers far greater value over time.
A small business I work with currently implemented HRIS platform. On paper, it could handle onboarding, leave, and performance. But the problem? It didn’t integrate with their finance system, you could apply for leave in the HRIS system and then downloads were required into the finance systems. This problem also meant that their employees did not have up to date leave balances as it was not a 'live system". In addition, the existing finance system did not produce a spreadsheet which was easily uploaded into payroll system.
For small and medium-sized businesses, HRIS platforms can be transformative. But technology alone won’t fix process or communication gaps.
Before you invest, audit what you have, involve your people, and make sure your HR system truly connects to your finance and payroll tools. You don’t need every bell and whistle, you just need systems that talk to each other, fit your business, and actually get used.