Post on 08-Jun-2022
Building a Business Case for a Time and Attendance SolutionFive steps to selling the value of best-in-class automation
2 Building a Business Case for a Time and Attendance Solution
Table of ContentsIntroduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. Lay the Groundwork for Success . . . . . . . . . . . . . . . . . . 4
Build the right team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Assess the scope of your project . . . . . . . . . . . . . . . . . . . 4
Conduct discovery and analysis . . . . . . . . . . . . . . . . . . . 5
Focus on presenting value . . . . . . . . . . . . . . . . . . . . . . . . 6
2. Identify Opportunities for Cost Savings . . . . . . . . . . . . 7
Direct cost savings worksheets . . . . . . . . . . . . . . . . . . . . 8
Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Time theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Overtime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Administrative effort . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indirect cost savings worksheet . . . . . . . . . . . . . . . . . . . 13
3. Visualize and Document Your Future State . . . . . . . . 14
Typical automated process . . . . . . . . . . . . . . . . . . . . . . 14
Investment cost breakdown checklist . . . . . . . . . . . . . . 15
4. Run the Numbers to Analyze ROI . . . . . . . . . . . . . . . . 16
Assemble the financial analysis model . . . . . . . . . . . . . 16
5. Package and Present Your Findings . . . . . . . . . . . . . . 17
3 Building a Business Case for a Time and Attendance Solution
IntroductionUsing manual, semi-automated, or disparate systems to manage time and attendance
can lead to costly errors and frustrating inefficiencies . You’ve seen the limitations of
these outdated approaches firsthand as you struggle to control labor expenses and
gain visibility into trends that could impact productivity, engagement, and compliance .
You’re confident that automating time and attendance — or upgrading to a more
modern system — is the right call for your organization . But you can’t do it alone .
You need stakeholder support, executive buy-in, and committed resources from key
decision makers to make it happen .
This guide outlines five proven steps to building a business case for a best-in-class
time and attendance solution . With the help of worksheets, templates, checklists, and
best-practice advice, you’ll learn how to identify critical business drivers, calculate the
value of automation (and the costs of doing nothing!), and present an objective and
persuasive case to business leaders .
Let’s get started!
You need stake-holder support, executive buy-in, and committed resources from key decision makers to make it happen.
4 Building a Business Case for a Time and Attendance Solution
Ready to get down to business? First, think about what you’re trying to accomplish and why . In order to break through barriers
to yes, you need to clearly articulate the critical business issues (CBIs) you intend to solve with automated time and attendance
and then show how solving those CBIs will positively impact the organization . Therefore, it’s worthwhile to spend time upfront
on preparation to lay the foundation for a strong business case .
Lay the Groundwork for Success
Build the right team A strong business case starts with a strong team . Because
time and attendance impacts virtually every department in
your organization, look beyond your immediate functional
area and build a team that will help shepherd your project
through to approval . Make sure you get support from
finance and operations, as you’ll need their input to build
a compelling case . Your team should include:
• Sponsor: often the chief financial officer (CFO), chief
human resource officer (CHRO), chief information officer
(CIO), or vice present of operations
• Business owner: often the head of payroll or the
head of HR
• Steering committee: to champion and lend credibility
to your case
• Project team: to do the work required to build your case
Assess the scope of your projectAs you lay the groundwork for your proposed automation
project, consider the processes, people, and payback
period behind your business case . Identify and document:
• The functions and processes that should fall within
the scope of your project
• Organizational units — local, national, or global —
that will use the solution
• Your analytical time horizon, which specifies the time
frame for measuring your return on investment (ROI)
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5 Building a Business Case for a Time and Attendance Solution
Conduct discovery and analysis The purpose of discovery is to find out everything you can about the as-is state of your time and attendance functions and
uncover pain points that represent opportunities for cost savings or efficiency gains . At a minimum, review and analyze:
• Existing documentation and reports
• Interviews with key stakeholders
• Processes and workflows
• Demographic and financial data
• Operational metrics and reports
• Process and compliance audits
• Industry operational benchmark statistics
During discovery, take the time to talk to representatives from groups across the organization to understand their priorities and challenges . Be sure to include frontline managers who deal with time and attendance issues every day and dig down into the details of what works and what doesn’t . The departments most crucial to discovery are:
