6 Steps to Make a Business Case for Cloud HR
Moving HR activities and processes into the cloud has the power to turn Human Resources into a data-driven business partner while allowing it to become more people-oriented than ever. That’s because cloud-based software dramatically changes not only how HR operates, but also the entire company. Centralized data on a platform that everyone can use company-wide empowers employees to collaborate in new ways as they take charge of their careers. The cloud also frees up HR to focus on making a more strategic contribution.
Yet many HR departments struggle to make a coherent business case for moving to the cloud. During a presentation at the SAPInsider HR 2015 Conference in Las Vegas, Amy Grubb, CEO/Principal of Cloud Consulting Partners, shared these six steps to help make a business case for cloud HR.
1. Strategically align with the C-Suite
Grubb said that collaboration between HR and the C-suite will help ensure HR strategy and technology investments align with top-line corporate goals leading to strong leadership support.
2. Demonstrate bottom line impact
Be explicit about what the investment is expected to deliver to the company. Grubb recounted how one company with 10,000 employees developed a business case by showing how cloud would lower the cost of turnover, which represented 10 percent of the annual payroll.
“HR, IT and Finance worked together to explicitly demonstrate that by reducing turnover five percent, they could save the company four million dollars in annual turnover costs.”
3. Know your prioritized business requirements – map to vendor capabilities
Companies must have a full understanding of their business, HR objectives and HR pain points in order to select the technology that will best meet their needs.
“No system will offer 100 percent coverage. You are going to have gaps,” said Grubb. “But if you go in knowing hose gaps, you’ll be prepared to work around them so you’re not surprised. Insist on seeing the vendor’s road map to make sure it’s in sync with your needs. If they don’t have something today, when is it planned for?”
4. Develop and understand your HR technology road map
Take the time to identify the technology you need to move HR from transactional to transformational. Grubb sees this as a continuum that companies move through. “Without a documented map, you won’t know where you’re going. You also have to update it often as things change in the company and the market at-large.”
5. Calculate tangible investment returns over time
Grubb said she finds most companies don’t take the time to understand the full implications of the cloud vs. on-premise investment over time.
“You have to factor in everything that comes into play for both options, including lost opportunity costs. For example, what could someone be doing that’s more valuable if they weren’t spending so much time on an on-premise upgrade? How much more productive will people be if they can approve transfers or evaluate candidates from their mobile device?
6. Question the status quo
According to Grubb, most decision-makers cannot explain why they engage in processes in a certain way. “They’re likely doing things to compensate for legacy system limitations,” she said. “But if they can be open to taking advantage of best practices, cloud is a tremendous opportunity to change processes for the better. And if you are doing something completely differently, it’s time to ask what you’re getting out of that and maybe rethink your approach to align with best practices.”
Above all, Grubb reminded the group that moving HR activities into the cloud represents a fundamental rethinking of HR strategies including new ways to find people, share expertise, and engage employees. In this context, the cloud business case is central to company growth objectives.
“At the end of the day, cloud HR is really about people,” she said. “Centralizing talent data in one place empowers HR and employees across the organization. Employees stay longer when they have the tools to make a valuable contribution. HR departments that are freed up from the tactical can focus on the transformational to become strategic business partners.”
Follow me @smgaler