In part two of a two-part article on intranet return on investment (ROI), IDM explores the potential hard and soft investment benefits.
Intranets can be very expensive; and convincing your boss or CEO to shell out money for an intranet requires a persuasive argument.
Rather than just building it with little or no care for the financial impacts or potential, more and more organizations are building intranet business cases and properly planning their intranet build in order deliver the desired return on investment.
It is also worth noting that we’re not just talking about large companies either: a recent META Group study found that more than 85% of Global 2000 companies have implemented or are developing intranets - and small and medium-size businesses (SMBs) are following suit. Modalis Research found that 70% of all SMBs, including government agencies & non-profits, believe that having an intranet is important.
In Part I of our two part look at intranet ROI (see . HYPERLINK "http://www.intranetjournal.com/articles/200104/ii_04_25_01a.html" ..Measuring The Dollar Value of Intranets.) we examined the challenges of ascribing a dollar value to an intranet. While measuring the hard dollar cost savings – such as reduced printing costs and headcount – is relatively straight forward, valuating the soft benefits – such as improved access and increased employee productivity – is a far greater challenge due to the wide-ranging, all-encompassing nature of successful intranets.
While using the three generic approaches to measuring intranet ROI outlined in Part I are all valid, more CEOs and CFOs are looking for more precise targets and business plans. To develop more precise measurements, you have to know where to look and what to measure. To answer that need, I’ve categorized the potential benefit measurements – both hard and soft benefits – into ten categories:
10 Intranet ROI benefits:
Hard Costs
Sales
Productivity
Competitiveness
Application Access
Infrastructure
Collaboration
Time To Market
Customer Service
Human Resources
Hard Costs
Hard cost savings and avoidance are the most commonly reported areas for intranet investment, and perhaps the easiest to measure. Hard cost benefits range from reduced staff due to automated processes to eliminated printing and circulation expenses.
Benchmark
At Cisco Systems, all employees submit their personal business expenses via the intranet – which has not only saved the company millions, but also reduced the waiting time for reimbursement. Cisco’s METRO expense reporting application has reduced the cost of processing expense reports (compared to the traditional paper system) from US$50.69 in 1996 to $1.90 in 1999 – a whopping 96% reduction. Total METRO savings in 1999 totaled US$77 million. At the same time, the time required for processing each expense report dropped from an average of 21 days to only 4 days.
Productivity
By webifying business processes and aggregating tools and information on the corporate intranet or portal, employees become more productive as they get what they want and get where they want more quickly with better results. Productivity benefits range from easier and faster content publishing to unlimited access, regardless of location, to company tools and information.
Benchmark
Sun Microsystems usability experts calculated that 21,000 employees wasted an average of six minutes per day due to inconsistent intranet user interface design and navigation. Multiplying lost time by user salaries, the estimated productivity loss exceeded US$10 million per year.
Customer Service
To web-enable customer service functions is to arm both internal customer service reps and external customers with more immediate information. Through the use of email, FAQs and service policies, organizations can dramatically improve the information flow and reduce the cost of customer service. Benefits include improved customer satisfaction, round-the-clock access to service help and information, and fewer staffing requirements.
Benchmark
At Xerox, 20% of employees, or about 3,800 technicians worldwide, regularly submit best practice maintenance and repair tips to a centralized, browser-accessible database called Eureka. Eureka contains over 30,000 logged tips, accessed by 20,000+ field customer service professionals, resulting in savings of more than $10 million (as of early 2000).
While the exact return on investment of an intranet is difficult to precisely measure – for even the best accountants and auditors – there are many benefits to be claimed from deploying a well-planned and executed intranet. Soft benefit ROI, from collaboration to knowledge management, is even more challenging to measure in dollars and cents. However, as demonstrated by some of the examples above, many successful intranet organizations do achieve and measure significant intranet ROI. This ROI is often more than enough to justify the intranet or portal’s existence and frequently achieves a higher level of appreciation as a value added, mission critical business necessity.
Of course it should also be said that although the above examples are from large, established companies, generating significant ROI is not solely reserved for only large organizations; small and medium-sized organizations also extract measured value from their intranets and portals too.
All successful intranet organizations do have one thing in common: their intranets were well planned in advance and all track and measure their success. To find and measure valued ROI, an intranet should be assessed – engaging all stakeholder groups and users for requirements and expectations – and rigorously planned with benchmarks and measures for future success. By committing to formal assessment and planning stages, the uncertainty and risk of undertaking expensive, large-scale intranet endeavors (often involving multiple stakeholder and user groups inside and outside the organization) is greatly reduced or eliminated and your ROI goals can be planned in advance.
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