Return On Investment - Part II: Appraising the investment value of intranets

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:

 

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 per year.

---