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Building a Winning Business Case for HCM Cloud

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This is a syndicated post, view the original post here

Written By: Matt Richards, Managing Director, KPMG LLC

If you’re like many HR executives, you might be facing a skeptical CFO who’s insisting on looking at a business case before approving your big idea. The CFO’s hard line is understandable. Business cases – complete with financial analyses and justifications – are typically how CFOs consume information.

What’s more, there’s probably a ton of competing projects on the CFO’s plate. “Why would I spend $10 million on HR,” your CFO says, “when I could build a factory, launch five more retail stores, or hire 50 new doctors?”

That’s a basic question that a lot of HR execs don’t have an answer to. Some haven’t even tried to think of one. Many just expect leaders to see the business value of HCM cloud. But CFOs have a long memory. They remember the last time IT asked for money – and then overspent the budget threefold. Many also remember the mega-ERP projects of the last decade whose proposed $100 million budgets ballooned to a billion.

All good business cases should have a plan, timeline, and budget that are realistic and defendable. You should also tie the plan to your company’s overall business strategy. For example, we’ve been working with a major home improvement retailer that wanted to attract and retain a new tech-literate workforce, a task the old HR platform wasn’t equipped to do. The company also wanted to acquire new businesses and divest old ones, putting more pressure on the old system. HR built its business case around enabling both of those business priorities – and it worked.

Structuring Your HCM Cloud Business Case

The truth is, many HR execs have never actually created a full-fledged business case. One of our clients, for example, presented a “business case” that consisted of a single spreadsheet. That’s not enough. Remember you’re not just asking for money. You’re asking leadership to embrace a vision for the future. Here’s what a good business case should consist of:

  • Executive summary. The legendary business leader Jack Welch used to say that every good business idea can be described on one page. I always tell people if you can’t explain your case during an elevator ride – or with a one-page summary – then you need to rethink it. I’ve found the best executive summaries are about five bullets and very straightforward.

  • Case for change. This section is where you explain why your company should invest in HCM instead of building a factory or launching new stores. It’s where you lay out your vision and explain how it aligns with the business’s overall goals. And crucially, why you need to do the project now. The case for change is most effective if it’s vetted or even co-written by a line-of-business executive who will directly benefit from the investment.

  • Financial Analysis. HR execs can be easily stymied because they’re usually not numbers people. I suggest finding a friend in finance to help gather your costs and benefits, but don’t go overboard. If you spend more than a week, you’re going too deep.

  • Strategy and execution plan. This part of your business case should have two parts. First is the deployment schedule; second is the mitigation strategy – that is, how you’ll ensure on-time and on-budget performance. Note that your plan does not necessarily need to describe the specific brand of technology or vendor you want.

Think Bigger About Cost Savings

When you’re putting together the numbers, don’t sell yourself short. A lot of our clients add up their IT cost savings and stop there. But there are a ton of other business and productivity benefits you’ll want to capture to strengthen your case. I urge my customers to quantify everything they’ll be able to do faster, cheaper, or more efficiently.

Consider overtime, for example. Even cutting it by just a few percentage points can drive huge savings, and the new breed of cloud apps has the ability to do just that. And don't forget cost avoidance. Our defense-industry customer, for example, was running the risk of fines and legal action because its old technology couldn’t keep up with new tax laws. Its new HCM cloud solution gives them the ability to avoid these penalties.

One of our clients – a major fashion apparel retailer – reaped huge benefits from its new Oracle HCM Cloud platform, and the vast majority came from business – not IT – savings. The company was struggling to hire and onboard the tens of thousands of people it needs to handle the annual holiday-season sales surge, and then off board most of them a few months later. The business case focused on turning that into a fast, seamless process with “automated onboarding” using cloud and mobile HCM technologies.

The results would impress the most skeptical CFO (or CEO): a 65% drop in call-center traffic; a rise in employee-friendly mobile-phone onboarding from 5% to 70%, and a massive increase in data quality thanks to error-prevention features built into the app, which greatly reduced paycheck issues. Those are all solid business reasons for funding an HCM cloud project, and they have little to do with IT savings.

Frequently I need to make a strong case to clients to move beyond IT costs – and other costs for that matter. I tell them, don’t minimize the numbers, but don’t focus just on that. Business alignment and value usually matter more. Pitch the project on the numbers-- but close the deal on value.

Could a compelling business case get your cloud HCM initiative over the goal line? Have you already successfully upgraded to the cloud? If so, share your best practices with us in the comments below. 

At Modern Business Experience from March 19−21 in Las Vegas, hear how your peers are building skilled, impassioned, and productive workforces, delivering superior employee experience, and driving digital transformation within their organizations. Learn more and register.

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