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How To Write A Winning Business Case For Outsourced Payroll [Free business case template]
If you’re reading this, you’re already thinking about future-proofing your payroll by switching to a managed payroll service.
You’re already aware of the strong commercial justifications for outsourcing your payroll with immediate and long-term benefits. But now you need to persuade senior stakeholders and decision-makers in your business too.
That’s where a compelling business case comes in. In this practical guide, we’ll break down the process of writing a business case for outsourced payroll. In bite-sized chunks, we provide you with practical tips that will help you manage the process and present your case.
At the end of the guide, you will also find our handy template designed to help HR and payroll professionals write a business case for outsourced payroll!
When and why do you need to write 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, resources 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 decision about whether or not to proceed with the change.
Who should write the business case for outsourced payroll?
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 (aka the individual with the resources 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 costing, you might ask the IT security department to provide information on software costs. With this information, you can then provide a forecast for the next 5 years of upgrades and maintenance 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 cost-efficient option for your business.
Beyond the business case for outsourced payroll
Preparing a business case may seem like another task on your project management list, but it’s fundamental to the success of your project. It 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 can highlight any holes or areas of risk in your plan. It can also be used to measure success at the end of the project.
Did you achieve all the objectives you outlined for the timescales and costs set out in the business case?
Getting the basics right when writing a business care for outsourced payroll
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 the 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. It’s best practice to write concisely using a business-like tone of voice that reflects the audience.
Keep sentences straight to the point and ensure statements are fact-led, rather than emotionally 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). Avoid any confusion by expanding on any acronyms and including a glossary of all terms used in the appendix.
Formatting a business care for outsourced payroll
Most business cases are presented as a report-style Word or PDF document. The advantage of these formats is that it makes it quick to send to multiple stakeholders over email. It is also 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 programs such as PowerPoint.
This could make the business case appear more interesting when presented as you can present charts and figures more engagingly. Whichever format you decide to choose, make sure it’s aligned with your company’s culture and policy requirements.
If in doubt, opt for the format that presents your business case in the clearest, most compelling way.
Structuring a business case
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
This is a high-level summary of the project proposal. This is one of the most critical parts of the business case as 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.
This section will be scrutinised by stakeholders who approve funding as it outlines the costs involved in moving to outsourced payroll.
It should include pricing from a 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. This includes how much money you will save on investment into technology and security, increased scalability without buying the infrastructure, and staffing and recruitment costs. The latter will include 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 as to why you’re considering outsourced payroll. It will also include the business objectives of moving to an outsourced model as well as the benefits and risks of making the switch.
You should also give an insight into how the project will be managed. This should include timelines for implementation, which stakeholders should be involved, and any additional business resource requirements.
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. – can this be highlighted as a pull out snippet?
In this section, you can talk about non-tangible benefits such as:
- increased operational resiliency
- improved business continuity
- reduced total cost of ownership and increased efficiency
- improved data security
- more accurate and efficient payroll.
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.
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
This section would have additional information to strengthen your case. This may include supplier background details, a SWOT analysis, any reference material, budget calculations, commercials and pricing plans. It should also include any acronyms used throughout the document.
Tips for winning a business case for outsourced payroll
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 it's 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 as 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 before the pitch. This may include information about process efficiency, business continuity, employee benefits, accuracy and adherence 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 spot something that needs addressing in the trial run.
Ready for the next step?
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 below to help kick-start your progress.
Get In Touch with SD Worx
Want to know more about outsourcing your payroll? Get in touch with the experts at SD Worx. We create innovative payroll, HR and workforce management solutions designed for SMEs and large enterprises.
Our exceptional solutions are specifically crafted to help HR and payroll professionals streamline their business. Aside from offering award-winning outsourced payroll solutions, we also provide best-in-class payroll software to ensure that your in-house payroll team is as efficient as possible.
From ASDA to Hertz, our award-winning solutions are trusted by huge businesses around the world.