intranets & extranets
It’s no secret, intranets and corporate portals are expensive endeavors. Despite the expense, many organizations understand the implicit and explicit value of intranets and are ready to make notable investments. A recent study by Hambrecht and Quist found that 85 per cent of Fortune 200 companies are implementing intranet strategies. And Forrester found more than 67 per cent of Fortune 1000 companies have developed or are developing corporate intranets. Even medium-sized companies know the value and a majority are following the lead of their larger competitors. Technology stalwarts Oracle, Cisco and GE have all made recent headlines touting impressive intranet ROI of US$1 to $10 million.
How to Justify the Investment in an Intranet
So how do these companies justify the massive investments these intranets frequently require? Unfortunately, there is no “magic bullet.” Measuring the ROI value of a corporate intranet and portal is an imperfect science at best. In fact, many analysts contend that precise ROI measurement is not possible due to the expansive and far reaching nature of intranets. However, while measuring the precise return on investment may not be possible for most, there are means by which many organizations do quantify both potential and existing ROI.
Generally speaking, intranet ROI can be lumped into one of two broad categories: cost savings/cost avoidance, or increased revenue. And while increased revenue should not be discounted, the most obvious and visible area is cost savings/cost avoidance. Cost savings/cost avoidance (CS/CA) can be further broken down into two sub-categories:hard savings and soft savings. There are hard savings that result from the cost avoidance of printing or distributing documents, and latent, soft savings from latent benefits such as enhanced communication, collaboration, and decision-making, among other things.
The Principal Challenges
The principal challenge for measuring intranet ROI is that it is often easier to appraise the ROI of specific applications deployed on an intranet rather 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 e-procurement — rather than the ROI of the entire intranet or portal.
Cisco System’s tracks and measures the ROI of specific benefit areas on its enterprise intranet including purchasing, expense reporting, printing and distribution. Cisco estimates that the total fiscal 1999 ROI of their intranet surpassed $825 million. (Source: Cisco Systems) Like the phone system, most organizations ascribe an inherent, latent value to the intranet. However, have you ever been asked to measure the ROI of your telephone phone system? Not likely. Most people and organizations inherently know and understand the value of the phone and don’t require a detailed ROI balance sheet. In many ways, intranets are like telephone systems — they assist us in accomplishing mission-critical work all the time.
Learn more about Intranet ROI
A Black Box
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