MAKING A SMART CHOICEGETTING THE MOST OUT OF HR SOFTWARE

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To receive organization-wide endorsement, and financial approval, for new investments in a strategic HR solution requires a thorough business case that pinpoints all costs, potential benefits, and even project risks.

First, do you need to invest in HR software?HR leaders and CIOs ask themselves this question over & again when justifying a business case. It is true that leading companies across the world have begun automating their people processes, and integrating it with their ERP systems, to derive business advantage. However the case for investing in

HR software in your company depends on certain key parameters:• Do you consume over 20% of your total operating costs on your people?

• Does hiring and retaining talent feature regularly in your strategic meetings?

• Are you looking for way to better align individual performance to business goals?

• Are you creating a new performance culture within your company?

• Are you looking at cutting costs of delivering HR services and processes?

• Do you wish to forecast and plan people programmes to deliver measurable outcomes?

If your answer is yes to most of these questions, an investment in HR software is probably well justified and an important part of your HR strategy. This is because HR software will help enable your plans efficiently and consistently, and will function as the foundation of a number of initiatives that can have measurable results

As a first step, define your company's goal for investing in new HR software:Is it to reduce the administrative cost of HR functions, such as simplifying the manual labour required to manage a benefits programme? Or perhaps the goal is to increase employee productivity, by reducing the time it takes a manager to open a job requisition, enable a new hire, or the time it takes for an employee to change their benefits selections or calculate their current incentive pay performance

Next, be sure that all stakeholders are committed to the project.The realisation of HRMS benefits depends on IT departments implementing the appropriate infrastructure; human resources communicating the goals of the programs and re-engineering their processes to improve productivity; and in many instances, employees and managers changing the way they conduct their portion of HR administration. The IT department may deploy the perfect HR infrastructure, but if HR workers, or employees and managers fail to adopt, the benefits are not likely to come

Lastly, create the cost-justification business case -- a time-honoured financial analysis to assure that an investment will meet certain payback criteria for the organisation, and to compare various investment options to clearly delineate the optimal selection of the highest reward and lowest risk solutions. Traditional business cases compare the quantifiable costs and benefits of the proposed solution over a set time frame, typically three to five years.

A credible, realistic business case arms the IT and HR teams with the quantification needed to win over skeptics -- most often a CFO or even a board of directors. It also helps the core team move beyond their emotional connection to the solution and make the case pragmatically, enabling others to perceive the wisdom in the investment, and make a rational decision

Here are some guidelines to consider: Project CostsMeasure the one-time and on-going investments required in the solution. Often called total cost of ownership (TCO), all of the related costs to the organisation need to be estimated over the life of the investment. Initial IT costs include the investment in licensing the HR software, purchase of servers, possible computer upgrades, implementation labour, development and customisation, professional services for data migration and IT training. The software licensing costs are typically less than 10% of the TCO

A hidden cost is the ongoing IT management and maintenance of the solution. This includes the IT resources to manage the software and server systems upgrades, help desk support to answer "howto" questions -- particularly on new self-service applications, and on-going customisation and development. Expect these costs to represent 15-25% of the original software investment. Often overlooked or underestimated is the business unit investment required. This includes coordination and planning meeting participation, user training labour and course fees and business change management or re-engineering labour. These business unit costs for HR software solutions are often equal to or greater than the initial IT investment.

Tangible BenefitsThese are the savings or business impacts that can be quantified into monetary terms, and are harder to determine than the costs. The difference between the current organisation on an 'as-is' basis and the 'to-be' impact on people, processes and business, is the value of the solution.

Some sample tangible benefit areas include:

• HR Productivity Improvements

• Employee/Manager Productivity Improvements

• Improve employee retention

• Strategic business impact

• Lower employee turnover costs

• Reduced training and administration costs

• Reduced total employee costs

• Overheads/Outsourced fee avoidance

• Compliance and error reduction

Intangible BenefitsThough harder to quantify, some CEOs and executives view intangible benefits as the most important criteria, and almost half look at both intangible and tangible benefits before authorising investment in an HR solution.

• Brand advantage

• Strategic advantage

• Competitive advantage

• Intellectual capital

• Organisational advantage

Project Risk20% of all IT projects are cancelled before deployment; over 40% fail to meet budget, schedule and requirement goals. Risk adjusted analysis is a critical element of the business case, especially with our low tolerance for failure in today's business environment.

Factoring in project risks helps create a more realistic business case where expected benefits of a solution are measured on the level of risk, factoring in the lack of clarity in meeting cost goals or obtaining benefits.

Risk can be measured based on the probability of occurrence, and the likely impact on the costs and benefits, in some instances, discounting the value of the project significantly.

The risk measurement for HR software projects typically include items such as:

• Labour resource availability

• Slow or low user acceptance/adoption

• Compatibility with existing or future systems

• Vendor reliability

• Management commitment and funding

• Schedule overruns or delays

• Legal exposure or regulation non-compliance

• Organisational risks

• Dependencies on other projects

A Sample Business Case

To help set expectations, a few sample business benefits are listed. A proven HR software should provide payback between 12 to 24 months, with a 3-year ROI of 150% when deployed to suit specific

business needs.

• Employee productivity up by 3 to 5%

• Employee retention up by 25 to 35%

• Training costs down by 15%

• Total employee costs down by 20%

• Reduce HR administrative labour by 90%

• Decrease cycle time and cost on employee processes by 90%, almost eliminating cost of auditing & fixing errors

• Reduce HR service desk calls by 90%, call times by 40% saving communication costs by 50%

Human Capital Align ent Software

Connect

Motivate

Synchronise

Win

Copyright information: While every attempt has been made to ensure that the information in this document is accurate and complete, some typographical errors or technical inaccuracies may exist. Adrenalin does not accept responsibility for any kind of loss resulting from the use of information contained in this document.

This page shows the publication date. The information contained in this document is subject to change without notice. Any improvements or changes to either the product or the document will be documented in subsequent editions. This text contains proprietary information, which is protected by copyright. All rights are reserved. No part of this document may be photocopied, reproduced, stored in a retrieval system, transmitted in any form or by any means, or translated into another language without the prior written consent of Adrenalin eSystems Ltd. Copyright © 2012 Adrenalin eSystems Limited.

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Adrenalin is a web-based Human Capital Alignment Software that automates processes design to boost productivity. It maximises profits by effecting rapid savings- by optimising Human Capital Alignment with intelligent working systems. It delivers next-generation enterprise applications for Human Resources, Payroll, Employee and Manager Self-Service, Workflow Automation and more. Simple and fast, Adrenalin is available in stand-alone modules and as a complete Human Capital Alignment suite. Adrenalin is brought to you by Adrenalin eSystems Limited, a Polaris Group Company. Polaris Software Lab Limited is the world's first SEI CMMi Level 5 Company and is featured in the Forbes list of best companies under US $1 bn.

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