6.2 What does BCA mean?
STUDY
Study "Introduction" in your prescribed book.
Do you know what BCA stands for? Benefit-cost analysis, previously it was referred to as CBA
(Cost-benefit analysis). We assume that you understand it. If you don’t, look it up on the
internet or in a dictionary and read a bit more about the concept. You can also use the links
that follow for more information about the concept. For the examination you need to
understand what the concept is. Here are three different sources where you can learn
more: http://www.sjsu.edu/faculty/watkins/BCA.htm,
WhatIs.com (http://whatis.techtarget.com/definition/cost-benefit-analysis-BCA),
About.com (http://management.about.com/cs/money/a/CostBenefit.htm) and the
Business dictionary (http://www.businessdictionary.com/definition/cost-benefit-analysis-
BCA.html).
If you feel that you gain enough information from the first link, then you can continue with the
lesson. If you still don’t understand what BCA means, then rather look at the information on
the other links as well.
6.2.1 What is base-line functionality?
You need to understand what this means, as you will encounter it often. Base-line
functionality (BLF) refers to the minimum functionality required of a system. How will
you determine this? Yes, I'm sure you remember the needs analysis we discussed in
lesson 03. The BLF will include all the MUST haves, including functionality, cost and
implementation date, etc.
6.2.2 What justification strategies are available for HRIS investments?
There are two categories here:
, STUDY
In your prescribed book in the section "Justification Strategies for HRIS Investments" you
will find more information about this. Make sure you know and understand at least one of
each category.
6.2.3 How has HRIS justification evolved?
HRIS has helped organisations to move away from a paper-intensive environment to a more
electronic environment. This makes information easily accessible and also affects the workload
of HR. Employee self-service modules in HRISs have dramatically decreased the administrative
workload of HR departments as the employees themselves can make many administrative
inputs. As these systems evolved, organisations could see huge cost and time savings.
However, experts are of the opinion that it will be difficult to get the same administrative cost
and time savings with future developments and add-ons in HRISs. What does this mean? It
means that it will be more difficult for HR to use administrative cost-saving as a motivator for
implementing these systems. The motivation should thus concentrate on the improved
decision-making support that a modern HRIS will provide to management and the impact on
the effectiveness of the organisation.
For companies that currently use paper-driven systems, cost-saving might still be a motivator.
They can use a risk avoidance strategy (they might, for example, need accurate records for
disciplinary and other actions and for CCMA cases) to justify the need for an HRIS.
The organisational enhancement strategy incorporates a cost-saving or reduction strategy and
companies can use this to determine the BCA for the investment in an HRIS. An example could
be a staff inventory that can be used for training or promotional purposes. This will take up
less time if an HRIS is used as opposed to obtaining this information using a paper-based
system. A modern HRIS has a number of standardised reports for managers to use, e.g.
,turnover metrics, attendance, performance goals and assessment results, which are generated
at the push of a button (as we discussed in lesson 06). This HRIS can also give employees
access to their own performance goals and supply online job-related training to improve their
effectiveness.
STUDY
In the prescribed book you will find a section "Evolution of HRIS Justification", which you
should study.
The conclusion that we can make is that the organisations that already have an HRIS are not
likely to invest a lot more money in new functionalities of their HRIS, unless they use an
organisational enhancement approach with a BCA incorporated. The BCA methods used
should therefore not only focus on the costs, but also on what these new HRIS functions or
modules can do for the organisation's effectiveness. What is HR’s responsibility here? We need
to find tools that can help us identify the sources of value. You will learn more about this later.
6.2.4 What approaches to investment analysis can be used?
You need to firstly understand the following (think about the previous lessons that we have
already discussed):
• Why the analysis is being conducted
• The expectations regarding the results
• Who needs to be part of the team
STUDY
Table 6.1 in your prescribed book gives important guidelines that the BCA team can use to
approach the analysis. Study this together with the section "Approaches to Investment
Analyses Make a Difference: Some Guidelines".
To test your understanding of this part, do the self-assessment questions for lesson 06. Then
go to section 6.3 where you will learn more about how an HRIS cost-benefit analysis is done.
Once you have completed this, you can jump to section 6.3.
6.3 How do you do an HRIS BCA?
, You will have already realised that it is very important to determine the gap between the costs
and benefits. This will have an effect on the decision to implement a new HRIS or new HR
functionality.
STUDY
You don’t have to be a financial expert, but basic financial knowledge would be very beneficial.
Read more about this in your prescribed book in "HRIS Cost-Benefit Analysis". There are
three basic pieces of information used in BCAs. Can you identify them?
• sources
• monetary value
• time
STUDY
In the prescribed book you will find the section titled "Identifying Sources of Value for
Benefits and Costs" and three subsections "Direct benefits", "Indirect
benefits” and " Implementation costs".
Use the Structure of Lesson 06 document that you will find under Additional Resources in
the subfolder lesson 06 and complete a detailed mind map of this section. After you have
successfully completed it, you should understand figure 6.1 in the prescribed book clearly. You
could also use figure 6.1 as your point of departure and elaborate on it by adding more
information.
Once you have mastered this work, you can go to section 6.4.
