How are you handling your HR records, recruitment, and performance management?
Do you have various spreadsheets, word documents, and handwritten sticky notes all over the place?
How are you tracking things like vacation balances, address changes, family additions, etc.?
Maybe you have a solid spreadsheet to manage all the employee records but then something else happens, your company enters a growth spurt and you need to hire dozens of people. How do you track all the applicants, resumes, interviews, and interview notes?
When I was working for a tech startup of about 65 people, we handled employee data using the spreadsheet method. As we grew, we became burdened with many overlapping spreadsheets resulting in inaccuracies in most employee records.
For example, when someone updated their address we needed to manually update it in many places and, not only that, there wasn’t a “single source of truth” between HR and other departments such as Finance or IT.
It would take someone in HR at least 30 minutes or more just to reconcile someone’s vacation balance. Crazy!
Why did it take so long?
We had outgrown our process, people had emailed their manager for approval and HR had no record of the days being taken, and people were tracking sick days as vacation days.
When it came to hiring, I had the task of filling over 25 positions in three months, all without using an ATS. This was a daunting task, I added a person to my team and we went to work.
Sure we succeeded but we wasted so much time copying and pasting resumes, interview notes, and fixing scheduling issues.
About now, I am sure you can relate to some of the pain listed above and are aware that software can relieve a great deal of it.
But where do you start with creating a business case for HR software? How do you get buy-in?
In this article, we will list out 9 steps to follow to make a business case for new 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 Vendor
- Build Business Case And Get Approval
- Make A Decision
Step 1- Business Needs and Vision
The first step is to write out the vision for HR and ensure it aligns with the business direction and vision.
The benefit of doing this is to create buy-in from the key stakeholders and decision-makers. List out your key needs and the reason why.
Here is an example:
| Business Need | Why |
| We are planning for an increase of X headcount this year. | Our current process is time-consuming and error-prone. Feedback from candidates has been that our process is slow and confusing. By investing in an 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. |
Related Read: An Easy Guide To Employee Surveys (With Questions)
Step 2 - Identify Pain Points
List out all your pain points and don’t hold back. Pain points are defined as the areas where you believe there could be a better, more efficient, and effective way of working.
Sample Questions to ask yourself
- How many spreadsheets do we have to update when we add or change an employee?
- Can employees update their own information?
- How often do I come across data entry errors?
- Where do I spend most of my day today?
The responses to the questions will be the basis of your business case for acquiring HR software.
Step 3 - Current Process Steps
List out your processes and the steps in each process. No need for an in-depth process mapping exercise (unless you love all the squares and triangles).
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.
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).
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 spreadsheet tracker Update payroll tracker Email Payroll with employee information Enroll employees in payroll platform etc. | HR | 30-45 mins |
| Update employees address | Open up spreadsheet #1 and update Open up payroll tracker and update Email Payroll with new address | HR | 15 mins | |
| 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 |
Step 4 - Define Measures of Success (ROI - Return on Investment)
Ask yourself this: if we invested in X software, we would have…
This could be higher engagement, 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):
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.
52 weeks per year * 8 hours a day = 2,080 hours. 2,080 hours * 60 minutes per hour = 124,800 minutes.
Step 5 - Gain Initial Buy-in and Approval
There is nothing worse (OK there are a lot of things worse) than working out the entire plan, including connecting with vendors, and then not having approval from the decision-makers.
Use this time to present your findings from the above steps and ensure you have buy-in to continue or if you need to shut down the process. If you have verbal approval, keep going!
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 vendors, 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. |
Step 7 - Contact Vendors
Shop around, get a few demos, share your requirements and hear how the software will make your life better!
If the platform you are interested in doesn’t have all the features you need, keep in mind how easy it will be to integrate into other applications.
Once you have connected with vendors, make sure you are tracking their product offering against your requirements.
| Key Requirement | Critical (Yes/N0) | Software A | Software B |
| 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 - Build 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 anyways).
Decision-makers are looking for the following:
- How much it costs
- What pain points the software will 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 question; however, seeking approval at this stage will set you up for success.
If the answer is no, then don’t waste time talking to vendors. You may have already connected with a few to gain preliminary pricing (great) but be cautious when selecting a vendor before gathering requirements.
Use the calculation in step 4 to compare against the potential software cost and list out the savings.
Step 9 - Make the Decision
Hooray! You have gotten this far and have the approval to go ahead with your vendor of voice.
But remember, gaining approval through the business case process is not even half of it. Next up is vendor selection, implementation, and training.
Final Thoughts
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 precedent. You may think you need a performance management platform but in fact, you need to start with an HRMS.
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.
Good luck and hit me up in the comments or in the community with any questions.
For even more help in choosing the best HR software, check these out: