Measuring Intranet Return on Investment

After a two-month audit,
Special Agent Grimly found a discrepancy in the company’s financial assets.
The Marketing and Program Management departments have been secretly involved
in a project using a corporate intranet for, as yet, unspecified reasons.
Thousands of dollars have been put into this secret project but little
evidence has been shown on paper as to investment return. Are they purposely
trying to hide something? Have they been funneling the funds to an offshore
Cayman Islands account? Have they been supporting an underground movement
to overthrow upper management? The results of this intranet implementation
are inconclusive and case file “x23986001” shall remain opened until further
evidence is found.

to the men in black

You already know about the
advantages of using an intranet implementation to drive your strategic-intelligence
business processes, right? This is a solution that has been hailed
by some as the most important collaborative business tool since the telephone.

However, deep in the shadows a mysterious group of men and women are watching
you. They are watching every dollar you spend and wondering when they
will see a return. Will you have an answer when they come knocking on
your door?

To begin answering the question
of intranet ROI, you need to build a business case to prove that an
intranet is a valuable and cost-effective solution
for your company.
Management doesn’t want to spend money on something it doesn’t have
and if they do, they’ll expect big returns for their investment.
Unfortunately, an intranet, being a proactive solution, may clash with
management’s well ingrained”if it’s not broken, why fix it?” mentality.
An intranet fixes problems before they become problems and you have
to prove this

A business case will basically
provide your financial sponsors with the details of your intranet project
minus all the “techie” jargon. Your business case should include:

  • An executive summary defining and
    describing the project
  • The project objectives
  • The business requirements that warrant
    the application of such a solution
  • The project benefits
  • The development and implementation
  • A risk analysis

If time
and resources permit, a pilot project could also go a long way to
answering a lot of questions from the “people upstairs”
with regard
to intranet ROI. Unlike a simple PowerPoint presentation with static
screen shots of a theoretical intranet, a pilot project will allow
you to turn that idea into a practical working model
. Once your
key sponsors are given a chance to test drive your intranet on a much
smaller scale, they will get a better sense of what can be accomplished
and how it can effectively be used as tool to aid or replace current
business processes.

Unidentified Financial Object?

are one of the more difficult business solutions to measure for ROI. The
reason for this is that many of the benefits associated with intranets
are intangible
. These cost-savings are in so-called “soft dollars”;
improved employee productivity, tighter inter-departmental as well as
corporate-wide collaboration and communication, faster and easier information
gathering and sharing. How do you measure such things? Some managers
don’t even bother trying to quantify intranet ROI because it’s just not
worth it
. An in-depth ROI analysis will end up taking more time than
actually building the intranet itself.

I mentioned before that intranets are being compared on the same level
as the significance of the introduction of the telephone. When you think
about it this way, has any company ever been asked to quantify the ROI
of its telephone system? No, because everyone understands the latent value
and importance of a telephone system in both corporate communication as
well as communication with clients.

Does this sound like professional suicide? Asking your company to invest
in something on faith that it will end-up paying back? Well, not quite.
Let’s take a quick look at an intranet’s three main expense categories:

  • Technology

    Hardware, software, post-production, and maintenance costs

  • Information
    Subscriptions to external information, marketing, and promotion
  • Personnel
    IT and content provider man-hours for development, and

Complete Intranet Resource (CIR)
Web site offers downloadable intranet
ROI cost calculation worksheets. These are simple spreadsheets with
sample figures that you can use as templates in trying to determine
your own intranet costs. Fastrack
Consulting Ltd.
also provides a cost-benefit
using hypothetical figures and timelines. Obviously,
the size of your intranet and the size of your company will play
a major role in trying to determine intranet cost and ROI.