Securing investment in new HR software often requires navigating the complex dynamics of your company’s leadership team, with the CFO playing a pivotal role.
As you’d expect, the CFO’s major concerns relate to cost and risk. The CFO cares about the organisation’s financial performance and looks to understand and mitigate any long-term risks (both internal and external) that might impact that performance.
As Ciphr’s CFO, Ray Berry, points out: “the CFO is ultimately one of your biggest allies. There’s sometimes a misconception that finance is adversarial, and a gatekeeper to finds. That’s not the case.”
You’re on the same side, working towards what’s best for the business long term. If you treat the CFO as a cheque-signer and blindside them with a completed business case that ‘just needs their approval’, the answer is likely a ‘no’ every time.
Get this project on their radar long before you build a formal business case. Someone from their team might even be able to help you draw up the cost-benefit analysis.
Typically, the CFO’s buy in will depend on three major factors:
- Priority 1: Does this proposed investment fit within the cost envelope for the business? This is the foundation, and one reason you might get a quick ‘no’.
- Priority 2: Has the CTO signed this off from a technology perspective? Is this technologically feasible, to mitigate the risk of financial downside?
- Priority 3: Does this project make sense right now? This is the biggest chunk of work. You need to tell a story that compels investment, now.
Let’s unpack each of those.
In this article:
- Is the money there?
- Has the CTO signed the technology off?
- Does this project make sense?
- From pitch to approval: getting your CFO on board with HR software
1. Is the money there?
If your budget’s already set for this year and this project doesn’t feature, there might not be much you can do until next financial year. This is a large-scale project: the CFO will typically expect visibility into something of this size before you formally ask for investment.
In this case, the upside is that you’ve got plenty of time to build a cast-iron business case. Get all your ducks in a row now and you can look forward to a smoother project process next year.
Saying that, with the best will in the world, sometimes you don’t get that long-term visibility. Unexpected issues can mean projects become unavoidably urgent.
Maybe your contract is due to expire and staff changes meant nobody noticed. Or perhaps the vendor you’re with now is sunsetting some features you can’t do without. Or your current system won’t be supported after a certain date.
In that case, you’ll need to work with the CFO to make room for this project in this year’s budget. Help the CFO and other leaders understand why this is now urgent and work together to decide which investment this could replace.
This is often a difficult situation that can cause internal tension – nobody likes having their project shelved. It’ll take diplomacy, tact, and honesty. Work hard to show why new HR and payroll software will have a positive impact outside HR – before, during, and after the project, to protect your internal currency and reputation.
2. Has the CTO signed the technology off?
The CTO has huge decision-making sway over new technology projects because the costs of mistakes can be so high. The CFO has a keen eye on future risks that might impact financial performance: implementing the wrong technology is a huge one.
When you approach your CFO, they’re likely to head straight to the CTO and get their take. As Berry says: “I absolutely won’t look at anything until it’s been blessed from a technology perspective. I want to know it’s technologically feasible for us before I consider the financial angles.”
Your case will be strongest if you’ve already gone to the CTO, understood their requirements, and can clearly show you’ve met those requirements. (Or will meet, if you’re in the pre-selection stage).
3. Does this project make sense?
Provided the money’s there and the CTO gives the nod from a tech perspective, the CFO’s major concern is whether your proposed investment can deliver a tangible set of benefits.
“If we want investment, we need to show a real need. The directors are happy to spend money on things we need that will clearly benefit the business.”
Darren Vann, head of HR, Paultons Park
Show the CFO the problem and, critically, what the problem costs. Then show them the solution, and what the solution saves or delivers.
“It’s crucial to be extremely clear on the true benefits,” says Berry. “If it’s going to save money, where? How much? What will we stop doing, or start doing differently? Make the path to value tangible.”
It can be helpful to think about these benefits in terms of triage – like the emergency response 3Bs of breathing, bleeding, and bones. Imagine your CFO conducting a similar triage process when considering an investment:
- Does this increase revenue?
- Does this reduce costs?
- Does this minimise risk?
- Does this make lives easier?
The further up the triage order you can move your business case, the more likely you’ll get that ‘yes’. Here are some specific pointers.
Think short-, medium- and long-term
Your proposed new software will have immediate benefits, like reducing your outsourced payroll costs, for example. It’ll also have medium-term benefits, like reducing turnover costs.
