In the first part of a two-part article on intranet return on
investment (ROI), we look at the challenge of justifying intranet
It’s no secret, intranets and corporate portals are expensive
endeavors. Despite the expense, many organizations understand the
implicit and explicit value of intranets and are ready to make notable
investments. A recent study by Hambrecht and Quist found that 85 per
cent of Fortune 200 companies are implementing intranet strategies. And
Forrester found more than 67 per cent of Fortune 1000 companies have
developed or are developing corporate intranets. Even medium-sized
companies know the value and a majority are following the lead of their
Technology stalwarts Oracle,
Cisco and GE have all made recent headlines touting impressive intranet
ROI of US$1 to $10 million.
So how do these companies justify the massive investments these
intranets frequently require? Unfortunately, there is no ‘magic
bullet.’ Measuring the ROI value of a corporate intranet and portal is
an imperfect science at best. In fact, many analysts contend that
precise ROI measurement is not possible due to the expansive and far
reaching nature of intranets. However, while measuring the precise
return on investment may not be possible for most, there are means by
which many organizations do quantify both potential and existing
Generally speaking, intranet ROI can be lumped into one of two
broad categories: cost savings/cost avoidance, or increased revenue.
And while increased revenue should not be discounted, the most obvious
and visible area is cost savings/cost avoidance. Cost savings/cost
avoidance (CS/CA) can be further broken down into two sub-categories:
hard savings and soft savings. There are hard savings that result from
the cost avoidance of printing or distributing documents, and latent,
soft savings from latent benefits such as enhanced communication,
collaboration, and decision-making, among other things.
The principal challenge for measuring intranet ROI is that it is
often easier to appraise the ROI of specific applications deployed on
an intranet rather than measure the ROI of infrastructure and/or the
portal itself. In fact, most demonstrable ROI case studies highlight
application ROI – such as employee self-service and e-procurement –
rather than the ROI of the entire intranet or portal.
Cisco System’s tracks and
measures the ROI of specific benefit areas on its enterprise intranet
including purchasing, expense reporting, printing and distribution.
Cisco estimates that the total fiscal 1999 ROI of their intranet
surpassed $825 million.
Like the phone system, most organizations ascribe an inherent,
latent value to the intranet. However, have you ever been asked to
measure the ROI of your telephone phone system? Not likely. Most people
and organizations inherently know and understand the value of the phone
and don’t require a detailed ROI balance sheet. In many ways, intranets
are like telephone systems – they assist us in accomplishing
mission-critical work all the time.
Likening a robust intranet or corporate portal to a telephone
system will help to illustrate your case, but it likely won’t persuade
your CFO or accountant to open the vault. To do that, you need to
provide tangible, measured intranet ROI.
There are three general approaches for measuring intranet
Ascribe the intranet a value equal to the investment; dollar in
equals dollar out.
Ascribe a non-monetary value to the intranet as a collaborative
communication and knowledge management asset.
Measure and appraise specific benefits from implementing an
intranet and/or corporate portal.
The first two approaches are rather obvious, but should not be
ignored by any organization. However the third approach – measuring
specific benefits – is the most precise and tangible means for
quantifying intranet ROI.
In part two of our examination of intranet ROI, we’ll look at ten
different measurable ROI areas for corporate intranets and offer some
real-world examples of companies who are finding significant ROI at
A former journalist and a regular e-business columnist and
speaker, Toby Ward is a senior intranet consultant and the founder of
Prescient Digital Media. For more information on our One Day
Consultation © 2002-2010 or a copy of the free white paper
, Intranet ROI, please contact