when all’s said and done, how do you measure “hard dollar” investments
with “soft dollar” returns? It’s difficult to directly connect money
spent with money returned, in this case. Some analysts say that, at the
very least, you will break even within one year. Others, such as Forrester
Research, place average intranet application ROI at 1238%. The difficulty
with respect to measuring intranet ROI stems from the fact that much
of the payback comes in the form of intangible returns with indirect cost
Hard Medium – These are the savings accumulated by replacing
paper documents as well as the administrative costs associated with
maintaining and storing this hard medium. This includes reductions
in both distribution and production costs.
Saving – In the world of document management, it’s a widely
accepted statistic that over 20% of an employee’s time is spent
searching for information… that’s eight hours a week. In strategic
intelligence, there’s no gain in looking for information. The gain
comes only with what you do with this information after it has been
Stays When People Leave – People decide to tackle other projects
or leave the company. When they do this, they take with them all
of their experience and knowledge. However, an intranet gives you
the opportunity to gather and store the knowledge of your employees,
past and present, into an accessible pool of shareable information.
Duplication of Effort – Every company must deal with a certain
amount of “the left-hand doesn’t know what the right-hand is doing”
syndrome. By using an intranet as a collaborative tool for information
sharing there is less likelihood for duplication of effort.
Self-Sufficiency – By placing relevant industry and corporate
information in a centralized location, it makes it easier for employees
to find what they are looking for. This eliminates the need for
intermediaries. When you empower your employees with the appropriate
tools, you also provide them with the opportunity for more efficient
An intranet is a solution
that provides long-term gains with short-term costs. Sure, it may
seem like a lot of money to invest upfront when compared with something
like the production of paper-based medium but what you need to realize
is that the initial costs will pay for themselves in the long run.
The rolling costs of printing, maintaining, and distributing hardcopies
will accumulate and these are dollars you won’t be getting back either.
It will cost you money, no matter how big or small, every time you need
to make an update.
The good news with an intranet
is that much of the initial costs come in the form of a one-time investment.
A properly built and maintained intranet will eventually reach a point
where it becomes self-sustaining. Every dime you put in will bring
with it the opportunity for gain, either directly of indirectly.
Despite my efforts at convincing
you about the difficulties associated with trying to quantify intranet
ROI into a feasible number that you can put on paper, your sponsors will
want one anyway. That’s just the way the world works; you put water in
the fridge and it will freeze, you go outside when it’s raining and you’ll
get wet, you ask your company to invest in a solution and they’ll want
a concrete return… isn’t it strange that ROI means “king” in French?
Hmmm, coincidence? I’ll open up a new X-File.
This story was first published on IntranetJournal, an internet.com site.
Paul Chin is an IT technologist and intranet specialist for Competia, a consultancy and training organization for senior executives and analysts in strategic planning and competitive intelligence.