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ARTICLES | Intranet ROI
Intranets have been arguably one of the most important
and effective technological discoveries to businesses since the advent
of the Internet. While many companies agree and value the importance of
an investment in to a corporate intranet in today's work environment,
not many can manage to quantify the value derived by its use. The primary
reason for this is the fact that an intranet and the operations it makes
possible permeates so deep into the working of a company and its business
processes, that it is difficult to separate the technology from the business
process and quantify it in isolation.
To illustrate the point further, it would be sufficient
to point out that a research group studying various intranets deployed
by corporations has assigned as much importance to Intranets as to the
telephone system. And that seems fair enough - a telephone system is of
prime importance to a company but nobody measures its added value, as
it is self evident and universally accepted. Similarly an ideal intranet
touches all the facets of a business in a very close way so much so that
the whole business depends on its working and success.
So how does one go to measure the ROI or the return offered
by this corporate investment? What are the different elements to quantify
in the process and what metrics should one use to measure a success or
failure?
Metrics of measurement
Usually as a first impulse, an intranet's ROI makes everybody
reach for the hits received by the website that houses the intranet of
the organization. However while a hit report will over a period of time
will tell whether or not an intranet is successful, to calculate its ROI,
it's not enough. Following are some intranet performance metrics that
should be used to map an intranet's ROI:
Time savings:
Intranets help in improving efficiency of a company in different processes.
However often it is difficult to account for the increase in productivity
of the employees directly. One way to quantify such an increase in productivity
is by calculating the time saved for each employee and then measuring
the ROI by arriving at a company wide figure of time saved multiplied
by the costs incurred on each employee group.
Intranets make searching for information easier. It is an established
that an average employee spends almost 40% of their time searching for
information. With the help of a good document system in an intranet, employees
of companies around the world save enormous amount of time a day. Even
if the per employee per day time saved is less (say around 10 minutes)
multiplying that by the whole employee strength of the company makes it
worthwhile.
Cost savings
Costs saved are an obvious inference to measuring the ROI of an intranet.
The enterprise having the intranet should however understand how to account
for the costs saved and identify where the company can save costs and
measure them.
Costs savings are almost apparent in publishing and distributing documents
online instead of printing them in paper and sending over to different
employees. However it is not just a one-time cost saving that a company
should account for, but also the amount of costs saved in regular updates
to the original document. It is estimated that around 20% of corporate
printed material becomes outdated within a month's time. This being the
case, upgrades to documents presents a great opportunity to save unnecessary
costs.
Increased sales
Regular use of the intranet helps a company to increase its revenues and
profits. Over a period of time, the effect of the intranet and its extent
to which it can be attributed to the increase should be apparent over
the revenues and sales. The company's sales force is more equipped to
handle customer calls and client meetings with downloadable documents
like the sales kit, presentations and product manuals. The company's customer
support staff is able to answer queries of customers easily due to the
ready database of client interactions. In fact some companies measure
the intranet ROI from the sales support process as per the sales closed
than minutes saved!
What does it include?
As said above, to measure the return offered by an intranet,
one has to be discerning and separate the different parameters and look
at them in isolation. This being so, often the whole is more than the
sum of the parts. In other words, the result offered by the intranet as
a whole is more than the value added by the different parameters in isolation.
One basic category used to quantify parameters is explicit v/s implicit
elements in an intranet - parameters that have a direct dollar value attached
to them and parameters that do not.
Explicit parameters may include:
Hits:
The 'hits' a company's portal receives is a sure indication of whether
it is successful or not. However the company ought to go a bit further
and find out what different users in the company are seeing and how consistently.
This is done by seeing whether there are only a select parts or applications
of the intranet that are being used more than others, whether there is
a certain user base that uses the intranet more than others. Answers to
questions like these help the company fine tune its intranet and make
it truly useful for all in the organization.
