Is your HR Tech budget starving for funds? Technology funds are always in high demand because there are so many new tools and functionalities on the market, and many questions to answer as you allocate resources:
What’s the best investment for your company and how can you make the most of your HR tech dollars?
Is AI worth investing in this year?
How do you justify expenditures?
And then there are the annual edicts from on high: streamline the budget and reduce wasteful spending.
The truth is that HR is often viewed as an expense, not a value contributor, and that can make it tough to secure budget for new technology. But with the right tools, you can flip that equation on its head. HR is the center for engagement and performance management. A successful HR strategy creates more productive employees, who in turn create more profit. And that’s an excellent business case for HR investment.
Technology budgets sometimes turn into wish lists of all the things you’ve seen at conferences and exhibitions throughout the year, but no boss is going to sign off on a budget like that. If you can create direct logical ties from the budget to your business strategy, however, you’ll be in a better position to secure the funds you need.
For example, let’s say you want to migrate your HR processes from paper and spreadsheets to a cloud-based HRIS. To gain approval, you’ll have to demonstrate how that move will add value to the organization by delivering better outcomes: higher productivity, more engaged employees, and more effective decision-making. Those results will in turn support higher profits, which is a key business strategy driver.
The fact that a tool can do something faster or more efficiently than your human HR staff doesn’t necessarily make it a value contributor. Your company may not be ready for digital innovation or you may not have the right technology foundation in place to support AI. The key to picking the right battles is to know where you are, where you want to go, and what steps you need to take to get there.
Start by asking questions like these:
These questions will help you evaluate your current technology to determine whether you need to add one or two new tools or whether you need to scrap everything and start over.
Where do you want to be in five or ten years? Would you benefit from a fully fleshed-out AI strategy that automates your recruiting function? Do you need a new performance management strategy along with the tools to implement it? Your technology strategy flows out of your overall HR strategy, so spend some time evaluating your HR goals, tying them in to overall business strategy, and determining what technology you need to get the results you’re aiming for.
Experts predict that technologies like AI and blockchain will fundamentally transform HR over the next decade, and now is the time to put the right technology foundation in place to capitalize on those new capabilities.
Based on your current technology platform and your 5 or 10-year plan, what steps should you take each year to move you closer to your goal? What steps should you take this year? This month? Known as backcasting, this method of starting with your goal and working backward to set realistic milestones is the best way to get from Point A to Point B without overextending your budget.
For example, let’s say you want to implement an AI recruiting strategy but right now you’re still using spreadsheets and paper. What are the steps you will need to take? They might include:
Once you have know what steps you need to take, create a timeline and budget starting with your desired completion date and working backwards.
Cost justifying your technology recommendations requires a clear demonstration of the technology’s return on investment. It must provide predictable business improvements and contribute to higher productivity, higher profit, or both. We’ve written extensively about that in another post (Justifying the Cost of a New HRIS or HCMS), so we won’t repeat that information here. Just bear in mind that to be worth the investment, new technology must offer strategic, enterprise-wide value, eliminate waste, and help employees perform their jobs more effectively.
