I spent a couple days this week in Atlantic City discussing staffing best practices with a group of corporate staffing leaders who, three times a year under the auspices of the Thought Leadership Institute, convene to share ideas on advancing staffing to the next level. In those conversations, the issue of developing persuasive business cases for new staffing investments, particularly in technology, arose frequently. We harp on business cases a good deal in our new 2010 Corporate Recruiting Report because few initiatives are green-lighted anymore without strong cases made. We want yours to be impregnable.
The Business Case
Good business cases are especially important when dealing with technology because of its:
- Cost
- Complexity
- Long-term impact
- Dependence on three scarce corporate resources: executive mindshare, money and IT bandwidth.
2010 Corporate Recruiting Report
The Law of Large Numbers
The law of large numbers applies whenever you’re competing for a scarce corporate resource with other powerful constituencies like sales, operations, R & D, or finance. The law states that the larger the consequence of an expenditure in dollar terms, the more attention it will receive from senior management and the higher its priority will become once approved. An investment of $10,000 with a $10,000 annual payback for 5 years (a 5X ROI) will receive less attention than an investment of $50,000 with a $100,000 annual payback for 5 years (a 10X return).
Because of its power and impact on process, technology can have lots of financial leverage. This is another reason to understand it. Good decisions with good results will cast you as a manager who understands business and who knows how to invest a dollar for maximum corporate result. This is goodness.
It’s Not About the Technology
As you begin, remember that your business case will be a business document, not a technical document. Any technical material will be relegated to an appendix for IT’s reference. The executives who will kill, table or approve your budget request will not be making an expert technological decision. They may be no more equipped to do that than you are. Instead, they will be making a business decision based on a cost/benefit analysis.
This has several ramifications. The first is that the appropriation will come from a different pot of company money than, for example, personnel expenses. In accounting terms, technology is an investment that becomes a depreciating asset, expensed over multiple years, not an expense that is written off all at once. Therefore, from accounting’s perspective, a technical asset needs to have a stated lifespan. So don’t show up expecting more money until the asset has lived out its useful life and is fully depreciated.
Second, tech decisions are cumulative, which means they build on each other. The version 1.0 you are investing in today will lead inexorably to version 2.0 tomorrow, then 3.0 after that, and so on. So tech decisions are by their very nature long haul, not short haul.
This makes your tech thinking somewhat inflexible in a way that, for example, personnel decisions are not. Hopefully all your personnel decisions are totally on the mark, but should they not work out as planned, your hires can be re-tasked, or sent to other departments or, worst case, let go. You can’t do any of these things with technology. You’re stuck with your decision. Unwinding an unsatisfactory purchase means either living with the consequences for quite some time, or starting over.
Strategy and Trends
In this context, thinking strategically becomes just as important as thinking tactically. Strategic thinking, in turn, brings trends into play. These are the big, powerful currents on which all staffing boats float. Trends are not what you deal with day to day. Indeed they may be quite invisible. But they are nonetheless very much there, carrying the profession along in some direction or other whether you are paying attention or not. Making a technical decision is like putting down an anchor. If you do so in the wrong place, you may find that over time you and best practice end up very far apart.
An example of thinking this way today might involve mobile recruiting. Technology is clearly moving toward mobile applications. That’s an established trend. So purchasing some mobile software now is tactically justifiable in order to experiment and get the jump on the competition.
However, strategic thinking would argue for not dropping that anchor just yet because the field is very young and evolving rapidly. You should wait until you can identify an investment with a 2-3 year life expectancy that also fits seamlessly into your broader plan to build an end-to-end HR technology platform.
The report develops these points in more detail and also offers advice from Mark McMillan and Elaine Orler, two of HR’s top technology consultants, on learning tech’s language, owning tech problems, taking a proper inventory (see diagram above), analyzing problems, managing upgrades and cultural change, and SaaS.
Related Reading
Ready to Invest in New Technology? Here Are Some Questions to Ask
Chuck Ros’s Blog |
