HR circles are abuzz with the benefits and performance of cloud based HR software system. But merely talking about the latest HR tech will not do your organization any benefit. Until the management decides to invest capital in HR tech software and processes, all the conversation about HR tech is just paying lip service. However, it’s not easy to convince the CHROs, the CFOs and the CEOs to set aside dedicated financial resources for HR Tech. Read on to know how you can make a business case for the same.
Every time the financial leaders of the company decide about budget allocation, the HR department is hard pressed to make a compelling case for its demands. Most of the organizations are still embedded with legacy, premise based solutions for HCM and while benefits of replacing this system are pretty clear, the return on investment is not as well defined and can dissuade the CFO from giving a go ahead to any significant investment in new HR technology tools and solutions. The onus is now on you to provide relevant data and context so as to make a convincing business case for HR tech investment.
Here are some tips for building a business case for HR Technology:
- Show HR Tech benefits to convince your boss
- Justify HR Technology costs with ROI to convince management
- Show case studies to make a business case for HR Technology
Show HR Tech benefits to convince your boss
To create a buy-in among the executives who will sign on the purchase orders, you need to prove that the new solution will benefit the company as a whole. Everyone knows the key advantages of advanced HR software, but how those benefits will translate into overall business success needs to be presented in clear and data-backed visual format. This will only happen after you do due diligence, spend days performing comprehensive market research and vendor comparisons. Once you have the required data to support your claims, you can clearly show the improvement it brings in terms of quality, quantity, productivity and transparency in every HR process. From thereon, the task is to connect the dots for the decision makers to show the fulfillment of a common or multiple business objectives.
An example could be how using advanced analytics solutions can help increase the employee retention rates and improve efficiency. Now CEOs are always concerned about the availability of high skilled talent. If you are able to alleviate this concern through your solution, at least you will have one of the top leaders on your side.
(Also Read: The Importance of HR Analytics in an Organization)
In addition to the CEO; CFO, CTO and CHRO are perhaps the only other people on the panel who have an overarching view of the entire organization’s performance and vision. Your proposal should be able to create a common ground for all the executives where each has a clear idea of how the new solution will help accomplishing the shared business goals. (Also Read: Need for HR Digitization)
Justify HR Technology costs with ROI to convince management
CFOs are more concerned with the ROI aspect of the investment than anything else. Ideally, you should be able to explain how the technology will be able to recover its costs in due course of time.
To come up with the ROI, you will have to evaluate the following three aspects:
Calculating ROI of an HR Tech investment is a combination of the direct and indirect savings caused by the solution. The direct or quantifiable part of it relates to minimization of payroll errors, precise attendance record maintenance and reduction in time to process different operations. It is easy to put a monetary value against time as you can measure the number of hours saved in doing a task with the automation tools. The resources thus freed can be reallocated to spend more time on other areas of HR.
Indirect savings or unquantifiable ROI refers to other key attributes of the solution that empower the recruiter with the ability to identify best hiring sources and key performers of the organization. Greater employee retention if made possible through identifiable patterns in employee data analysis is also a saving which can increase bottom-line in the long run.
(Also Read: HR activities to improve employee engagement)
Show case studies to make a business case for HR Technology
When leaders are skeptical about your proposal, it is wise to come up with some case studies that provide credibility to the assertions you make. The HR solution providers might have something to show off which can come handy or make a case study of your own by studying the competition and proving how they are doing better than you. Case studies, if done right, are exceptionally powerful at expounding the product and its benefits and how it has solved problems in the past. They will help provide a value to your proposal.