Digital transformation is a priority for three-quarters of businesses in Australia and New Zealand. Human resources, as the steward of the organisation’s people, culture and employee experience, is playing an increasingly important role in these transformations. Some market observers suggest that the HR function will be the first to fully digitise, with more than 40% of global organisations planning to re-evaluate their HR systems strategy by the end of 2016 .
As organisations embark on their digital transformation journeys they’re likely to face significant challenges. You’ve probably read these kinds of statistics before:
- 45% of large projects run over budget and deliver 56% less value than predicted
- 17% of major IT transformations go so badly they threaten the organisation’s existence
- 31% of projects will be cancelled before they are completed
A lot of projects fail during execution or don’t live up to expectations. But these issues often stem from a poor foundation for transformation, so let’s go back to where it all starts – before the project even kicks off – to the business case.
When working with customers on HR transformations, there are 3 common pitfalls I see when building a case for change:
- Framing the case for change too narrowly vs framing around the broader priorities, challenges and drivers of the business.
- Over reliance on emotion and jargon when presenting benefits vs demonstrating a rigorous quantitative fact base couched in language that resonates across all functions and can be measured during and after the project.
- Failing to secure buy-in from key stakeholders who will make the funding decision and/or significantly influence the ongoing success of the project.
What’s needed is a value-based business case, or a value case. We’re not talking about an Excel-based financial model with NPV and IRR calculations. It’s more than numbers – it’s a story. A story that crisply demonstrates how the project will contribute to organisational objectives, satisfy the needs of key stakeholders, and meet financial objectives.
Here are 4 key elements to a great value story:
- Business focus – A value case clearly connects the proposed project to the organisation’s strategy, objectives, and commitments to external stakeholders and/or the market. For example, if HR implements a cloud-based talent solution it will no doubt remove manual processes and reduce the admin burden on HR staff. But how will better visibility of talent and performance drive the CEO’s agenda of inorganic growth? How will integrated hire-to-retire processes and data drive employee performance and engagement, and therefore boost productivity? How will learning and performance management solutions drive a customer-centric culture?
- Technological feasibility – Doing the same old things, but faster, is not a strategy for transformation. Rather than simply determining how current processes can be digitised, we need to look holistically across the organisation to understand how digitally integrated processes can transform the business and drive organisational agility, transparency, and capability.
- A human point of view – Any transformation initiative will impact people. If it’s an HR transformation project, it’s likely to impact every single employee. A value case considers the people impact – who will be impacted, when, and how? What are the pros and cons for each area of the organisation? And how will the risks and changes be managed?
- Economic viability – A value case is not complete without the traditional financial metrics. However, a value case very explicitly ties the productivity improvements and cost savings to the overall business objectives and the broader digital transformation agenda. It’s about more than the economic viability of the project – it’s how the project contributes to the economic viability of the entire organisation.
Business cases often address only the technological and economic feasibility of an initiative. Broadening to all four elements of the value case will increase the likelihood of the project being approved, enhance stakeholder buy-in, and provide a strong foundation for successful project execution.
This is a three-part series focused on building a value-based case for change in organisations undertaking transformation initiatives. While specifically targeting HR transformations, these concepts can be applied to projects in any function.
In Part 2, we’ll look at the six steps to building a value case that wins the hearts and minds of cross-functional stakeholders.