Operations: Under pressure to deliver ROI, the vice president of operations is keen to increase efficiencies and streamline processes so frontline managers can focus on their staff
Finance: Concerned with budget adherence and cost control, your financial executives typically have the final say in funding key software investments
HR: Because HR is in charge of FMLA and attendance policies, this department has a vested interest in consistent rule application to minimize compliance risk
IT: Your IT staff will want to weigh in on technical issues such as cloud strategy and integration requirements associated with your automation project
Payroll: Your payroll professionals are on the frontlines dealing with problems, such as pay errors, employee complaints, and manual checks associated with inefficient time and attendance processes
6 Building a Business Case for a Time and Attendance Solution
Focus on presenting valueIf you hope to successfully influence key decision makers, especially the CFO, you’ll need to focus on how a time and
attendance solution will deliver value and boost the bottom line . After all, the CFO is ultimately responsible for the corporate
budget and can approve or deny funding for operations and IT projects . Before talking to financial executives, familiarize
yourself with the key terms below:
3 Cash flow
3 Net present value (NPV)
3 Internal rate of return (IRR)
3 Return on investment (ROI)
3 Payback period
7 Building a Business Case for a Time and Attendance Solution
Identify Opportunities for Cost SavingsBefore executive leaders sign off on a modern time and attendance solution, you’ll need to
show them how the new system will deliver ROI . This starts with uncovering areas of potential
cost savings — both direct and indirect — to demonstrate the value the organization will
derive from the proposed solution .
Direct costs savings such as fewer payroll errors, reduced overtime, and decreased time theft
will likely represent the most persuasive part of your business case, as they have an immediate,
measurable impact on the bottom line . Use the following worksheet to document opportunities
for cost savings .
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8 Building a Business Case for a Time and Attendance Solution
Direct cost savings worksheets
PAYROLL
Automation benefit Potential savings
Reduce payroll errors by eliminating manual data entry or calculations
Decrease prior-period payroll adjustments and manual checks by empowering managers to manage by exception for more accurate pay
1 . Eyal Katz, “Payroll Errors That Cost You Money and How to Fix Them,” Human Resources Today (August 22, 2017), found at http://www .humanresourcestoday .com/?query=payroll%20error%20rate&open-article-id=7088941&article-title=payroll-errors-that-cost-you-money-and-how-to-fix-them&blog-domain=connecteam .com&blog-title=connecteam .
2 . Kronos Incorporated, “Payroll Problems May Undermine Employee Experience, Finds Workforce Institute at Kronos Survey” (June 6, 2017), found at https://www .kronos .com/about-us/newsroom/payroll-problems-may-undermine-employee-experience-finds-workforce-institute .
3 . Ibid, at 39 .
According to the American
Payroll Association,
companies using traditional timecards show an error rate of 1-8% of
total payroll.1
Approximately 1 in 4 employees — 24% —
will look for a new job after
the first payroll mistake,
while another 25% will seek
new employment after the
second issue. 2
About 25% of payroll inquiries are about
employees’ pay slips and
22% are related to missing pay.3
9 Building a Business Case for a Time and Attendance Solution
On average, HR and payroll
departments spend approximately 30 hours per week on compliance-
related activities.4
A single major regulatory
change often costs businesses between $40,000 and $100,000.5
Nearly half (47%) of companies surveyed say
maintaining multiple, duplicate
employee records leads to
increased compliance risk.6
4 . Kronos Incorporated, “Risky Business: Majority of HR and Payroll Professionals Witness Questionable Compliance Practices” (March 19, 2018), found at https://www .kronos .com/about-us/newsroom/risky-business-majority-hr-and-payroll-professionals-witness-questionable-compliance-practices .
5 . Ibid . 6 . Ibid .
COMPLIANCE
Automation benefit Potential savings
Minimize exposure related to grievances, audits, and fines by automatically enforcing work and pay rules
Reduce cost of compliance changes with automated legislative updates
Lower risk of compliance issues with a unified platform that maintains a single source of data and applies compliance rules consistently
10 Building a Business Case for a Time and Attendance Solution
On average, American workers
say they would need to be
overpaid $463 before alerting their employer
to the mistake.7
Nearly 45% of U.S. shift workers who commit
time theft report their hours
inaccurately.8
Just 10 minutes of time theft
per employee in each 8-hour
shift could cost a 500-person
business more than
$549,000 per year for nonproductive activity.9
7 . The Workforce Institute at Kronos Incorporated, “New Workforce Institute at Kronos Survey: Payroll Problems Affect 82 Million American Workers” (March 27, 2017), found at https://www .kronos .com/about-us/newsroom/new-workforce-institute-kronos-survey-payroll-problems-affect-82- million-american-workers .
