How to build a business case for an HR system: five steps to success
4 minute read
Build a business case for an HR system by following our tips for success, including defining your needs, and quantifying the benefits of a new HR system
The decision to invest in a first, or replacement, HR system is one that can pay off in many ways for HR teams, senior leadership, and employees: the many benefits of investing in HR software include more effective management of people data, improved efficiency, and valuable time saved on admin time. But the first step in any HR system selection project is to build a solid business case for investment. Here are Ciphr’s top five steps to building a business case for an HR system.
How to build a business case for an HR system
- Define your organisation’s requirements
- Identify the benefits of investing in new HR software
- Research the market
- Get stakeholder buy-in
- Create a detailed project plan
1. Define your organisation’s requirements
Every organisation has different needs and, as a result, different reasons to invest in HR systems. Helen Armstrong, founder of SilverCloud HR, says that, when building a business case for HR systems, you should gather and document the reasons why your organisation needs the system.
“You want to start by asking yourself: what’s the current situation with systems and processes? Why are you looking to change them. A starting point might be that your current HR software is old and not cloud-based.”
Similarly, Armstrong adds that there might be a need for your HR team to avoid data duplication – “you shouldn’t be rekeying data into systems more than once because one, it is inefficient, and two, there’s a data security risk involved with having multiple people handle data.” If that’s the case, needing a replacement solution that integrates with, for example, payroll software or a learning management system, will be a central part of your business case for an HR system.
HR teams all have their own reasons for needing an HR system but by clearly defining your business needs, you can show others in the organisation that an HR system can make a big difference in helping achieve goals (both strategic and performance-wise).
2. Identify the benefits of investing in new HR software
From improving the employee experience to helping you save costs and improve your regulatory compliance, investing in an HR system can benefit your organisation in a variety of ways.
When building a business case for an HR system, you should make sure you describe exactly how a HR system can benefit not only your team but others in the organisation as well. Stakeholders at all levels – end users, managers, senior leaders, and even volunteers and alumni – can all benefit from new, easy to use, HR software.
Using data to show how HR systems can benefit your organisation can also be helpful, says Armstrong. “It’s always hard to measure something but if automation is one of your key priorities, you should have data that shows what your costs are with current HR processes.”
3. Research the market
In order to make a well-balanced decision about which HR system you want to go for, you need to research the market. Only by comparing the cost, reviews, and compatibility of the HR systems that are out there can find the best fit for your organisation, and therefore build a strong business case for an HR system.
“You might want to research the market before you put your business case in, or you might need to get the business case signed off before looking at the market. Either way, you need to start doing some research so you have an idea about HR systems and what’s on offer,” says Armstrong.
“Ask yourself what your guiding principles and priorities are, and why you are doing this. Speak to the HR system providers and get as much information from them as possible. There are so many HR systems out there and it’s hard to see the unique selling point of those systems so if you’re able to share your objectives with the HR software vendor, they can tailor demos for you.”
Seeking references from a vendors’ existing customers can also help you understand if the HR software will be the right fit for your organisation, especially if you are able to contact clients who operate in your sector.
4. Get stakeholder buy-in
A successful business case involves getting buy-in from key stakeholders. Without their buy-in, you’re unlikely to get very far.
Armstrong says: “It’s important that you quickly get in front of the CEO, the CFO, the relevant IT person, someone in finance and someone in payroll. Once you start bringing people in and engaging them in your business process to choose a new system, they’ll feel a lot more aligned with you and the business needs.”
She also adds that it’s easier to get your business case for an HR system signed off when you’re holistic about the whole process and are able to communicate the wider business priorities to stakeholders.
When trying to get stakeholder buy-in from the CFO in particular – who is likely to be concerned about the cost – Armstrong says,“do your research upfront so that what you’re going and asking for budget-wise is accurate. It’s not a good start to the project if you’re already under-quoting what you need.”
5. Create a detailed plan
Finally, you should make sure that you create a detailed plan which covers all of the resources you’ll need in order to implement the HR system, the schedule for implementation, roll-out and product training, the cost, and the predicted return on investment (ROI).
This plan can help you cover all of the key elements involved in choosing and implementing an HR system and can ensure that your business case for the HR system covers all relevant areas.
Whether you need assistance building your business case for an HR system, or have already created your business case and are now ready to review the HR software market, Ciphr is here to help. We’d be happy to help you benchmark your existing solution, or give you a tour of our integrated HR, recruitment, learning and payroll systems. Get in touch to request your personalised demonstration.
This article was first published in December 2020. It was updated in November 2022 for freshness, clarity, and accuracy.