Recent research has shown that HR departments struggle with justifying the business case for new HR technology. Mark Barlow provides a practical guide to putting together such a case.
Over a third of senior-level HR practitioners that were interviewed in Qikker’s 2007 research – ‘Hi-tech HR: A contradiction in terms?’ – had presented a business case and implemented new HR technology solutions.
However, for 21 per cent, there was a ‘failure’ rate with budgets being vetoed at the final hurdle. In addition, just under one fifth said that they didn’t know enough to put together a business case. This suggests that 40 per cent had either had a business case rejected or lacked the expertise in putting one together.
The task of defining and implementing a new enhanced talent and performance management process, or replacing established paper-based activities with an IT solution, is a challenging prospect – especially if you are tacking this type of project for the first time.
Producing a credible business case for budget consideration, developing a detailed requirement specification for tender, and selecting the right solutions from the plethora of software suppliers is just the beginning.
If your project is to deliver business benefits, then the new process and the technology that underpins it has got to be used by the various stakeholders – a fact that is often overlooked and the cause of numerous HR project failures.
In our opinion, the real challenge therefore is change management, exactly how you are going to transition across to an improved process that will be accepted and used. Understanding these organisational issues should be the first step before the production of a traditional cost/benefit business case.
We recommend that organisations initially consider the following steps:
- Strategy Review: Develop the right eHR strategy for your business to make sure that individual proposals are consistent with a long-term vision to avoid wasted time, money and effort, for example, “is it consistent with our existing HR systems and processes?”
- Process Change Review: Benchmark existing processes and assess the impact and benefits of new initiatives for all stakeholders (HR, managers, staff and the organisation). Translate the process change output into a prioritised requirements specification.
- Change Management Review: Assess the change management impact in order to recommend a pragmatic implementation approach.
- Communications Strategy: Too many projects are seen as “just another HR scheme – what’s in it for me?” To really sell the benefits of the project to all users, a communications strategy will need to be developed to ensure that the project does not fall at the first hurdle.
- Solution Assessment: Assess the various solutions against the requirements specification, taking into account consistency with the needs identified in the change management review and existing investments in systems and processes.
It is only once this investigation work is concluded that a business case should be produced that naturally includes a cost/benefit analysis which clearly identifies hard and soft cost savings and states the expected return on investment (ROI).
A profound shift is occurring in the way that business software applications are purchased. In our research, we found that over two-thirds of HR practitioners still believe that they need to utilise traditional capital budget, which was seen as the biggest barrier to eHR implementation.
Organisations have rightly become dissatisfied that it can take months, and sometimes years, to deploy a new system to find that it yields less than optimal results. Today, there is the option of Software as a Service (SaaS).
The SaaS model is how most HR technology solutions are now delivered. For organisations it offers significant benefits including reductions in cost, risk and length of time it takes to recognise value from the investment.
This is achieved through accessing systems and services securely over the internet on a rental or annual subscription basis, reducing the previously prohibitive upfront capital expenditure.
A SaaS system can be integrated into your existing HR management system and can deliver all of the advantages and benefits listed below:
- Low cost of entry – removes the need for traditional capital expenditure process.
- Low cost of ownership (no obsolescent equipment to write off).
- Rapid implementation cycle (days and weeks, NOT months).
- Reduced dependency on internal IT resources.
- Guaranteed service levels 24:7.
- Rapid ROI (immediate bottom line impact).
- Full accountability of your chosen service provider.
Early concerns about the security of externally hosted data have long since been overcome. Today, many of the world’s largest private and public sector organisations are purchasing SaaS. It is also becoming an increasingly realistic option for SMEs that want to deliver first class HR services as they only pay for what they consume.
Through our research, we found that there is a growing realisation that managing your talent is a crucial factor in maintaining organisational capability and competitiveness. There was also an increasing understanding that talent and performance management requires the capture and analysis of a significant volume of data about workforce skills, ambitions and capabilities to meet the evolving needs of the business, so that appropriate resourcing and development decisions can be made.
HR measures and metrics are the way forward and organisations are putting increasing pressure on HR to deliver meaningful and sound data as a basis for business decisions. The organisations we interviewed who believed their talent management strategies were making a difference in the business had one thing in common: they had begun to implement technology-based solutions. This suggests that the application of HR technology is much more than automating systems – it is an intrinsic enabler of talent management processes, planning and measures.
For any business that is serious about performance and talent management, the business case for HR technology should be a ‘no-brainer’. Yes, it does rely on spending time researching the market, developing the specification, finding the right solution and detailing the ROI, and sometimes advice will need to be sought, but the long-term benefits to the business are apparent.
As Richard Ayres, HR director at Buckinghamshire County Council, says: “If an HR person says to me, ‘I don’t do technology or figures’ then I say you don’t do my job.”
Mark Barlow is managing director of Qikker Solutions.