Appraising the investment value of intranets
In part two of a two-part article on intranet return on
investment (ROI), IDM explores the potential hard and soft investment
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 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:
Time To Market
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.
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.
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.
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
Toby Ward, a former journalist and a regular e-business
columnist and speaker, is the President and Founder of Prescient Digital Media. For more information on
Prescient’s CMS Blueprint service, or for a free copy of the white
paper “Finding ROI”,
please contact us.