Evaluating Intranet ROI - Benefits Overview

Evaluating Intranet ROI - Benefits Overview

Measuring the precise value of an intranet or portal is likely impossible. It is, at best, an imperfect science. However, more and more organizations are measuring the ROI of their intranet investment.

An Intranet ROI study (more than 200 organizations) with the University of Pittsburgh Katz School of Business (2009) found that 6% of organizations undertake ongoing, specific measurement of the ROI of their intranet, while occasional measurement is undertaken by 26% of the respondent organizations. Today, the number of organizations that measure intranet ROI is far less. 

When asked how business executives currently evaluate the value of an intranet, most executives will speak about reducing business costs and improving employee productivity. For anything that cost the business money, there must be a clear answer to the question "How does this help us financially?"


INTRANET ROI STUDIES

(The spectrum ranges greatly)

Aggressive Studies: Returns of greater than 1000% with payback in as short as 8-24 weeks

Conservative Studies: Returns of 23 to 88% with payback in 1-2 years


While less than 20% of organizations have measured specific benefits, a majority of organizations have at the very least made a ‘rough estimate’ or guess of the value of their ROI. Rather than attempt to measure the intranet or portal’s entire value, some companies are successfully measuring only a few specific benefits.

A META Group study revealed that 80% of surveyed companies realize a positive ROI with an average annual return of 38%. An IDC survey found that an average intranet investment of about US$1 million at six leading companies returned benefits of US$5 million per company

The principal challenge for appraising intranet ROI is that it is often easier to assess the ROI of specific applications deployed on an intranet 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 procurement, rather than the ROI of the entire intranet or portal. 


To fully understand the potential of an intranet, we must segment ROI into the following benefits and provide an analysis on each:


1. Hard Costs

Hard cost savings and avoidance – from paper reduction and reduced information distribution, to labor reductions – are the most commonly reported ROI benefits, and perhaps the easiest to calculate. 

  • Reduce paper printing and circulation
  • Software downloads rather than manual installation
  • Headcount reduction and savings resulting from automated functions
  • Reduce or eliminate processing errors


2. Sales

Many successful sales organizations rely on sales software and web applications to improve their sales success. Online sales tools allow sales representatives to access greater volumes and media-rich (multimedia) information faster than previously possible – driving increases in sales. Intranet sales tools vary from applications that allow the sales force to enter and access customer data, track sales leads, forecast sales and profit margins, schedule joint meetings and more. 

  • Better customer service leading to more sales
  • Reduce time to market for promotions
  • Increase collaboration amongst sales people
  • Enhance collaboration between reps and customers
  • Migration of sales brochures & collateral to the web


3. Productivity

Increasing the productivity of the knowledge worker has become imperative. It’s a competitive advantage that is best driven by digital technology and workplace tools, spearheaded by the intranet. The intranet represents a massive opportunity to improve productivity that reduce costs for servicing customers, automating processes, removing paper work and administrative efforts, publishing, and collaboration while reducing manual labor.

IDC conducted a productivity survey of knowledge workers that investigated various information tasks performed by knowledge workers, and repetitive tasks that might be prime targets for automation or improvement. On average, IDC estimates the average information worker salary of $75,000 per year and discovered the following about the average knowledge worker:

  • 13 hours per week spent on email (cost: $21,000 per year)
  • 9 hours per week spent searching for information (cost: $14,000 per year)
  • 8 hours per week analyzing information (cost: $13,000 per year)
  • 6.5 hours per week communicating / collaborating with team members (cost: $10,000 per year)
  • 6 hours per week creating content (cost: $10,000 per year)
  • Nearly 4 hours per week publishing information (cost: $6,000 per year) 

Researchers conclude that social collaboration tools increase employee productivity. In fact, McKinsey & Company estimates that by using social technologies, companies can raise the productivity of knowledge workers by 20 to 25%.


4. Competitiveness

An organization will only be competitive if it can learn faster than its competitors” is a favorite saying of renowned tech writer and speaker Don Tapscott. It’s no secret that intranets are becoming the cornerstones of knowledge management (KM) and learning at leading Fortune 500 companies. With faster access to greater volumes and more accurate information and knowledge, users are driving organizations to learn and respond more quickly in the marketplace. 

  • Just-in-time access (access when needed)
  • Improve access to internal and competitive data
  • Improve information sharing (KM)
  • Opportunities for new business


5. Application Access

Productivity is also determined by the technology employed by the user, including hardware, platform, and browser. By aggregating application access under the corporate portal, all users will be able to benefit with access to previously unused or seldom used tools. Access speed is also greatly increased as users access applications regardless of their location, which also improves employee productivity.

  • Centralize access to multiple applications and platforms
  • Desktop access by all employees, from anywhere
  • Home access enables employees to work remotely
  • Multiple, cross-platform integration is reduced


6. Infrastructure

Mainframe, legacy and proprietary systems and applications are expensive to buy, maintain and staff. Utilizing internet technology as the foundation for the corporate intranet can save organizations a great deal of money – in both capital and maintenance costs. 

  • Reduction of server and client operating costs
  • Special training for web application users is eliminated or greatly reduced
  • Systems integration is less complex and costly
  • Application development is less complex and costly


7. Collaboration

Metcalfe’s Law states that the number of possible cross-connections in a network grows as the square (exponentially) of the number of computers in the network increases. In short, as the number of connections between computers and users increases, the value of the network increases at an exponential rate. The same value could be ascribed to the connected users of an intranet: the value of an organization will exponentially increase as more connections and collaboration points are made between intranet users.

  • Reduces time and space constraints
  • Support for virtual teams in multiple locations
  • Knowledge Management - enhanced communications and information sharing
  • Online training (e-learning)


8. Time to Market

An effective intranet enables an organization to attract more customers and market share by responding faster to market demands.

  • Faster development of products and services
  • Reduced supply chains cycle with suppliers, partners, customers, etc.
  • Real-time information sharing
  • Reduce inventory requirements
  • Reduce working capital requirements
  • Faster invoicing and purchasing


9. Customer Service

Web-enabled customer service functions arm both internal customer service reps and external customers with more immediate information. Through the use of email, FAQs and service policies, organizations can dramatically improve the information flow and reduce the cost of customer service

  • Fewer employees required to service customers
  • Availability of support and reference information
  • Customer and employee access to subject matter experts via email, etc.
  • Availability of 24-hour, 7-day per week support
  • More accurate and consistent information (internal information matches external information)
  • Centrally-managed information repositories


10. Human Resources

While the business culture, personal compensation and the opportunity for advancement are all critical motivators of employees, many employees will also cite the ‘right tools to do the job’ as a prime motivating factor. By arming employees with the right tools and technology to perform their work, employee satisfaction and retention rates will be greater while improving productivity and saving money.

  • Higher employee retention
  • Reduce training expenses
  • Reduce knowledge loss and resulting competitive threat
  • Improve productivity and reduce 'downtime' due to employee desertions


If you enjoy this post - like, comment, share, and send. This will be the first of a series of articles regarding the intranet business case.

Iman Fardghassemi

Corporate Sustainability Consultant | Research Analyst | Sustainability Manager | Account Manager

3 年

Worth the read!

Darian Ghassemi

Sales at Crossbeam

3 年

Really in depth and comprehensive. Clearly and effectively paints ROI and the need to audit your current intranet. Thanks Andrew Hookano!!

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