The HR department takes on massive projects like system implementation or development, which can cost a company up to $3,800 per employee per year, according to Gartner. With thousands of employees, the investment can run into millions of dollars, leading many companies to view HRIS investment as a liability.
Professor John T. Reilly, an Adjunct Instructor at New York University, emphasizes the significance of benefit-cost analysis (BCA) during HRIS project development. When the Executive or C-level reads our proposal, the most compelling part is understanding the BCA from the project. This analysis determines how the investment's cash flows in and out, and it's crucial to make the right decision for the company.
There are a few suggestions to keep in mind when developing a BCA.
Estimate benefits before costs. For example, when planning a trip, first we need to determine our destinations and activities, and then we can set the budget. This will help us make better decisions and achieve a clearer purpose. The benefits estimation should include the source (team/person), estimated dollar value, and the expected completion time.
Know your own business. To improve the organization, we must identify the dynamics and areas for improvement. For example, retail supermarkets struggle to free up managers from administrative tasks. The HRIS project can simplify these tasks and enable managers to focus on more strategic work.
You are not alone - seek an internal advisor! It is a common belief that the responsibility of creating a business proposal, which includes the Business Case Analysis (BCA), falls on the project team. However, not all members of the project team possess the necessary financial skills to undertake this task. Thus, the project team needs to collaborate with the Financial department and seek their guidance to calculate the BCA.
Be realistic and honest. Sometimes, project managers may be tempted to manipulate calculations to get approval from executives or C-level personnel. However, it's important to consider the long-term impact of such actions on how the organization and executives perceive accountability and the results of the project.
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