Making the Business Case For HR Software: A 10-Step Guide
Managing HR with spreadsheets in a growing company leads to inefficiencies and record-keeping challenges, making tasks like vacation tracking and rapid hiring difficult.
Using smart HR software can be an easier solution than you think, especially for small business HR teams with tight budgets. This article will explain the steps you need to take to build a strong business case to get the new HR software you're after.
How to Build a Business Case for HR Software:
- Business Needs And Vision
- Identify Pain Points
- Current Process Steps
- Define Measures Of Success (ROI - Return On Investment)
- Get Initial Buy-In And Approval
- Gather Requirements
- Contact Vendors
- Prepare to Address Objections
- Build Business Case And Get Approval
- Choose the Winning Software
Step 1 - Business Needs and Vision
Your business needs are the specific requirements and challenges your company faces in managing human resources efficiently, while vision is more like the long-term goals and direction the company aims to go with the successful implementation of new HR software.
The first step is to write out the vision for HR and ensure it aligns with the business strategy, direction, and vision.
The benefit of doing this is to create buy-in from the key stakeholders and decision-makers on your leadership team. List out your key needs and the reason why to align everyone on what the organization's HR software requirements are.
Before investing in new HR technology, define your business needs—whether it’s talent acquisition, onboarding, or leadership development. Understanding your goals ensures that the tech aligns with your strategy.
Align your direction and vision
Here's an example of how you can align your business needs with the reason why you should invest in a new HR system.
| Business Need | Why? |
|---|---|
| We need better tools to track our headcount. | Our current headcount process is time-consuming and error-prone, with key metrics calculated manually. |
| We need to streamline our recruiting process since we are planning for an increase of X new hires this year. | Feedback from candidates has been that our process is slow and confusing. By investing in a new ATS, we can speed up the resume review process, scheduling interviews, and candidate selection by x%. |
| Tracking of employment contracts is manual | With the headcount growth targets, we need an automated and integrated way to track signatures on contracts. |
| Increase employee engagement | Our engagement is concerning and we currently have a manual performance review process and surveying process where the data isn’t easily accessible and actionable. |
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Also, don't fall victim to shiny-object syndrome or push for new software just because it's touting some fancy new features.... ahem, such as AI-backed tools! Instead, focus in on software that will solve your specific needs and support your vision to achieve your goals.
Don’t chase trends without understanding your unique business needs. Whether it’s a new tool, policy, or benefit, align every initiative with your organizational goals and employee priorities.
Step 2 - Identify Pain Points
Strategic talent management supports the business case for HR software by aligning tech solutions with workforce development pain points.
Pain points in this context refer to the specific difficulties and inefficiencies a company experiences in its current HR management processes, which HR software aims to address and alleviate. List out all your pain points and don’t hold back.
Pain point identification checklist example
- How many spreadsheets do you have to update when you add or change an employee?
- Can employees update their own information?
- How often do you come across data entry errors?
- What tasks take up most of your day?
The responses to the questions will be the basis of your business case for acquiring new HR software.
Step 3 - Current Process Steps
Current process steps are the way you're doing things now in your HR department. This should cover all your core HR tasks, such as how you handle employee records, leave requests, hiring, and onboarding. (I'm guessing you're mostly using spreadsheets and emails.)
Start by listing out the main processes, the steps for each process, who is responsible for each step, and the time each process takes you.
Sample Simplified Process Map
| Main Process | Sub-Process | Process Steps | Who | Time |
|---|---|---|---|---|
| Employee Records | Add new employee | Open up a spreadsheet and add a new row with employee information. Make sure employee number is updated. Add employee to benefits and update benefits tracking spreadsheet. Update payroll tracker. Email Payroll with employee information. Enroll employees in payroll platform, etc. | HR | 30-45 mins |
| Employee Records | Update employees address | Open up spreadsheet #1 and update. Open up payroll tracker and update. Email Payroll with new address. | HR | 15 mins |
| Employee Records | Employee vacation balance | Email manager for their reconciliation. Compare their notes to HR notes. Open time tracking application and verify. Calculate balance based on any proration (if needed). | HR and Manager | 15-45 mins |
Pro tip: You can take the process mapping a step further and, next to all the process steps, include if the step adds value to the organization (VA - value add) or doesn’t add any value (NVA - non-value add).
Step 4 - Define Measures of Success (ROI - Return on Investment)
This could be higher engagement, better retention rates, quicker turnaround on filling roles, or more bandwidth in the HR team for things like connection, training, and value-adding activities.
If you can save time by investing in HR software, what would you be doing with that time?
Decision-makers like to see the ROI numbers. With HR software, this is typically measured in time savings and therefore you can add a dollar amount to the savings.
Example (many assumptions being made and we encourage you to state them):
For reference: 52 weeks per year * 8 hours a day = 2,080 hours
2,080 hours * 60 minutes per hour = 124,800 minutes per year
Salary = $80,000
Time per given task = 15 mins
Tasks per Month = 50
Total time per month = 750 mins
Total cost per month = (124,800/$80,000 = $1.56 of salary per minute). $1.56 * 750 mins per month = $1,170 per month in labor cost.
The formula above shows illustrates the positive impact of finding a new HR solution that uses automation to eliminate a 15-minute task that your HR professionals are performing frequently — as often as 50 times per month.
By eliminating that task through automation, your company would save $1,170 per month in labor costs. That is a significant cost saving for your bottom line!
Step 5 - Gain Initial Buy-in and Approval
Use this time to present your findings from the above steps and ensure you have buy-in from your HR leaders to continue or if you need to shut down the process. If you have verbal approval, keep going!
Examples of how to gain initial buy-in
- Case Studies: Present case studies of similar organizations that successfully implemented HR software, showing tangible benefits.
- Cost-Benefit Analysis: Show a detailed cost-benefit analysis highlighting the HR software costs vs the cost savings and improved efficiency you'd expect to gain from the new HR technology.
- Demonstrations: Arrange a demo of the HR software to showcase its capabilities and user-friendliness and how it compares to your current system.
- Productivity Statistics: Show statistics on improved productivity and time-saving from companies using similar HR software.
Step 6 - Gather Requirements
I know that this isn’t the most fun step but it is one of the most important. Before contacting software providers, be clear on your requirements and have input from all your key stakeholders.
| Key Requirement | Who | Why |
|---|---|---|
| One single source of employee data truth | CEO, COO, HR, Manager, Employee | Prevent errors, increase speed, and ease of use |
| Goals tracked and visible to the executive team | C-Suite, Manager, HR, Employee | All goals need to roll up into one view for the exec team and for the team leader. |
| Resumes are viewed by hiring manager | HR, hiring manager | As of now, HR copies resumes and pastes them into a folder on the shared drive. Managers need to be automatically notified when a resume comes in so they can quickly filter it in or out. |
| Compatibility with other software already in use | CTO, IT Manager | To get the most out of your new HR technology, you'll need to ensure it is compatible with other software your organization is already using. |
Step 7 - Contact Vendors
Shop around, request a few demos, and share your requirements with a shortlist of HR software providers that seem like a good fit initially. Doing so will help them demonstrate how their software can make your life better!
If the platform you are interested in doesn’t have all the features you need, ask how easy it will be to integrate it with other applications in your HR technology stack.
Once you've connected with vendors, make sure you're tracking their product's capabilities against your unique requirements.
| Key Requirement | Critical (Yes/No) |
|---|---|
| Built-in contracts and signature acknowledgment | No |
| Employees can update their own data | Yes |
| Vacation is tracked via a system and approved by the manager. HR has visibility. | Yes |
Step 8 - Prepare to Address Objections
Before you make your final recommendation, take time to prepare for potential objections—especially around cost. Financial concerns are often the biggest hurdle when pitching new HR software, so it’s important to be ready with clear, confident responses.
Common objection: “It’s too expensive.”
Acknowledge the concern, then pivot to value. Highlight the long-term savings the software offers by reducing manual work, minimizing errors, and lowering compliance risks. If possible, show how the cost compares to the current system’s hidden expenses—like time spent fixing mistakes or managing clunky workarounds.
Common objection: “Can’t we just keep using what we have?”
Explain the risks of doing nothing. Legacy systems often lead to inefficiencies, poor data visibility, and increased admin burden. Emphasize how the new software supports growth, streamlines operations, and helps the business make better decisions faster.
Common objection: “What’s the ROI?”
Come prepared with data. Use benchmarks, case studies, or vendor-provided ROI calculators to estimate cost savings, time saved, or productivity gains. Frame it in terms your stakeholders care about—dollars saved, risks reduced, or revenue protected.
By addressing objections head-on, you strengthen your case and show that you’ve thought through the decision from every angle.
Step 9 - Build a Business Case and Get Approval
With all the above data gathered, it's time to put together your business case. This doesn't have to be a 10-page document, it can be as simple as a one-page memo (because who has time to read 10 pages anyway).
Decision-makers are looking for answers to the following questions:
- How much does it cost?
- What pain points will the software solve?
- If we didn’t invest in the software, then what?
- How long will it take to implement?
- Why do we need to invest now?
- What is the ROI of implementing this software?
You may not know the answers to the cost questions; however, seeking approval at this stage will set you up for success.
Many companies trial free HR systems to showcase the benefits of HR automation before committing to paid solutions.
Here's a business case template you can use for HR Software:
- Executive Summary: Brief overview of the proposal, key benefits, and conclusions.
- Current Situation and Problem Statement: Description of the current state and specific challenges or problems being addressed.
- Proposed Solution and Benefits: Detailed description of the proposed solution and its expected benefits, including a cost-benefit analysis (Use the calculation in step 4 to compare against the potential software cost and list out the savings).
- Implementation Plan and Risk Assessment: Step-by-step implementation strategy, timeframe, and a summary of potential risks with mitigation plans.
- Conclusion and Recommendations: A concise summary of the business case with final recommendations for decision-makers.
Building a strong business case for HR software is easier with premier HRIS certifications to back your expertise.
Step 10 - Choose the Winning Software
Hooray! You have gotten this far and have the approval to go ahead with your vendor of choice.
But remember, gaining approval through the business case process is not even half of it. Next up is choosing the HR software that best fits your business needs and capabilities around implementation, onboarding, and training.
If you're running HR at a small business, your demands of the software will be different from those of a company with 2,000 employees. Your prioritization should match your current needs as well as those that support your growth.
HR software makes HR more efficient
Automating your HR processes will make for a better employee, manager, and candidate experience. Spending time on creating a detailed business case will have the following benefits:
- Outline key processes that need to change or be improved
- Capture feedback and requirements from the right people
- Identify what time can be saved and spent on value-added work
- Demonstrate where software investment should take precedence. You may think you need a performance management platform but in fact, you need to start with a human resource management system.
Regardless of how in-depth or detailed you are, creating a solid business case for HR software will improve your organization.
In my experience, when we implemented an HRIS, ATS, goal tracking, and performance management software (all at the same time), we saw a measurable increase in employee satisfaction, a decrease in admin time, and more time spent on value-added activities.
This, in turn, creates a better employee experience for your employees, managers, and HR professionals, alike.
Good luck on your HR digital transformation journey!
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