Study finds that while precise measurement is lacking,
most organizations are making 'rough' ROI estimates' of the
intranet
A new study by
Prescient Digital Media finds that only 6% of
organizations undertake ongoing, specific measurement of the ROI of
their intranet. Occasional measurement is undertaken by only 26%
of organizations and 51% either do no measurement, don’t know if they
do, or only guess at the ROI. 18% are considering ROI
measurements.
“Although ROI has not been
established in our current intranet we do see the potential and the
need to create a more efficient intranet to be able to reduce costs and
engage employees in a more direct method.” ROI survey
respondent
[1] The study drew responses from more than 240
participants – intranet managers, professionals and consultants –
representing the intranets of a wide variety of organizations including
KPMG, Scotiabank, Volvo, Shell, RBC Financial Group, New York Life,
Hewlett Packard and others.
Value
While few organizations are spending significant time
accurately measuring ROI, it is important to 76% of the respondent
companies.
How important is the ROI of your intranet or portal to your
organization?
|
Unimportant
|
6
|
|
Somewhat unimportant
|
6
|
|
Neither important nor unimportant
|
6
|
|
Somewhat important
|
36
|
|
Very important
|
40
|
|
Don’t know
|
5
|
|
Total
|
100%
|
|
[1] The study, conducted in the spring of 2003,
was self-select (voluntary) conducted online with readers of various
intranet publications including senior management (VP, CEO, COO, CIO,
etc.), middle management (directors, managers, senior managers)
and consultants who regularly work with their organization’s intranet
or with others.
Also, while it may rarely be specifically measured, the intranet’s
benefits are inherently appreciated. More than two-thirds of
respondents state that the intranet has improved the productivity of
the organization.
How does the intranet or portal impact productivity at your
organization?
|
Greatly hinders productivity
|
3
|
|
Somewhat hinders productivity
|
7
|
|
Neither hinders nor improves productivity
|
13
|
|
Somewhat improves productivity
|
45
|
|
Greatly improves productivity
|
23
|
|
Don’t know
|
9
|
|
Total
|
100%
|
|
Highly representative of the challenges facing those that manage
intranets, only a bare majority (52%) of organizations surveyed said
they are satisfied or very satisfied with their intranet or portal
while 36% are dissatisfied.
How satisfied are you with your organization’s intranet or
portal?
|
Very dissatisfied
|
13
|
|
Somewhat dissatisfied
|
23
|
|
Neither satisfied nor dissatisfied
|
8
|
|
Somewhat satisfied
|
38
|
|
Very satisfied
|
14
|
|
Don’t know
|
3
|
|
Total
|
100%
|
|
The percentage of organizations with intranet users varied with
the wide range and size of organizations. 60% of organizations had 1000
users or more while 21% had fewer than 100 users. The largest group had
1,000 to 5,000 intranet users, representing 25% of the survey
respondents.
How many intranet users in your organization?
|
Fewer than 100
|
21
|
|
100 – 1000
|
19
|
|
1000 – 5000
|
25
|
|
5000 - 10,000
|
15
|
|
10,000 +
|
20
|
|
Total
|
100%
|
|
Benefits
To gauge exactly what intranet benefits are valued and how they
are measured, the survey segmented benefits into 12 categories:
-
Reduced hard costs: print, paper and distribution costs.
-
Improved sales: increased revenue and reduced response time.
-
Enhanced communications: better, faster employee
communications.
-
Enhanced competitiveness: time-to-market, information
accessibility.
-
Enhanced application access: centralized application access.
-
Enhanced infrastructure utilization: reduced infrastructure and
integration costs.
-
Enhanced collaboration: better, cost-effective training and
collaboration.
-
Reduced product cycle: reduced inventory and faster
invoicing.
-
Improved customer service: improved information retrieval and
customer self-service.
-
Enhanced human resources: reduced administrative costs and
improved employee retention.
-
Enhanced procurement: reduced cost and time of purchasing
goods.
-
Content management: reduced time and cost of publishing
content.
Unfortunately, of all the benefits measured, none of the above
benefit categories is measured in more than 20% of organizations. Most
organizations undertake a ‘rough estimate’ (a guess) and do not
undertake precise measurements.
Leading the measured benefits parade is content management,
measured in 20% of the respondent organizations with 42% of respondents
undertaking a rough estimate (a guess) of content management’s ROI
value. Other leading areas of measurement included communications,
application access, human resources and infrastructure
utilization.
Percentage of organizations
measuring specific ROI benefits:
Measured ROI
Benefit
|
Measured
Estimate
|
Rough Estimate
|
No Measurement
|
Content management
|
20%
|
46%
|
42%
|
Communications
|
18%
|
53%
|
29%
|
Application access
|
17%
|
37%
|
45%
|
Human resources
|
15%
|
51%
|
34%
|
Infrastructure utilization
|
13%
|
37%
|
49%
|
It is interesting to note that while less than 20% of
organizations have undertaken measurements of specific benefits, a
majority of organizations have at the very least made a ‘rough
estimate’ or guess of the value of their ROI.
Measured Value
Of those that measure or offer ‘rough estimates’ of their
organization’s intranet, answers varied from $0 to $20M. The average
annual ROI of respondent intranets fell just shy of $1 million
($979,775.58).
Respondents were also asked to provide a measured (or
estimated) yearly ROI of each of the 12 benefits.
Measured ROI
Benefits
|
Average Yearly
ROI
|
Content management
|
31%
|
Applications access
|
28%
|
Human resources
|
27%
|
Collaboration
|
27%
|
Hard costs
|
25%
|
Not surprisingly, content management is the intranet ROI champion
with an average yearly ROI of 31% among the respondent organizations.
This correlates well with the perceived value of an ROI benefit.
In part I of the Intranet ROI survey (see
Measuring The ROIs of Intranets: Mission
Possible? for a full overview of the results), respondents
were asked to rate the most important areas for intranet ROI
measurement. Content management was cited as important or very
important by 87% of the respondents – second only to competitiveness
(90%).
More surprisingly is the ROI of intranet communications.
According to the survey participants, the average yearly communications
ROI of respondent intranets is only 11% -- the least of all ROI benefit
categories. Conversely, communications ranks second in importance
– tied with content management.
Conclusion
The ROI of an intranet is sought after and valued at most
organizations, but few are undertaking specific measurement programs to
quantify the value of their intranet investments. While a
majority of organizations make a rough estimate (guess) at the value of
specific intranet benefits, still more are planning to measure ROI. To
quantify the ROI of an intranet, organizations will have to act
decisively to establish baseline measurements for future comparison
while enlisting the support and efforts of other people and departments
across the organization to determine specific benefits for
measurement.
As with any critical business system, the intranet must be
delivering measurable performance and remain accountable to the
investment. If you are not measuring your intranet’s value, then you
risk failing the needs and demands of both employees and
management.
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.