I’m guessing you’re here because you’re about to present a business case for a new technology to your chief financial officer.
If you are, I’m flattered. But honestly, you shouldn’t be. CFOs aren’t as complicated as we might seem. We like numbers. We like logic. We like sound strategies. And we like numbers. Yup, I mentioned numbers twice. I did say that we weren’t that complicated, didn’t I?
Those parameters might seem basic — and they are — but I’ve read hundreds of business cases in my career and you would be shocked at how many of them miss the mark on those essentials. And I would say that the ratio has dramatically increased in the last few years as the economy has struggled and budgets have tightened. Now more than ever, business cases need to be airtight, strategic, and value driven. It’s certainly not impossible to get new tech approved in 2023, but I can guarantee this:
The only tech getting approved by CFOs right now are the ones that are going to have almost an immediate ROI.
With that in mind, here are some tips to go from "red pen" to "green light" with your proposals in 2023.
1. How much does it cost?
Don’t hide the cost.
The cost doesn’t need to be the first thing I see, but it better be easily found in the case. Then, I immediately want to know if this is “new” or “replacement” spend. If I am swapping like-for-like in a specific category of expenses, it feels a little bit easier to tackle or consider. But if I'm going to increase my spend in an area like technology, and decrease my spend in payroll, then it's a different thought process and path to adoption. Possible, but will be a different discussion.
Right after looking at spend, I am eager to find the return on investment. How much are we going to save? This is where your “flashy” headline savings should be presented. Like I said, the only major costs likely to get approved right now are ones that are going to deliver a major ROI in return, and fast. I’ll use one of our clients, for instance, General Motors. They actually saved $2 million in recruiting costs in less than a year by adopting our conversational software. Nearly instant ROI that would have any CFO rushing to sign on the dotted line. If you have a proof point that good (and if it checks out with calculations), the case essentially makes itself.
2. How does it tie into strategic initiatives of the company?
If you are trying to present to the CFO, listen carefully to any earnings calls or initiatives that are coming down from leadership. How does your business case fit into that up and coming strategy? Language is severely important here. I would even take specific wording from initiatives by the company and embed that into your business case for hiring technology.
If your project is not a strategic initiative and is going to be a major change for the company, why would the company be interested in spending time, money, and resources on it? But if it somehow fits into the company's goals, it’s a lot easier for everyone involved to get buy-in and budget allocated. Let’s go back to GM. How did they pitch technology that would help them achieve their business goals? Well, in 2020 they announced plans to invest $35 billion into creating an entirely electric car lineup and becoming the global leader in electric vehicles (EV) by 2035. In order to accomplish this huge goal, they needed to up their game in terms of recruiting innovators by providing one of the best candidate experiences on the market — an initiative that literally goes hand in hand with the company's goal to accelerate its commitment to EV technology.
3. Why now?
You have to understand the “cost of change” for your project. Not just the dollar amount I talked about earlier but the impact of disruption. I am sure everyone has heard the classic line “maybe next quarter.” And to be fair, I’ve certainly said it once or twice. But sometimes it’s warranted. If the company has been humming along for the past few quarters with no major disruptions, I would be more willing to take on new projects. But if we just implemented a new marketing initiative or re-structured our sales team — well, we may want to take a few months to cool off.
If you understand the business case enough and can clearly see how the lack of action will result in either revenue left on the table or continuing to throw money into recruitment agencies or advertisements, the urgency is built into the case for you. You simply need to demonstrate how delaying or not pursuing this opportunity may result in negative outcomes. Whether that be the restaurant across the street hiring more top qualified candidates or a slow in revenue coming into the business from understaffing.
4. Don’t be oblivious to economic factors.
No matter how good your business case is, it can't completely alleviate market conditions that are out there. But what you can do in the business case is show that you've at least thought about them and the impacts of the macro environment. Even though the market is doing X, we don't think it matters to this technology case because of Y reasons — there’s your starting point. But being oblivious to market conditions is only going to hurt your chances of getting that budget approved.
Just look at it right now. Unemployment is at a record low, economic uncertainty is in the air, and employers all around the country are struggling to fill their open roles — if there is ever a time to find efficiency and ROI for your business, it is right now. You just have to prove it.
5. Hard savings vs. operational savings.
I like to look at the return in two different (but similar) buckets.
First: the hard costs. Think replacement of previous technology, repurposing recruitment coordinator headcount, or even reducing costs of previous service. That’s the $2 million that GM is saving by automating interview scheduling.
The second bucket requires you to really look into the operations of your business: the operational efficiencies; where things can get faster, better, and more competitive. For example, hiring managers spend less time on recruiting tasks like interview scheduling or candidate screening. It seems obvious how that would correlate to cost savings, but it’s not like those hours of work are going to just disappear, right? Now think how those HM’s can spend more time serving customers or retaining employees, helping make the business better to drive more revenue in the long run.
Here’s an example of the distinction:
6. Never overestimate the savings.
One of the major keys people tend to overlook when making a business case… never overestimate the return or benefits.
Numbers that look too good are more likely to either lose attention immediately or garner some motivated poking and prodding into how realistic the case actually is. Be real! You know your business, does saving X time per week realistically turn into Y million in cost savings? Maybe it does, but be sure to back up your estimates. Remember when I brought up the GM headline? Sure the $2 million in savings sounds hyperbolic up front, but it's incredibly important to know that reducing admin work like screening and interview scheduling allows the organization to repurpose contract recruiting and create transformational cost savings.
Calculations are incredibly important and should be shown wherever you are claiming cost savings or ROI, but if the numbers are too big to believe, the legitimacy of the case goes out the window.
7. How does this business case stack up against other projects presented to the CFO?
There are plenty of other initiatives put onto your CFO’s desk. Marketing needs this much to see X return by Q4 or sales is going to spend this much in resources in hopes to gain… You’re not just competing for approval. You are competing for hard dollars against the many functions of the company — the best business case wins.
With a sound business case, rooted in the metrics that will drive efficiency and savings to the business, you can secure funding and continue to drive revenue within the business. The savings will carry over year over year, helping to provide long-term budget relief as well as a better candidate and recruiter experience.
That’s a lot of challenging questions to answer when purchasing hiring technology, so we brought some of the best minds in the industry to find answers.
Paradox’s VP of Marketing and Client Advocacy Joshua Secrest (formerly head of global TA at McDonald's) joined Hacking HR founder Enrique Rubio (he/him), and ScottMadden, Inc. Director Chris Schmelzer, in a recent conversation to build the perfect HR tech buying plan.