6.4 Estimating the timing of benefits and costs and the
value of indirect benefits
STUDY
STUDY
Study "Introduction" in your prescribed book.
Do you know what BCA stands for? Benefit-cost analysis, previously it was referred to as CBA
(Cost-benefit analysis). We assume that you understand it. If you don’t, look it up on the
internet or in a dictionary and read a bit more about the concept. You can also use the links
that follow for more information about the concept. For the examination you need to
understand what the concept is. Here are three different sources where you can learn
more: http://www.sjsu.edu/faculty/watkins/BCA.htm,
WhatIs.com (http://whatis.techtarget.com/definition/cost-benefit-analysis-BCA),
About.com (http://management.about.com/cs/money/a/CostBenefit.htm) and the
Business dictionary (http://www.businessdictionary.com/definition/cost-benefit-analysis-
BCA.html).
If you feel that you gain enough information from the first link, then you can continue with the
lesson. If you still don’t understand what BCA means, then rather look at the information on
the other links as well.
6.2.1 What is base-line functionality?
You need to understand what this means, as you will encounter it often. Base-line
functionality (BLF) refers to the minimum functionality required of a system. How will
you determine this? Yes, I'm sure you remember the needs analysis we discussed in
lesson 03. The BLF will include all the MUST haves, including functionality, cost and
implementation date, etc.
6.2.2 What justification strategies are available for HRIS investments?
There are two categories here:
, STUDY
In your prescribed book in the section "Justification Strategies for HRIS Investments" you
will find more information about this. Make sure you know and understand at least one of
each category.
6.2.3 How has HRIS justification evolved?
HRIS has helped organisations to move away from a paper-intensive environment to a more
electronic environment. This makes information easily accessible and also affects the workload
of HR. Employee self-service modules in HRISs have dramatically decreased the administrative
workload of HR departments as the employees themselves can make many administrative
inputs. As these systems evolved, organisations could see huge cost and time savings.
However, experts are of the opinion that it will be difficult to get the same administrative cost
and time savings with future developments and add-ons in HRISs. What does this mean? It
means that it will be more difficult for HR to use administrative cost-saving as a motivator for
implementing these systems. The motivation should thus concentrate on the improved
decision-making support that a modern HRIS will provide to management and the impact on
the effectiveness of the organisation.
For companies that currently use paper-driven systems, cost-saving might still be a motivator.
They can use a risk avoidance strategy (they might, for example, need accurate records for
disciplinary and other actions and for CCMA cases) to justify the need for an HRIS.
The organisational enhancement strategy incorporates a cost-saving or reduction strategy and
companies can use this to determine the BCA for the investment in an HRIS. An example could
be a staff inventory that can be used for training or promotional purposes. This will take up
less time if an HRIS is used as opposed to obtaining this information using a paper-based
system. A modern HRIS has a number of standardised reports for managers to use, e.g.
,turnover metrics, attendance, performance goals and assessment results, which are generated
at the push of a button (as we discussed in lesson 06). This HRIS can also give employees
access to their own performance goals and supply online job-related training to improve their
effectiveness.
STUDY
In the prescribed book you will find a section "Evolution of HRIS Justification", which you
should study.
The conclusion that we can make is that the organisations that already have an HRIS are not
likely to invest a lot more money in new functionalities of their HRIS, unless they use an
organisational enhancement approach with a BCA incorporated. The BCA methods used
should therefore not only focus on the costs, but also on what these new HRIS functions or
modules can do for the organisation's effectiveness. What is HR’s responsibility here? We need
to find tools that can help us identify the sources of value. You will learn more about this later.
6.2.4 What approaches to investment analysis can be used?
You need to firstly understand the following (think about the previous lessons that we have
already discussed):
• Why the analysis is being conducted
• The expectations regarding the results
• Who needs to be part of the team
STUDY
Table 6.1 in your prescribed book gives important guidelines that the BCA team can use to
approach the analysis. Study this together with the section "Approaches to Investment
Analyses Make a Difference: Some Guidelines".
To test your understanding of this part, do the self-assessment questions for lesson 06. Then
go to section 6.3 where you will learn more about how an HRIS cost-benefit analysis is done.
Once you have completed this, you can jump to section 6.3.
6.3 How do you do an HRIS BCA?
, You will have already realised that it is very important to determine the gap between the costs
and benefits. This will have an effect on the decision to implement a new HRIS or new HR
functionality.
STUDY
You don’t have to be a financial expert, but basic financial knowledge would be very beneficial.
Read more about this in your prescribed book in "HRIS Cost-Benefit Analysis". There are
three basic pieces of information used in BCAs. Can you identify them?
• sources
• monetary value
• time
STUDY
In the prescribed book you will find the section titled "Identifying Sources of Value for
Benefits and Costs" and three subsections "Direct benefits", "Indirect
benefits” and " Implementation costs".
Use the Structure of Lesson 06 document that you will find under Additional Resources in
the subfolder lesson 06 and complete a detailed mind map of this section. After you have
successfully completed it, you should understand figure 6.1 in the prescribed book clearly. You
could also use figure 6.1 as your point of departure and elaborate on it by adding more
information.
Once you have mastered this work, you can go to section 6.4.
6.4 Estimating the timing of benefits and costs and the
value of indirect benefits
STUDY
