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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 an organization
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 an organization 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 the organization 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 organization
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 an organization 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 the organization 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 an organization 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 an organization 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 an organization 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. ·
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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