A recent Personnel Today webinar poll found that the key hurdles to investing in HR software were getting budget sign-off and building a business case. This step-by-step approach will help break the process down into manageable chunks.
Why are you investing or upgrading?
Is it because your existing contract is coming to an end or is due for renewal? If so, it’s a good time to consider a new supplier, according to Denis Barnard, a software consultant. “Look at what’s available, don’t just sign up with what’s being offered, it’s a great time to get your head out of the sand and have a look,” he advises.
Listen to our software buying webinar
Organisations can be anywhere on the spectrum between looking to get something more sophisticated than an Excel spreadsheet, or perhaps you invested in a large-scale system some years ago and it’s out of scale with your current needs.
Meet potential suppliers
Attending shows such as the CIPD Software Show or HR Tech can help you to get a feel for the types of systems available and who the key suppliers are.
If you book a demonstration, ask the salespeople to show how a system might deal with a query or issue typical to your organisation, rather than accepting their standard demo.
Further on in the purchasing process, consider bringing key users to demonstrations or asking for a ‘hands-on’ trial so you can flag up any issues that end-users might experience.
Map out your processes
On the ‘macro’ level, take into consideration the software modules you’d like in your system (such as time and attendance, payroll, performance management, learning).
Then drill down into the processes you’d like to automate or improve: for example, what are the steps required to manage the workflow for and sign off an appraisal? Or what must a manager do to get a new hire approved? As you’re doing this, make a note of the time and cost involved in handling these processes currently, as these can be used as evidence of projected savings.
Will you rent or buy?
One option is to access the software via the cloud, meaning your supplier will host and maintain all the necessary hardware and handle upgrades or changes to the software as and when they happen.
This can mean significant savings in terms of not having to employ IT resource to manage systems, but does mean there needs to be a sharp focus on the relationship with your provider. Scrutinise contracts and interrogate potential suppliers on issues such as exit clauses, how they will migrate employee data, how much it costs per user.
Get a range of quotes
Whether you’re a public sector organisation or not, using a tendering approach to buying software can help you get a grasp of the pros and cons of each supplier, and means you can look at them across a level playing field.
Ask for quotations from each vendor based on the same parameters, such as what is the annual cost to run the system? How much will it cost to train staff? How will the charges be applied? You could use a scoring system for each to help make the final decision.
Work out costs and potential savings
When looking at cost, compare current costs with projected costs and quantify them. Have current systems been producing errors, for example, and how much does it cost someone to (manually) rectify them?
Or perhaps automating a business process negates the need for a full-time staff member to carry out this process, in which case you can use a FTE (full-time equivalent) salary cost as a projected saving.
Build the business case
Making the case for a major investment in technology means coming up with a detailed narrative around how it will benefit not just your department, but the business as a whole.
Describe the benefits, making sure you highlight the savings or return on investment you’ve calculated while mapping out processes. Don’t use too much jargon, and focus on business benefits that the board will understand. If you can, include return on investment (ROI) statistics from independent sources, rather than just technology suppliers.
Similarly, don’t make claims about results based on assumptions. Saying ‘if we invest in absence management, absence will reduce by 50%’ is meaningless unless you show how policies and behaviours will change with the support of the new system.
It’s not all about the cost
Don’t forget that not all benefits from HR software have a pound sign attached – soft benefits, such as improved morale and corporate reputation, should also be included in your business case.
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A key element of your business case is outlining the practical steps and timeline. You should also outline who is responsible for each step in the project, as well as who might need to be trained or redeployed.
