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Developing a business case for an HCM system implementation

Building a business case is often the first step for implementing new HR technology. Keep things simple, but give stakeholders a complete picture of the costs and benefits.

Developing a business case is often a prerequisite for implementing a human capital management system or a new...

module. A good business case not only helps sell your idea, but also enables you to focus on the critical components of the project. The business case, for example, could merely be seeking approval of resources to investigate products, all the way up to implementing a new HCM system altogether. Depending on the situation, the level or detail will be different, but the overarching goal remains the same: to get your project approved.

Therefore, to get the green light for your project, you must be sure to include the following in any business case for an HCM system.

The following steps will not only help you build a strong business case for HCM software, but also ensure that you are well prepared to validate the return on investment.

Use the preferred template. If your organization has a template for developing a business case, use it. This will make it easier for decision-makers to ascertain your request and make sure you covered all the critical questions they care about. If there isn't a specific template for a business case, look for something internal you can use as a starting point or find a good template online. You want your submission to look professional, and using corporate templates often lends that level of professionalism.

Keep it simple. When developing a business case, provide the level of detail required to explain your request, including why it's a good investment for the company. Remember, too much detail could potentially overwhelm or confuse decision-makers reviewing your case. If they have questions, then you can provide the details. On the other hand, too few details will prompt additional questions and may lead to delays in the approval process. In either case, make sure you fully understand the details so you can respond to questions accurately.

Provide an overview and background. Be clear about what you seek from your proposal, why it's important to the company and the issues the new system will resolve. You don't want your readers wondering what to invest in after going halfway through your proposal. Also, take into consideration various stakeholders and the information each may want to see in the proposal.

Show how this initiative supports organizational goals. Most organizations set goals at the beginning of the year that underline what is important to the executives. Showing how your HR system will support the goals will help decision-makers see the connection between your project and what is important to them.

Include the numbers. Business people want to see the cost and benefits in real numbers before they approve a project. Depending on the request being made, your level of detail may differ, but either way you should be able to provide good guidance. When providing numbers, be sure you understand how they were derived and avoid being overly optimistic. Inflating savings or underrepresenting costs may get the project approved, but may lead to other challenges in the future. There are three areas to focus on:

  1. Cost of the new HCM system. While you may not have evaluated all the options in the market, you should do enough homework to provide an estimate of the implementation cost, annual recurring fees, training costs and any other fee that may be incurred. This might include the cost to have consultants help with the implementation or interfaces to be built to other systems.
  2. Savings. It's also important to estimate the savings that will be achieved through this project. If, for example, the new HCM system will eliminate duplicate entries, reduce errors or replace an existing system, show how much money will be saved. Also, you may be replacing an existing system that has annual fees or requires significant hours to maintain that might provide additional savings.
  3. Nonfinancial benefits. There will also be additional benefits that are hard to estimate in dollar amounts, such as an improved user interface. If possible, try and put a dollar figure on these items as well, and be sure to highlight that they are estimates. In addition, if you've received feedback from employees on this issue, include it as a note to back up your claim that the project is important to all employees.

Sell the benefits for all stakeholders. As much as a new HCM system will help HR, it's very important that you show how the investment will benefit everyone in the company. This expanded scope takes the focus off HR and highlights it as a business tool that will help employees in multiple departments throughout the company. Some examples include management's ability to identify and engage top performers; provide all employees 24/7 access to the system; provide one source of employee data; eliminate the need to rekey data; and automate notifications, such as notifying IT and finance about new hires and terminations.

Highlight key issues of staying with status quo. When developing a business case, point out issues with the current system, especially as it relates to risk management, cybersecurity and company reputation. For example, if employees routinely send email containing employee data, there is a chance an email will be sent to the wrong person, thereby risking company data. Additionally, if the security model of the current system is weak, there's a possibility of more people having access to confidential data and, therefore, increased risk.

In addition to data breaches and potential lawsuits, there is also the time it may require to maintain employee data and develop dashboards or usability issues that frustrate users.

Discuss the HR system with reference clients. Depending on the purpose of your business case, it may be appropriate to contact existing customers who use your preferred HR system. They will be able to provide you with lessons learned or tips about the implementation process, and, more importantly, it establishes that you've done your due diligence.

Other options considered. You should show the other options that were considered, especially the obvious and low-cost options. This might include maintaining the current system, doing an upgrade rather than implementing a new system, using spreadsheets or remaining with manual processes. This is the opportunity to remind your audience of the cost, security issues and lost benefits of not moving forward with the project.

Clearly state the recommendation. In the overview section at the beginning of the document, state the recommendation. This will help readers follow your justification for the project as they read the remainder of the business case. Also, in the conclusion, restate your recommendation and the key points to justify the project.

Next steps. Assuming your business case will be approved, make sure you explain what the next steps in the process will be and give an approximate date for when you will follow up with the committee. If this is a request for a new system, you can show an advanced project plan and schedule and find out what updates they would like to receive about the project.

A business case is an important tool when requesting a new HR system. It helps you convey what the project entails, why it's important to the company, and the costs and savings gained as a result of the project. It also helps decision-makers weigh your project against others so that they can make an informed decision.

This was last published in December 2017

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