How to Measure and Optimize ROI on Intranet Software?
Intranet software providers the world over are adding value to business. A simple intranet platform adheres to the definition of business automation. A decision to deploy, administer and run an intranet is a decision to invest in enterprise technology. In God we trust. Everybody else must bring data to the table. The rationale behind a business decision to embrace technology has to be substantiated on the basis of performance.
There are two aspects of measuring performance of a technology: technical and economic. While the measurement of technical efficiency is of interest to technocrats, the justification of an investment in technology calls for a premise of economic efficiency. In other words, in order to assess the rationality behind adopting a simple intranet, the correct question based on metrics of economic efficiency has to be asked. There is a line of thought process that has been popularized by the academicians and business leaders in the U.S. that stresses on financialization.
Of course this line of thought has gained immense acceptance and approval of a vast majority of business leaders across the world. Yet, it is only prudential on the part of a business enterprise to look at the question of legitimacy of investment in intranet technologies from different perspectives of functional areas of business and then chart a formidable plan of measurement that takes into account both monetary and non-monetary returns.
Monetary Returns from Development, Deployment & Maintenance of Intranet
Returns of deployment, development and maintenance of an intranet need to be assessed objectively. Doing so allows business leaders to have a crystal clear idea of the one time and recurring costs of instituting an intranet framework for business. From the functional view of finance, monetary returns provide a input and output relationship and thus enable smooth budgeting for automation and technology investments. A standardized assessment of tangible returns on investment in intranet may be premised on any of the following methods
- Hard ROI
- ROI from solutions to problems
- Impact of ROI from intranet on KPIs
The hard ROI method measures returns as an output having linear relationship with the investment. Thus a ratio between returns accrued in a financial unit time and the onetime cost of deployment of intranet may be considered as a fair enough approximation. For example an investment of US $ 1000 on intranet and an annual returns measured at US $ 3500 is assessed as:
ROI = returns / investment = 3500 / 1000 = 3.5
The reason why we call it just a fair enough approximation is because there are non linear spill over effects of technology and returns to scale that accrue to business out of intranet usage.
Thus the second method of ROI from solutions to problems solved can be a better substitute. This method considers the returns obtained by reducing wastages of cost, time and resource engagement in the execution of a business assignment as a result of deployment of intranet systems.
The particulars of the ROI may be stated as follows for a hypothetical example:
- Increase in sales: 12%
- Reduced cycle time of closing a deal: 7%
- Reduced costs of liaison with customer service: 7%
- Reduction in mobile tariff and fax costs: 9%
- Reduced cycle time in document search: 8%
The third method of calculation of ROI based on impact on key performance indicators (KPIs) is the most exhaustive. Experts on ROI assert that this method considers the impact on KPIs across different functions of sales, customer service, marketing, talent management and training, etc. The standardized calculation of ROI on intranet following this method may be presented as follows:
|Assignment||Cycle time before intranet (in seconds)||Cycle time with intranet (in seconds)||Time Saved Per Attempt (in seconds)||Dollar Equivalent of Time Saved Per Employee||Dollar Equivalent of Time Saved for the Company *|
|Brainstorming a New Idea||112||42||80||1||100|
|Provide After Sales Service to Customer||232||152||80||3||300|
|Stay Updated on New Client Deals||227||177||50||0.5||50|
|Update Marketing Information Systems||145||65||80||4||400|
*data shown in the column 6 are assessed on the assumption of 100 employees in the work force of the company
Human Resource Engagement and Collaboration
At the purely micro-economic level, the ease of use is a simple yet very important yardstick to measure the impact of intranet on staff and human resources. Facets of technology like collaboration, productivity and competitiveness indicate some important parameters of the ease or simplicity of technology. Lower the necessity of time, money and resource engagement for learning the use of an intranet network the better it is for a business enterprise. Moreover the collaborative capacity of an intranet bears testimony to the synergistic effect that it creates by enhancing team work and synchronization of individual efforts towards realization of organizational goals. Time and money saved in executing document search and sharing are also effective pointers in this regard.
Application Access and Infrastructure
Finally technical aspects need to be considered while dealing with the effectiveness of a technology platform like intranet portal. Factors like application access and infrastructure creation and maintenance are highly important. A platform and device agnostic approach towards the development and deployment of an intranet software is most desirable as it enables employees to access documents, collaborate with each other and stay in touch with the back office even as they spend greater time at the market place engaging in meaningful conversation with customers and clients to generate revenue and develop business. Portability or mobility of work greatly depends on the creation of enrolment points across personal devices that employees carry to the workplace. An infrastructure development and maintenance effort also deserves to be counted. Lower the involvement of the IT department of n enterprise the better it is for the business.
On a concluding note it makes enormous good sense to suggest that ROI measurement for intranet networks can not only give a detailed account of an intranet’s benefits but can also show up areas for improvement in the back office that can be addressed. It is true that measurement precedes management and for businesses to assess the utility of technology like an intranet they need to adhere to a disciplined measurement plan that looks at both the monetary and non-monetary returns affecting business.
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