Denis Barnard, an expert in HR & Payroll software selection, helps us narrow down which factors can help you win budget approval for your new HR system.
One of the perennial problems presenting to HR professionals is that of getting approval for new software. Whether you have a current system or are looking to secure your first one, there seem to be barriers to winning the necessary support and getting sign-off.
Why is this? Part of the problem has been that we in HR have failed to make a convincing case for the acquisition, so here I aim to set out the ways we can overcome this.
To start with, we need to understand the reasons for having the software. What pain is it going to solve? What administration is it going to save? What benefits is it going to deliver to the organisation, as a whole?
Another thing to consider is the project sponsor. Do they have enough political clout to carry the day if there is opposition encountered? Are they committed 100%?
It is also important to know if there are any legacy holdovers from previous failed or botched HR software programs; you will need to overcome the inevitable objections or reservations based on those events.
As Finance heads are the ones most likely to be scrutinising your business case, it needs to be predicated upon these factors:
1. Sourcing new software will save money; newer technology means reduced IT resource required
There are savings to be achieved by switching to modern Cloud HR software, as costs of acquisition and maintenance have come down significantly over the past few years.
If you are hosting your current software on servers based on your premises, then you need to calculate the costs of having those servers, the time spent by IT people who look after them, and any time that IT may use supporting HR in troubleshooting.
Having your software vendor host the application is initially more expensive than using your existing IT infrastructure, but you need to balance that against the on-going IT costs shown above, plus:
• Software security, system availability and disaster recovery is the responsibility of the vendor;
• Upgrades are performed at the vendor’s end, therefore eliminating the need for your IT staff to be involved.
• Troubleshooting is more easily handled by the vendor.
Using a system that’s hosted by your vendor in the Cloud frees up IT time for more core activities. They’ll just need to ensure that
• The internet “pipe” has the right speeds and bandwidth;
• Compatible browsers and versions of Word, Excel and so on are enabled;
• The vendor complies with your company’s security requirements: which could include hosting within the EEA, single sign on, password security, penetration testing, etc.
Even if you are making do with spreadsheets and manual processes, there’s likely to be an IT overhead associated with fixing formulas that don’t work, compiling data from multiple sources to provide management reporting, chasing up overdue forms or simply running essential reports for payroll.
Apart from the obvious savings, IT staff time is freed up for other projects and we need to calculate the value of that time.
2. The investment will bring about the suppression of errors
Most errors in data occur at the point of input, and in situations where the same data is input more than once. If the data is entered by people who cannot readily sense check what is being input, for example, temps taken on to help catch up with a data entry backlog, the risk escalates. Centralising the data in a single system avoids duplicated data entry and is part of the solution. As importantly, self-service gives more ownership of data to the individual who has more of an interest in getting it right, and automation stops things “falling down the cracks”, which is inevitable with manual diaries and other written records such as authorisations.
Try to work out how much current errors are costing in terms of time and administration.
3. Management will have access to better quality information to more easily comply with statutory information requests
The deployment of self-service will bring about better “real time” reporting, especially in Absence, Training & Development and Performance. Better information should bring about better decision-making; and faster, more-accurate reporting for statutory compliance such as diversity reporting. There is a value in this, and you will need to talk to management colleagues to get the basis for this calculation.
4. New software saves time – literally
Modern software is quicker to use, due to slicker navigation and fewer keystrokes and will shave time off transactional postings on older systems or Excel spreadsheets. Tests I have run have shown speed differences of up to 45 seconds per posting. Relate that back to the volume of transactions per month/per annum, even for a relatively simple process, like approving a holiday request, and you will arrive at a time-saving.
5. Inbuilt workflows and notifications help ensure processes run smoothly
Automatic triggers – which send reminder emails for a whole host of events such as upcoming appraisals, work permit expiration and starter or leaver processes – and workflows, which effectively move documents for approval around the system – have, together with self-service, led to a dramatic reduction in the amount of administration in HR departments. Do the calculation to arrive at a time figure that will be saved by so doing.
Over a period of some years, our HRmeansbusiness Ltd consultancy has looked at the effect of changes in HR (and in some cases, payroll) software on some of our clients, by observation and empirical evidence, and our findings are as follows:
The figures are considered by us to be conservative, and are based on an average organisation of 1000 employees, showing the time savings (expressed in FTE) achievable over a 5 year period by introducing the following features:
• Self-Service 5.00
• Work Flow 1.25
• Triggered (automated) actions 2.00
• Organisation Charts 1.25
(Derived from empirical studies by HRmeansbusiness Ltd. Copyright ©HRmeansbusiness Ltd 2017)
For smaller businesses, with fewer HR and IT resources to call on, the benefits of freeing up HR and management time, and providing immediate access to accurate information, is just as significant.
So, if you aren’t currently able to use the above, which are features of good quality modern HR software, you can see economies which should be within your grasp.
6. Other considerations
Depending on your business, there may be other HR-related activities that, if not managed appropriately, could either cost the business money or lead to sub-optimal performance. For example:
• not being able to demonstrate you are managing the right to work of overseas nationals in an appropriate way, or keeping appropriate health and safety and other compliance records;
• missing key dates for delivering mandatory training;
• allowing days off to go unrecorded, and unchecked;
• failing to ensure employees understand their performance objectives, or
• making sub-optimal use of training budgets by not having a clear picture of development needs, attendance or overall costs.
It’s important to take the time to identify what the risks are for your business, and how new software could help mitigate them.
Making the business case and getting it accepted is the cornerstone of your project, so it’s worth remembering these guidelines:
• It must be right the first time: fall at this fence, and you may not even get a second chance at it.
• Everything in the proposal must be aligned with the organisational aims: If you can’t demonstrate that it will help your business and its aims, it is an irrelevance (for them, if not for you).
• It must be in scope with the size and resources of the organisation: don’t pitch for an oversized or overpriced system; make sure it is scalable both ways and as future-proofed, as one can reasonably assess.
• Be specific in your requirements, and build the key assertions in your case on solid facts and figures. If you don’t have internal data, you may be able to benchmark against other organisations. But be grounded, don’t over promise.
• Focus on the aspects of your case that are compelling and can be defined as a business priority. Otherwise, your project can be cancelled or put on hold because of higher prioritisation of other issues requiring resources.
• Don’t forget the politics! Be very careful to get all onside, even those who would appear not to be directly affected but may have influence. This is where your project sponsor should be wheeled out to smooth the way for you.
When you have the system in and running, remember the promises you made about savings and efficiencies. Otherwise, all those good things in the business case will come back to haunt you.
I wish you every success with your project!
Denis Barnard is acknowledged to be a leading expert in the selection of HR & payroll systems, and other HRIS, both inside and outside the UK.
He has been instrumental in leading successful selection and implementation projects in a wide range of sectors, including local government, Higher Education, publishing, music industry and manufacturing.
His recently-published book “Selecting and implementing HR & payroll software” has been acclaimed by leading HR practitioners.