Building a Business Case for a Time and Attendance Solution

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


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these outdated approaches firsthand as you struggle to control labor expenses and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.


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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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


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


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 .

2


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


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


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


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


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


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


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


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


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


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


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

3


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


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

4


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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Building a Business Case for a Time and Attendance Solution

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