8 . Ibid . 9 . Kronos Incorporated, “Detecting a Widespread but Hidden Business Cost: Time Theft” (2017), at 1, found at https://www .kronos .com/resources/detect-
ing-widespread-hidden-business-cost-time-theft .
TIME THEFT
Automation benefit Potential savings
Reduce hourly payroll inflation by applying uniform policies and procedures
Decrease nonproductive time with real-time visibility into issues and trends
Eliminate buddy punching and system gaming by automatically notifying managers when the system spots time and attendance exceptions
11 Building a Business Case for a Time and Attendance Solution
Over time, the productivity of employees who work
overtime might actually be less than that
of employees working
a normal 40-hour week.10
The costs of overtime can
be more than financial
and include physical, emotional, and psychological impacts
on employees.11
U.S. organizations using
automated systems have
41% less unplanned overtime.12
10 . Neal Bolton, “Overtime: The Effect on Cost,” Forrester Daily News (September 15, 2016), found at https://foresternetwork .com/daily/waste/waste-collection/overtime-the-effect-on-cost/ .
11 . Ibid . 12 . Aberdeen Group, “Next Generation Workforce Management, The ROI for Accurate Scheduling” (July 2012), at 2, found at
https://www .shiftboard .com/wp-content/uploads/2018/04/Aberdeen-ROI-of-Accurate-Scheduling .pdf .
OVERTIME
Automation benefit Potential savings
Reduce controllable overtime with real-time visibility into time recording and employee hours
Improve absence management to reduce reliance on overtime to manage employee time off
12 Building a Business Case for a Time and Attendance Solution
Nearly 1 in 5 payroll professionals (18%)
spend much of their time on
activities such as data entry.13
About 35% of all payroll errors result from
manual data entry.14
Automation reduces the
time required to compile management reports by 50% to 80%.15
13 . Mercer LLC, Virginia McMorrow, Mercer Payroll Benchmarking Survey 2015, Payroll Operations Country Survey United States (2016), at 15 .14 . Mercer LLC, Virginia McMorrow, Mercer Payroll Benchmarking Survey 2015, Payroll Operations Country Survey United States, Mercer LLC (2016),
at 22 . 15 . Sanjeev Aggarwal, Laurie McCabe, and Dwight Davis, “Research Study: Cloud-Based Workforce Management Powers Midsized Organizations,”
SMB Group (September 2015), at 6, found at https://www .kronos .com/resources/research-study-cloud-based-workforce-management-powers-mid-sized-organizations .
ADMINISTRATIVE EFFORT
Automation benefit Potential savings
Streamline administrative processing associated with time and attendance for both salaried and hourly workers, including payroll, HR, and line supervisors
Cut down on payroll inquires by proactively identifying issues and delivering perfect paychecks every time
13 Building a Business Case for a Time and Attendance Solution
Indirect cost savings worksheetStrengthen your case by identifying indirect cost savings tied to the achievement of measurable business objectives
such as increasing available capacity, improving workforce productivity, or boosting operational efficiency . Assign a percentage
reduction or improvement to demonstrate value .
Business benefit How automated time and attendance delivers value % Reduction / Improvement
Increased employee retention
Deliver a great employee experience through consistent application and interpretation of work rules, more accurate paychecks, mobile technology, and self-service capabilities
Better cost accounting and margin analysis
Provides on-demand access to detailed data on labor hours and expenses broken down by product, project, customer, work order, and process
More accurate cost allocation and staffing projections
Properly assigns and cross-charges costs for exempt staff, external consultants, and contract labor associated with internal projects
Operational process improvements
Delivers visibility into the location and scope of excessive indirect labor hours, which often points to unproductive activities or process issues
Improved labor negotiation position
Simplifies detailed, accurate reporting of scheduled and unscheduled absenteeism rates, tardiness, attendance, and leave
Decreased need for contract workers or new hires over time
Enables better monitoring and management of paid time off across a large population of exempt, salaried employees
Higher customer satisfaction
Tracks employee hours to guide cost-effective, compliant staffing that meets customer needs and demand
14 Building a Business Case for a Time and Attendance Solution
Visualize and Document Your Future StateYou’ve filled out the worksheets to identify the shortcomings of your as-is processes and understand opportunities to reduce
cost and increase productivity with automated time and attendance . Now it’s time to share your vision of where an automated
modern time and attendance system can take you . Workflows and diagrams can help illustrate your future state so key decision
makers will be able to clearly visualize the value of your proposed investment .
