Playing the financial game

It’s all very well playing the strategic card to justify your IT investment,
but practical gains are more likely to win over the bean counters. By Keith
Rogers

What makes a finance manager invest in HR technology? The question has
always been pretty critical for the HR function, given that many finance
directors are directly involved in influencing IT purchasing, and almost all of
them feature prominently in that interminable process of approving major
expenditure.

Part of the problem for the HR department is that the finance department’s
perspective on HR IT expenditure doesn’t necessarily match its own. In HR, the
challenges of managing processes and administrative requirements and meeting
regulatory needs are all very real and immediate. While the more strategic
goals of human capital management (HCM) are high on the agenda – particularly
in areas such as managing and measuring performance and increasing retention of
key employees – the practical realities of people management are never out of
sight.

There has long been a belief that if you could ease yourself out of these
more mundane activities – particularly through process automation and selected
deployment of self-service functionality – you’d have more time to focus on the
strategic necessities of HCM, especially if you can combine that investment
with better analytical capability.

Unfortunately, there seem to be a couple of tricky issues with this
argument. First, to justify investing in automation, it helps to be able to
demonstrate the cost-savings and efficiency gains it brings, which in turn
means you really could do with knowing how much your processes are costing
today to compare them with the price tomorrow. Very few companies, however,
have a comprehensive understanding of those costs. In itself, this isn’t an
insoluble problem, since most business cases for automation can be constructed
on very practical, specific bases.

Perhaps more important is that many finance managers don’t actually appear
to buy into the strategy part of the argument in the first place.

Webster Buchanan Research regularly assesses finance managers’ attitudes to
HR IT spending, and in a survey published in March in response to the
DTI-backed Accounting for People initiative, we asked for their top and bottom
investment priorities.

Top of the list was improving the quality of management information, while
freeing up HR to focus on strategic input came at the bottom, with less than
half the respondents ranking it as important.

This finding reflects a complex mix of attitudes to IT and perceptions of
HR’s capability, but it does suggest one important point. While HR
professionals understand the link between automation, process improvement and
business strategy, it’s not always so visible from outside.

So whatever long-term drivers for investment occupy HR minds, the formal
justification for investment may have to be more practical. After all, if
finance is controlling the deal, it makes sense to play by finance’s rules.

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