How to write a winning business case for outsourced payroll [Free business case template]

When do you need a business case?

A business case is necessary when there is a substantial change required to address a business need. For example, if you’re switching from an in-house payroll model to an outsourced model, then you will need to propose the justifications for the expense, resource and time needed for the change.

The business case will present all the financial information and costs involved, as well as non-financial benefits to strengthen the case. This allows senior stakeholders to make an informed choice about whether they want to accept the proposal and proceed with the change. 

Who should write the business case?

The business case is typically written by the change agent (usually the Payroll Director, or HR Director) who is looking to make a positive change. The business case is written for the benefit of the project sponsor who is the individual with the resource to support the project.

However, they won’t do this alone. A solid business case requires gathering accurate and relevant information from multiple sources to strengthen the argument. For example, to demonstrate how much your in-house payroll model is currently costly your organisation, you might ask the IT security department to provide information on software costs and provide a forecast for the next 5 years of upgrades and maintainance fees. 

By comparing these figures with the overall costs of paying for an outsourced service, you can start to build a clear picture of whether outsourcing would be a more costefficient option for your business.

Beyond the business case for outsourced payroll 

We know that preparing a business case may seem like another task on your project management list, but it’s fundamental to the success of your project and can be used as a guide once the project is in flight too.

The business case will assess whether the project is worth doing and it could highlight any holes in your plan or any areas of risk. It can also be used to measure success at the end of the project, did you achieve all the objectives you outlined to the timescales and costs set out in the business case? 

There are a few basic guidelines that you should follow to ensure your business case is given the consideration it deserves from the beginning. Simple things like use of language, structure and preparation can have a big impact on how your case is perceived. Here are some simple tips to nail the basics.

Tone of voice

Even if you’re not physically presenting the business case to the decision maker, you should keep your audience in mind while you’re writing and think about the kind of language they use. It’s best practice to write concisely using a business-like tone of voice.

Keep sentences straight to the point and statements fact-led, rather than emotion-led. Don’t use slang words, but don’t make things sound overly stuffy either. The payroll industry is notorious for using acronyms, (think SMP, RTI and P11D to name a few), so make sure you expand on any acronyms used and include a glossary of all terms used in the appendix.

Format

Most business cases are presented as a report style document written on a programme like Word or saved as a PDF document. The advantage of creating it in this format is that it makes it quick to send to multiple stakeholders over email and it’s easy to refer to if stakeholders want to look at specific sections. It also provides a clear audit trail of the change. However, some companies will allow you to create a business case in more visual programmes such as PowerPoint.

This could make the business case appear more interesting when presented and you can present charts and figures in a more engaging way. Whichever format you decide to choose, make sure it’s aligned to your company’s culture and policy requirements, and that you are comfortable that it presents your case for
outsourcing in the clearest, most compelling way.

Structure

Every business case follows a similar structure, although this may vary depending on your organisation. Here is an example structure:

• Executive Summary
• Reasons for change
• Financial information
• Project definition & details of scope
• Benefits of outsourced payroll 
• Risk assessment
• Measurement of success
• Appendix, glossary, other information 

Executive summary

This is a high-level summary of the project proposal. This is one of the most critical parts of the business case because it’s the first thing the stakeholder will read. It should be compelling and clearly explain why an outsourced payroll service will solve your business’ challenges.

Reasons for change

In this section, you explain the business challenge in more detail and outline why moving to outsourced payroll will solve your problem.

Financial information

This section will be scrutinised by stakeholders who approve funding as it outlines the costs involved in moving to outsourced payroll, such as pricing from supplier, implementation costs and any ongoing fees. This section will demonstrate whether the cost of outsourced payroll will provide more financial benefits than sticking with the in-house model.

You can also include the financial benefits of an outsourced service, such as how much money you will save on investment into technology and security, increased scalability without buying the infrastructure, and staffing and recruitment costs, including onboarding new hires, training expenses and paying for staff salaries.

Project definition and details of the scope

This is the largest part of the business case as you’ll outline the background information to why you’re considering outsourced payroll, business objectives of the moving to an outsourced model, and the benefits and risks of making the switch.

You should also give an insight into how the project will be managed, timelines for implementation, which stakeholders should be involved and any additional business resource requirements that were not listed in the financials.

Benefits of outsourced payroll

The benefits section is crucial in a business case, after all this is when you’re really selling outsourced payroll to the decision makers. Be sure to focus on both financial and non-financial benefits to paint a clear picture of why outsourced payroll is needed.

In this section you can talk about non-tangible benefits such as increased operational resiliency and improved business continuity, reduced total cost of ownership and increased efficiency, improved data security, and of course, more accurate and efficient payroll.

Risk assessment

Of course, it’s important to also conduct a full risk assessment that outlines project risks and how they will be managed. The risks included should cover those that could come from the project or the organisation’s ability to deliver change.

For most companies, the main limitation of outsourcing is losing in-house staff and the expertise that goes with that. However, the right outsourced payroll provider should feel like an extension of your team and regularly communicate with you. You should also be able to set payroll performance metrics and KPIs to monitor performance and keep tight control over the process.

Measurements for success

The business case should define how progress is recorded and how success is measured. You can work with the outsourced payroll provider to define these metrics.

Appendix, glossary and additional information

In here you would include additional information to strengthen your case such as supplier background details, a SWOT analysis, any reference material, budget calculations, commercials and pricing plans, and any acronyms used throughout the document.

So, you’re fully briefed on the WHY and the HOW of creating a compelling business case for moving to managed payroll. Now, here are some tips to improve the delivery of your business case.

Nail your elevator pitch

For your business case to be compelling, it must highlight a genuine business need or problem. Think of this as your elevator pitch; try and summarise your business need and the solution in a simple sentence.

Choose your preferred supplier

Make sure you outline which outsourced payroll supplier you want to use and provide some background information on their proposal. Each supplier will have different costs, timescales and implementation methodologies and its vital to include these in your business case.

Gather all the information before you start

You’ll need input from subject matter experts and various stakeholders around the business to strengthen your business case. Start this information seeking process early because you’ll need all the information to compose a strong argument.

Include non-financial benefits as well as financials

As you’re probably aware, the benefits aren’t all related to money. You should also consider non-financial benefits and considerations and gather information about process efficiency, business continuity, employee benefits, accuracy and adhering to compliance standards when building your business case.

Don’t skip the proofread

Even the most brilliant business case will get ignored if it is littered with typos and grammatical errors. If you only follow one tip in this guide, let it be this: get someone to proofread your business case before you submit it!

Get business buy in

Aim to address the key stakeholders involved in the project about your proposal ahead of time, otherwise they might ignore your business case. Reading the business case shouldn’t be the first time they are hearing about the project. After all, the business case is simply a formal request for change, funds, or choosing a supplier, which should have been discussed in detail before.

Present your business before you circulate to the wider group

By presenting the business case to a small group of stakeholders first, you can test it and make any changes before it goes out to the wider stakeholder group. This saves a lot of time and trouble if you do spot something that needs addressing in the trial run.

We hope that you found this guide useful and it has helped you gain a clearer picture of what’s involved in writing a business case. Moving to an outsourced payroll service is a big step and writing a winning business case is often the first hurdle, but don’t let that stop you from achieving your payroll strategy goals.

You can download our free sample business case template to help kick start your progress.