Future-state workflows should include all major process steps and system components as well as data inputs and outputs for
each step . They should also detail the actions to be taken at each step, who will take them, and within what time frame . For even
greater impact, you may want to show where key improvements will be realized . This exercise provides an ideal opportunity to
rework some of the workflows you have in place today to simplify processes and improve efficiency .
Typical automated process
Employee data gathered
electronically
Pay rules automatically
applied
Supervisor edits and approves
Payroll reviews and processes
Correct checks are cut
Reports in real time and
one click away
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15 Building a Business Case for a Time and Attendance Solution
Show in each step where you will:
Minimize compliance risk
Reduce cycle times
Eliminate errors and rework
Prevent missing information
Make real-time information accessible
You know where you are today and where you want to go in the future, but exactly what kind of solution will get you there? Use
the policy, process, workflow, and reporting documentation you’ve collected, along with cost-savings information, to create your
prioritized feature/function requirements list . This will help you define the breadth and depth of solution you need and break
down the associated investment costs .
Investment cost breakdown checklist
Solution: Software as a service (SaaS) subscription fee
Time collection devices
Change management:Communication
Training
Implementation resources:Internal project resources
Software provider
Recurring expenses:Software support
Ongoing operational maintenance
16 Building a Business Case for a Time and Attendance Solution
Run the Numbers to Analyze ROIOnce you’ve projected the investment requirements for the proposed solution, you’re ready to proceed with financial modeling
and analysis . These models provide executives with an objective basis for a go/no-go decision, enabling them to compare ROI
on various projects competing for limited funding .
Assemble the financial analysis modelYou’ll need your finance department’s help in assembling the preferred financial analysis model(s) — NPV, ROI, IRR,
and/or payback period — for your business case . It will be your job to apply the projected cost savings per year over the
length of the analysis period and compare these savings against each year’s projected costs to determine the projected
cash flow for each year .
In order to run the numbers and analyze value, you’ll need the following information from your financial group:
Financial model(s) to be used
Evaluation period in years
Pretax or after-tax values
Effective corporate tax rate (if after tax)
Discount rate (cost of capital, such as time clocks)
Depreciation schedule for software, if depreciated over time
Allowable cost savings (direct, indirect, or avoiding increases in future costs)
Financial treatment of nonquantifiable benefits (see indirect cost savings on page 13) that help address critical business issues
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17 Building a Business Case for a Time and Attendance Solution
Package and Present Your FindingsNow that you’ve documented the investment requirements, benefits, and financial impact of the proposed solution, you’re
almost ready to present your business case . Line up the support of your steering committee and key operational stakeholders
to make sure you’ve uncovered any potential obstacles and reached a final consensus before addressing executive decision
makers . You need to be certain that the steering committee has your back in the face of any internal opposition .
For maximum impact, your business case should include the following:
Executive summary – A brief synopsis of the content, hitting key executive “hot buttons”
Methodology highlights – A summary of how the case was structured and how the analysis was conducted
Major findings – A summary of critical process and business issues, together with a documentation review, outlining and prioritizing areas of exposure and opportunities for improvement
Recommendations – A detailed description of the system functionality required to get from your as-is state to your to-be state, along with a high-level implementation roadmap
Financial value analysis – The results of the financial analysis model(s) used to predict the financial impact of the scenarios you evaluated
Next steps – The actions you’re requesting from the decision-making body, including funding and resource allocation
Supporting documentation and appendices – Summarized versions of pertinent materials procured during discovery, including reports, analysis findings, and financial spreadsheets and models
You’ve done the hard work — now it’s showtime! Armed with detailed documentation and the support of your team, you’re
ready to take your business case to the executive decision makers . Good luck as you move one step closer to state-of-the-art
time and attendance automation!
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