Building the business case for new HR Tools

Many organisations pay lip service to the importance of people, culture, and employee engagement, but very few can say they’re making investments in these areas a priority. While new digital technologies allow organisations to transform the way they attract, retain, and develop people, HR departments continue to suffer from a lack of investment in these tools.

So, how do we go about building a business case for new HR tools? First, we need to look at the way we’re communicating the value. Some common mistakes include:

  • being too HR-centric in the need for new tools i.e. not framing the tools around the broader challenges of the business

  • overreliance on HR jargon that isn’t easily relatable to real business benefits across every department

  • a lack of buy-in from key business unit leaders who could influence the decision

To build the best possible business case, I would suggest taking the following steps in order to present decision-makers with information based on measurable business value:

Don’t leave it up to the IT team

Too often we see new technology projects being owned and run by the IT department, where they become the stewards of potential transformation initiatives. While it’s still important for your tech team to be on board with new technology, it’s vital that HR is taking the lead on the project. That’s because new HR tools should be seen as strategic transformations, as opposed to another technology upgrade that the organisation seemingly can’t afford.

Link the tools to business strategy

For your business case to have maximum effect, it needs to be clearly linked to your organisation’s broader competitive and operational strategy. What are the growth targets your organisation is aiming for, and what level of productivity is required from the workforce to achieve these targets? Once again, simply focusing on the benefits to the HR team is unlikely to secure the votes you need for approval.

Understand the broad expectations of HR across your business

This involves talking to key business unit leaders and decision-makers to understand how HR can help them achieve their strategic goals by improving productivity and eliminating skill gaps. By having these conversations before you prepare the business case, you’ll be creating the buy-in necessary to get the funding over the line. Take each stakeholder’s individual feedback on expectations, and link these expectations to the capabilities a new tool will deliver.

Provide real measures of expected value

This is about demonstrating how a new HR tool can contribute to strategic objectives, satisfy the needs of individual business units, and meet financial objectives. Some potential measures to include would be:

  • links to strategy enablement and stakeholder commitments

  • the ability to foster an innovative and collaborative workplace culture

  • lowered risk and improved compliance by closing skill gaps, and better tracking of workplace safety initiatives

  • quantifiable financial benefits that meet ROI targets such as net present value (NPV)

It’s important to work with the finance team, as they’ll have the inside knowledge you need of approval processes, and they can give you a steer on which criteria have the greatest influence on success. It’s also important to work with your tech team to understand the expected level of resources required to implement a new tool and the costs of replacing established tools.

Craft the story

Decision-makers will have little patience and time for a convoluted and rambling presentation or an unwieldy document with dozens of appendixes. Each point of the rationale for the new tool should be concise and backed up with analysis and proof from within your business. Once again, you should also avoid HR jargon and acronyms such as EC, LMS etc. Use commonly understood business language that transcends organisational functions.

Ultimately, HR departments are being seen as early adopters of next-generation cloud-based platforms for performing their roles. While making a business case for new technology might be outside of the expertise HR leaders normally possess, following the above steps will greatly increase the likelihood of these valuable new tools being approved.

This piece was written by Presence of IT's Pranav Birla and published on LinkedIn. Pranav is based in New Zealand.