But also think about the broader and long-term strategic value of this project, which often gets overlooked. For example, if you work in a PE or VC environment, what value could the project bring to future investment events?
Address vendor consolidation
Consolidation of vendors is one of most CFO’s biggest priorities right now. Fewer vendors mean fewer contracts, less admin, less invoicing, lower costs, less support burden, and less complexity in general.
Depending on the HR software you’re choosing, integrated coverage across the likes of HR, payroll, recruitment, onboarding and learning can save a heap of hassle compared to managing separate vendors for each. If this project will mean consolidating vendors, that’s definitely a benefit worth highlighting.
“Contracts can be a headache if you don’t use integrated software. As an HR team, you don’t want to spend your whole time engaged with software buying processes. And you don’t want to overspend on contracts that overlap, or be caught short if contracts expire at different times.”
Darren Vann, head of HR, Paultons Park
Quantify costs and benefits
The CFO is a hard numbers person. To make a compelling case for new software, you’ll need to move beyond “this will improve efficiency” into “this will improve efficiency by 30%, which will reduce recruitment costs by £100,000 annually”.
Use your own data, comparative data, and industry standards to inform your figures. But don’t stress too much about the exact numbers. Most CFOs will appreciate that you’re not a finance specialist and understand that these are projections, not precise figures.
The most important thing is your underlying logic, which should be rigorous, not whimsical. “It’s like high-school maths”, Berry points out. “Show your working. The CFO wants to understand your thinking. Why will this software deliver benefits or save money?”
Be explicit about full lifecycle costs
HR and finance are on the same side. You’re not trying to ‘win them over’ to your cause so much as show them why your cause is the same as theirs. You’re not trying to varnish the facts. Just show the facts, in black and white.
You’ll need financial sign-off on the whole lifecycle of the contract. Often the first year will be higher, with implementation and training fees, for example, then an ongoing cost. There might also be an annual increase built into the contract, or you might want to add additional modules that’ll increase costs over time.
You’ll need to show exactly what the software will cost compared to what you’re paying now, on a year-by-year basis throughout the contract. And justify that spend, coming back to the benefits you’ve outlined.
Show you’ve done thorough vendor due diligence
The CFO is typically less concerned about vendor selection, although this differs by organisation. What CFOs definitely care about is showing you’ve been thorough and aren’t leaving much to chance. Again, it’s about minimising the long-term risk to the organisation’s financial health.
They’ll usually care about:
- Pricing and payment terms: is this good value for money?
- Implementation timelines: how long can we expect disruption?
- Vendor reliability: will the vendor relationship cause issues?
- ROI and pay-back period: how long until we see value?
The vendor should be able to provide you with this information once you’re in advanced negotiations with them. They’ll often help you prepare the business case and analyse costs and projected savings, because it’s in their interest to help you get this signed off.
Don’t overload them with information
As we've previously talked about in our guide on how to get your CEO to invest in HR software, the C-suite leaders are busy people. Like the CEO, they’ll expect to know there’s a thorough business case that deep-dives into all the nitty-gritty, but they might personally only need to see a short summary.
Just make sure you don’t give them the icing until you’ve baked the cake.
If you’re not naturally a financial person, approaching the CFO can feel a little intimidating. But they want the same things as you – “to ensure the business secures the best investments to meet our goals”, as Berry puts it. If this is a well thought-out plan and project that genuinely delivers business benefits, the answer is unlikely to be a ‘no’.
It might be a ‘not yet’, sure. Or a ‘not like that’. But that’s a positive foundation to work from, ultimately to make smart investments that make the business better.
From pitch to approval: getting your CFO on board with HR software
Gaining your CFO’s support for HR software investment hinges on understanding their priorities and presenting a strong case. Focus on cost, risk, and how your project fits into the company's strategy. Engage the CFO early, make sure the technology works, and clearly show the value it will bring to the organisation. With a well-prepared and thoughtful approach, securing that crucial sign-off becomes a collaborative effort, paving the way for successful implementation and long-term business benefits.
Download our full eBook to help you build a business case that speaks the C-suite’s language, or book a meeting with one of our advisors to discuss your needs and how we can help you secure that crucial CFO buy-in.