As I wrote in my first article on the subject earlier last year (
Measuring the Dollar Value of Intranets), there is
no ‘magic bullet’ to appraise the dollar value of an intranet.
Measuring ROI of a corporate intranet or portal is, at best, an
imperfect science. In fact, it is impossible to measure an intranet’s
exact dollar value. Although measuring the precise return on
investment may not be possible, more organizations are, nevertheless,
attempting to quantify both potential and existing ROI.
While technology stalwarts such as Cisco and Oracle have made big
strides in appraising (largely for marketing purposes and bragging
rights) the dollar value and performance of their existing intranets,
few others have done any extensive measurement.
To better understand how organizations value and measure the ROI
of their intranets, Prescient Digital Media partnered with the
Katz School of Business
at the University of Pittsburgh to conduct an extensive, but
voluntary, study of willing organizations. The first part of a two-part
survey was conducted in the spring and summer of this year (2002)
through an online survey tool. While the study is not a scientific
sample of a specific audience, the respondents were a mixture of
intranet managers, consultants and readers of Intranet Journal. This
diverse group of people offered unique intelligence into the minds of
organizations and professionals operating corporate intranets.
Two-hundred and seventy-five (275) survey participants were asked
to rank in order of importance almost 70 different intranet investment
benefits organized according to 12 broad categories including:
-
Hard
Costs
-
Sales
-
Communications
-
Competitiveness
-
Application
Access
-
Infrastructure
utilization
-
Collaboration
-
Time To Market
(Cycle Time)
-
Customer
Service
-
Human
Resources
-
Procurement
-
Content
management
The findings were somewhat surprising: softer, harder to measure
benefits such as competitiveness, communications and content
management (the big ‘C’s’) were rated the most important.
Traditional areas of focus for ROI benefits, including procurement,
sales and time to market were rated among the lowest benefit
categories.
Most important benefit categories
1. Enhanced
competitiveness
|
90%
|
2. Content management
|
87%
|
3. Enhanced communications
|
87%
|
4. Hard cost reduction
|
86%
|
5. Enhanced customer service
|
85%
|
Least important benefit categories
1. Enhanced procurement
(eProcurement)
|
63%
|
2. Reduced cycle time (time to market)
|
71%
|
3. Enhanced infrastructure utilization
|
75%
|
4. Enhanced human resources
|
77%
|
5. Sales process enhancement
|
81%
|
“I’m not that surprised,” says David Yockelson, an executive
vice-president and director with META Group, a technology
research and analysis firm. “The value of the intranet to me is going
to be more around productivity and soft costs. My expectations are more
about communicating more freely, time savings, and information
availability rather than sales and hard cost savings.”
When survey participants were asked to rank specific line item
benefits (almost 70 in all), access to and increased sharing and
accuracy of information led the benefit parade. The lowest ranking
benefits related to procurement and time to market.
Most important ROI benefits
1. Improved information sharing (customer
service)
|
97%
|
2. Enhanced communications and information sharing
(communications)
|
95%
|
3. Increased consistency of info (customer
service)
|
94%
|
4. Increased accuracy of info (customer service)
|
93%
|
5. Reduced or eliminated processing
|
93%
|
6. Easier organizational publishing
|
92%
|
Least important ROI benefits
1. Reduced capital costs by using ASP
|
43%
|
2. Reduced reliance on proprietary standards (vs. open
standards)
|
54%
|
3. Reduced inventory
|
55%
|
4. Increased collaboration with vendors reducing
time
|
55%
|
5. Wider marketing reach (Internet vs. EDI &
Catalogues)
|
58%
|
6. Increased control over purchasing process
|
63%
|
Again, specific benefits relate to customer service, communication
and content management – access to and accuracy of information. While
the results may be somewhat unexpected given the emphasis on softer
benefits, the results were appreciated by some of the pundits.
Yet, as many readers and intranet managers can attest, executives
want to see hard savings. While soft benefits can produce some ‘wow’
numbers, including millions of dollars attributed to time saved
(improved productivity), corporate bean counters want to see cold, hard
numbers.
“What is more convincing? Clearly the hard cost savings,”
Yockelson says. “Nobody wants to hand out money for anything – times
are tight. If you can’t justify it, it won’t happen. They’re
(executives) bristling at any costs.”
Part II of the intranet investment study examines where
organizations are measuring value and what ROI they’re finding.
Participation was requested in developing the most accurate picture on
intranet investment value. Readers were encouraged to partake
by completing an online survey. All participants received
full copies of the complete research and were eligible to win
cash, a PDA or University of Pittsburgh prize
package.
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.