Hard costs of processes like publishing, distributing
documents in lieu of paper documents:
Often the first process that companies work start with on their intranets
is to publish documents and manuals online. This is one of the easiest
ways to begin adapting the enterprise to the new technological discovery
in the company. Publishing corporate manuals and sales documents online
and distributing them enable considerably cheap costs than printing them
and distributing them physically. The low costs of upgrades to these documents
also make them a viable alternative.
Infrastructure that supports the intranet:
An intranet can run and be accessed from just a web browser on a user's
desktop. The client machines need not have expensive software installed
on them though one of the benefits of an intranet is that users can also
download different software and applications over the intranet itself.
Besides the user infrastructure, an enterprise has to account for the
server over which the intranet system has been installed. For interconnecting
different nodes or users of the intranet, most systems use the power of
the big brother - the Internet, as it is extremely cost-efficient and
standard.
The costs of applications that run on it and their maintenance
and upgrades:
Different intranets house different applications - generic applications
like a document management system, a content management system, collaboration
and chat module and department specific applications for human resources,
marketing & sales, support etc. Besides calculating the development costs
of these applications, it is also necessary to account for the maintenance
costs and the costs for regular upgrades to these applications. A research
done by the IDC indicates that database and inventory applications (whereve
applicable) run on the intranets give the maximum ROI than other processes
like document publishing of customer support.
Personnel training costs:
People are the driving force behind the success of any corporate initiative
- more so an intranet. And the people of an organization won't use the
intranet unless they are properly trained to. Adapting to a change to
a paperless, open information flow work environment can be quite challenging
and difficult for the workforce of a company. Hence companies have to
invest in training their workforce in implementing the intranet to its
optimum. Other costs related to the workforce of a company are development
costs (if intranet is done in house) and maintenance costs of the intranet
where updating content is concerned.
Implicit parameters
Implicit parameters are those that are difficult to quantify
in terms of dollar value or figures. These are generally the intangibles
that are affected by an intranet thereby making a considerable impact
on the organization's bottomline.
A few examples of implicit parameters are:
Productivity & efficiency
The productivity of the employees of a company is greatly affected by
a successful implementation of an intranet. At the same time, productivity
is not easy to quantify and measure. Enhanced productivity in a company
means the employees find information quick and easy and don't have to
rummage through paper files, they are able to provide exact and correct
answers to queries of their colleagues and customers, and effectively
do more in less time and greater accuracy.
Revenues and sales
A successful intranet enables faster and more productive working of an
enterprise consequently resulting in more sales and profits. A streamlined
business unit is capable of producing more profits than others. This is
achieved both ways - by reducing costs on different processes and also
by increasing sales that are a result of speedier communication and delivery
mechanisms that an intranet offers.
Employee co-ordination and collaboration
Thanks to the intranet, employees of organizations are able to collaborate
and work together between themselves and their vendors, suppliers at ease.
Employees can access information from different branches of the company
wherever they are located - thus leading to information on demand state
of business. Companies like Ford and Nike have design and development
centers set up through-out the world that contribute to their product
design and development process. This makes businesses run faster and more
accurately. A by product of this is that companies are turning more competitive
with fast access to information - they are able to deliver in lesser time
and with more accuracy thus helping them to grow more than their competitors.
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Customer support
Having an intranet set up in the organization offers tremendous opportunity
to beef up the company's customer support. Customer service reps can find
ready answers to common questions by being able to browse a database of
the information. Ready product manual downloads and sales kit documents
help the reps to cater to queries and feedback quickly and effortlessly.
The whole customer interaction process can also be documented for further
use in other cases of the same type.
To sum it up, calculating an intranet's ROI is mix of doing
scientific measurements and having a keen discerning eye for the above
listed points. It should be understood that different companies have different
ROI and not everyone will have a 1000% ROI often advertised by big enterprises.
A lot depends on the applications that run over the intranet and extent
of their use within the organization. With regular maintenance and upgrades
even a particular company's ROI may not remain the same over the years.
A more or less should only help further development and increase in the
usage of the intranet and prompt the company management to find out what
is it that they are doing right or wrong and work on it!
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