HR Digital Transformation journey could be different for different HR leaders but, the key is to build a business case that resonates across all functions and stakeholders like CEO, CFO, CIO, etc., who have direct or indirect influence on the HR projects.
The purpose of this article is to help HR leaders build and demonstrate a quantitative fact-based business case using value drivers and benchmarks delivered by SAP SuccessFactors.
Step 1: Identify HR Value Drivers Relevant to Your Transformation Journey
HR leaders must understand short and long term plans of business and align HR’s objectives to influence the changes. An example could be, reducing the manager’s time spent on administering employees would help focus more on customer based activities and reduce costs. Articulating the value of HR Technology investment is the important step of the transformation and it is crucial to identify and map the HR value drivers that contribute to the business outcomes. Value drivers delivered by SAP SuccessFactors include but not limited to
- Reduce HR compliance cost to mitigate risk
- Reduce manager time on employee administration
- Reduce manual transactions and HR administration effort
- Reduce ongoing localization cost
- Reduce vacancies in critical roles
- Reduce bad hires and time to fill
- Reduce vacancies in critical roles
- Reduce direct recruiting spend
- Reduce turnover
- Increase employee engagement
- Improve payroll management function efficiency
- Improve HR reporting and analytics capability
- Improve HR shared services efficiency
- Improve targeting of training
- Improve time to full productivity of new hires
- Improve recruiting function efficiency
- Improve social collaboration and knowledge sharing
- Improve worker quality
Step 2: Set value aspirations based on SAP Benchmark data
Once HR leaders select relevant value drivers, it is time to set aspirations for each value driver based on SAP Benchmark data. For example, in the discrete manufacturing industry- Manager’s time spent on employee administration is 7.1% in the top 25% of companies, while the average is 8.1% and 11.4% in the bottom 25% of companies. SAP provides comprehensive benchmark data to help HR leaders compare to peers and quantify potential improvements and benefits
Step 3: Estimate Benefits
A robust business case provides a comprehensive analysis that emphasizes quantifiable benefits. For example, Company “A” has 1000 managers with an average salary of $90,000 and, assuming the managers spend 9% of the time on employee administration, the total cost is $8.1 million (1000*90000*9%).
Now, by reducing managers’ time spent on employees to 8% the cost is going to be $7.2 million (1000*90000*8%). Thus, by reducing effort by 1% the company “A” could realize a potential benefit of $900,000.
Step 4: Calculate Return on Investment (ROI)
Finally, evaluate the viability of your investment by calculating return on investment (ROI). To calculate ROI, you need all costs and expenses, including but not limited to Subscription costs, Operation costs, Implementation costs, Ongoing Support costs etc.
Value and Benefits
- Improved transparency on investment needs, priorities, and increased business value
- Clear understanding of the value and its metrics that can be obtained
- Defined roadmap, business case, and transparency during the transformation
- Improved quality of business planning, and budget handling
- Reduced risk by having a clear value statement for upcoming investments
- Better traceability of project proceeding and decision making in case of required changes
At 3Core Systems, it is our objective to provide tools to guide HR Leaders to make informed decisions through an understanding of their capabilities gap, best products for their roadmap, value drivers, and value aspiration. Help create an estimate of business improvement aligned to scope and calculate potential benefit estimates, based on proof points, for processes and sub-processes or even for specific SAP solutions. Feel free to contact us for a free consultation.
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Shyam Reganti
Shyam is a Solution Engineer at 3Core Systems Inc, focused on helping clients with HR and Digital Transformation.
