Building Your Strategic Business Case for HR Technology
This Lunch Break, Kristie walked through the essential components of building a strategic business case for HR technology. [watch the recording]
First of all – I’m sure you have a pretty good idea of what a business case is used for – to evaluate the pros and cons of your business solution. It’s your basic S.W.O.T. analysis – reviewing strengths, weaknesses, opportunities and threats. But there are cultural considerations that you should consider before you begin development of your business case because they will influence how you approach it and it’s important to remember that your business case is also a “sales document.” Let’s get into the business case.
Components of a Business Case
A business case is generally composed of the areas listed below and can take 3-4 months to prepare.
- Executive Summary
- Analysis of Current State (developing the Needs Assessment)
- Analysis of Future State
- Cost/Benefit Analysis
The length of time required to complete it depends on the resources you have available and the decision making culture of your organization. Conducting a Needs Assessment and Feasibility Study will help you explain areas 2-4 in your business case. We’ll cover the components of both further down.
Why Develop a Business Case
Chances are, one of the reasons listed below is the drive for developing a business case. Instituting change within an organization doesn’t happen lightly, and when you don’t take all options and avenues into consideration, the outcome could be costly. Why are you developing a business case?
- The decision making culture
- The sensitivity of this project
- The resources available to conduct the research
- The credibility of research conducted by internal parties
- Methodologies that improve objectivity and credibility of the research.
Whatever your reason – this is the best place to begin – uncovering the “why” of your business case. It helps to uncover the compelling reason why this change is necessary – or not necessary.
What you Need to Know about Your Needs Assessment
There are several key items that need addressing in your Needs Assessment.
- Leverage – What opportunities for improvement already exist?
- Risks – What are the risks associated with the current state?
- Stakeholder Relationships – Who are the stakeholders? How will they be impacted? How will current operations change?
- Business Climate – Is the business able to support the change – financially, structurally, manpower?
Now this is all fine and good – but how do you uncover this information?
- Process Flows
There are many ways to approach finding out about the current state and each method has its advantages and disadvantages. Our approach often begins by reviewing all available documentation to get a sense of the business processes and develop a preliminary understanding. Then workshops are conducted to bring stakeholders together to discuss the workflow and fully document the practice. Finally there may be a need for one on one interviews to dig deeper into a specific process especially if it is somewhat isolated or if there is a key stakeholder that is highly influential.
The workshops usually yield two immediate results…
- Low hanging fruit – opportunities to immediately improve operational workflows because you have everyone in a room discussing what works well and what doesn’t. We always find something that can be eliminated or a change in practice that few people were aware of.
- Through the workshops, process flows can be diagrammed. This provides a clearer sense of the impact on various stakeholders and how the technology supports (or doesn’t support) a smooth process. It also helps reveal cumbersome workflows or workflows that are impacting areas that are not represented as stakeholders. This provides an important opportunity to bring those stakeholders into the discussion to ensure their buy in and comfort with the process as documented.
Mind the Gap
Now that you know the current state of your business – it’s time to analyze the gap between the current state and your desired future state. Your future state will answer such questions as:
- How will the future state…
- –reduce expense and/or increase profit?
- –improve business operations?
- –provide stronger decision support?
- –ensure synergy between systems and processes?
- –improve response time to changing business conditions?
–mitigate the current risks?
–improve stakeholder relationships?
–support the organization’s strategic initiatives?
Is this even feasible?
You have a picture of the current and future state – so is what you are proposing even feasible? It’s important to consider the financial implications (short and long term) of this new change – or of doing nothing through your Cost/Benefit Analysis. In your CBA you should include three options: 1 – the cost of doing nothing and maintaining the current state, 2 – pricing for more than one solution, and 3 – pricing for a phased approach.
There are lots of ways to approach technology and each design – or configuration – has its pros and cons and its own costing structure. When you get information from a software sales team, expect that they are probably minimizing the costs. There are a lot of ancillary costs that are not directly related with the software but are necessary in order to implement the software that may not come up in the conversation. Here are some examples of these options:
- Software as a Service (SaaS)
- Built Internally
Obviously, the decision of which way you will go will depend on a lot of thing. But most importantly, consider all possible costs now and down the line for the most accurate picture.
At the end of the day, the Business Case is a decision support tool that discovers business requirements, identifies options for purchase, drafts a budget for implementation and justifies the need. So, this is your place to start.
Need help preparing a business case? Send us a message!
Our next HRL Lunch Break is Thursday, March 15th, 2012 – same time – 1:15 – 1:45 ET and our topic is “Ensure Greater Success of Your HCM Initiatives by Applying Business Analytics and Risk Management” .
To check out and register for upcoming events, check out our Calendar