Building business cases for new HCM technology requires a broader, cross-functional approach, and there are 4 critical elements to focus on in this process, writes Rowan Tonkin
There have been major leaps in HCM technology development in recent years, which require a different approach on the part of HR when it comes to building the business case for new cloud HR solutions.
Previously, businesses used capital/CAPEX to purchase software and then managed these systems in-house. However, cloud solutions reverse this model to being OPEX and the software is essentially leased on a per-employee per annum fee basis. Capex was traditionally owned by the CFO or CIO, but the HR OPEX budget is owned by the CHRO. So the responsibility for building a compelling business case in many instances has moved from the IT team to the HR team. This means that ownership of HCM technology doesn’t go away, but stays with HR – who needs to design, build, run and service all cloud HR solutions.
Bringing in different skillsets
Furthermore, building business cases for new HCM technology is not in the traditional capability skillset of HR, and requires a broader cross-functional perspective in order to be successful.
In my previous in-house HR roles, I have taken resources permanently out of IT and brought them into HR, because I wanted that technology capability skillset in HR. If I needed a project manager to set up a PMO like those run in IT, I would bring that resource over to establish this in the HR function to facilitate HR projects, for example. Because the responsibility for cloud HCM solutions sits with HR, you can bring in these IT resources because HR is now accountable to the executive, the CEO and the board for that activity within the business.
It is also important to utilise the skills and perspectives of other functions in the business in building the case for new HCM technology. Historically, HR has built and presented business cases from a purely functional perspective, rather than an organisational perspective – which starts with an understanding of what the business needs to achieve.
“Ownership of HCM technology doesn’t go away, but stays with HR – who needs to design, build, run and service all cloud HR solutions”
If you have a stakeholder set that covers the entire business, this is critical to the decision maker(s) who will decide on whether your business case gets executive approval. It’s not about building an HR proposal, but rather it’s about building a holistic business case which is positioned as a genuine benefit to the broader business. Then you are talking their language, because you are engaging with them on the things that matter to them about business success.
4 critical elements in building the business case
Too often, HR business cases are challenged or are not successfully approved by executive teams and there are some critical aspects that can improve the chances of your HCM technology business case getting approved.
1. Focus on business value.
Too often the HR business case is only a financial description of tangible cost to the business. Presenting your case in this light can significantly reduce potential for success. A business case is the opportunity to qualify (and quantify) the business value (Benefit – Cost = Value) of the proposed HCM solution.
Some benefit assumptions could be:
- This technology enables the organisation’s HR/HCM strategies (and the benefits/ROI already identified) to align with the executive team and business planning process
- Cloud HCM supports the development of the organisation’s digital culture transformation
- Cloud HCM provides a compelling employee experience and work interface that builds engagement, productivity and retention
- Aligning the employee experience with the customer experience digitally
- Cloud enablement of HR, finance, marketing/CRM, supply chain, project management etc – all to work together on the same application. Often HR only looks at the functional solution and misses the opportunity to collaborate with other corporate functions and develop a collaborative proposal (especially with finance), which provides an even more compelling business case (and engages the CFO and other executives).
- Releasing manager, employee and HR capacity to focus on strategic business activity rather than administration
- Establishing and reinforcing your employment brand externally and internally and positioning your business as a digital leader
- Appealing to and attracting a technology-driven workforce (i.e. millennials)
“Too often the HR business case is only a financial description of tangible cost to the business”
- Robust HR data to base HR analytics and workforce modelling to enable better forecasting, people cost management and organisational capability modelling to avoid future talent shortages
- Cloud introduces modern HR processes (internal talent management, volunteering, succession planning, workforce modelling, social learning etc.) which are new HR services that generate new returns for the business
2. Focus on technology benefits
- Data and HR technology security. Having your data and application well protected by world-leading providers with local data centres and few (if any) third party providers are all security considerations
- Rapid availability of new technology and application development with quarterly updates
- Transparency over total cost of ownership. What is the total cost of managing your current HR applications?
- Opportunity to consolidate or cease legacy technology systems, reducing licencing and maintenance costs and risk
3. Cost and efficiency
- Cloud HCM provides cost reduction opportunities (technology, HR, reduced manual processes, increase speed and reduced duplication of administration). It has been well demonstrated that cloud services can demonstrate superior ROI, and a recent report from Nucleus Research, a global provider of investigative, case-based, technology research, found that cloud application projects deliver 3.2 times the ROI of on-premise ones.
4. Project cost
- Rather than leading with project costs, the recommendation is to build a ‘benefits-based HCM case’ first, so that the executive understands the positive benefits to the business, customers and people – positioning the proposal on value (and not just cost).
Once the benefits (tangible and intangible) are recognised it is still important to present a well-defined statement of project cost (application/licencing, implementation and internal change management costs)
“The road to cloud HR adoption is more agile and more iterative, in which you implement, evaluate and move on”
Where to start?
HR professionals are sometimes stuck or procrastinate in this process, because they don’t know how or where to start. The best thing to do is just start. With cloud HCM technology, the process is different to that of the past in which HR built up momentum to get a proposal for many millions of dollars to spend all at once on a new HR system.
However, with cloud HCM technology – the process is simpler in that it can be adopted and rolled out in stages (based on modules). So make a start now, do some pilots, get a business case together and build out a roadmap which paves the way for full adoption. The road to cloud HR adoption is more agile and more iterative, in which you implement, evaluate and move on.
It might take three years to get there, so don’t think that you have to get everything designed and perfect before you undertake this project. This way, you also reap the benefits to the business two or three years earlier, rather than waiting for funding for a full implementation. A staged rollout is a better approach, and this is what modern cloud HCM solutions allow for.
If you need help with building the business case for an HCM cloud solution, please email Rowan Tonkin or for more information on Oracle cloud HCM solutions, visit their Human Capital Management Quick Tours.