chapter seven

Common questions from CFOs

What’s the OPEX versus CAPEX for this project? Operating Expense (OPEX) refers to ongoing expenses for the administration of the company, while Capital Expense (CAPEX) indicates a one-time expenditure for an asset. The difference between these expense types is important for accounting and tax reasons, but also for financial planning.

Generally, your CFO will want to know that the OPEX — i.e. software license and maintenance — of your desired recruiting-software will be the same or lower than your current system, which could justify the initial CAPEX — i.e. deployment–cost.

What is the hard cost comparison of this project? Hard cost refers to the direct, quantifiable expenses of the project. You’ll want to compare the licensing and maintenance costs of your current and desired recruiting-software. Ideally, you will be able to demonstrate an equal or less expensive outcome. Make sure to consider the integration and servicing fees in your calculations.

What internal resources will we need to deploy? Your IT or Tech department will be your partner in deploying and maintaining a new system. It’s important to understand how much time and money your IT/Tech department expends to maintain your current system for an accurate comparison.

For most first-generation software, maintenance and updates are a real pain-point. Imagine every time you wanted to update your iPhone you had to test the update yourself on a spare phone to be sure the whole system would not crash — that’s what your IT/Tech department is up against with legacy systems.

What would this change mean for productivity? Your CFO wants to know if your team can achieve more with the same or less head-count. For example: If your 10 recruiters filled 1,000 reqs last year, can a team of 5 recruiters fill 1,500 next year? Productivity is a powerful motivator for system changes and can even justify a higher OPEX or Hard Costs.

This is also a good time to mention soft cost savings. Soft costs are the indirect expenses associated with a project. You will most likely identify areas of soft cost savings in terms of man-hours — less time screening resumes or less internal support from IT.