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Projecting ROI for your intranet: Don't bother

Monday, November 15, 2004  

A corporate intranet that successfully improves collaboration and knowledge-sharing is of immense value. The greatest value comes from random, profitable events--a salesperson coming across information that helps him close an important deal, or a developer avoiding a costly mistake by reading a cohort’s posting. But forecasting serendipity is impossible. Too many variables exist to accurately forecast the future effect of an intranet implementation.

So you can’t tell your stakeholders how much their intranet will save them (or make them). Any business case would be inaccurate and impossible to verify. Instead, the senior team has to simply believe that the intranet will be a strategic asset. They have to go on their gut feeling. How can you create that gut feeling?

Ask your audience to consider things like this:
  • How much time is spent searching for information?
  • How much time is spent recreating documents that already exist?
  • How much value is wasted in documents that have been lost or forgotten?
  • How much information stays locked in employees’ heads because it’s too much work to publish it where colleagues can find it and put it to use?
  • How much does it cost to repeat mistakes someone else has made?
  • What’s the cost of missed opportunities?
  • What’s the value of the Next Big Idea?
Here’s another powerful line of reasoning (though probably still inaccurate and impossible to verify): According to IDC and Delphi Group, knowledge workers spend about a quarter of their day looking for information. So, for sake of argument, say your intranet will reduce that time by one hour a week, and that one hour is worth $30 (approximately $40,000 annually plus benefits):

250 employees x 1 hour/ week x 49 weeks x $30/ hour = $367,500/ year
1000 employees x 1 hour/ week x 49 weeks x $30/ hour = $1,470,000/ year

Using this calculation, your intranet for your company with 1000 knowledge workers will save time valued at about $1.5 million.

In any event, your goal is not to deliver a precise ROI dollar figure. Rather, your goal is to offer so many convincing lines of reasoning that any idiot can see that the intranet will be of strategic importance to the company. ROI may be clear-cut for, say, a new piece of equipment on a manufacturing line. But in the knowledge industry, ROI is difficult to ascertain, if not impossible.

About the Author

I'm Chris McGrath, an intranet consultant in Vancouver, British Columbia, Canada. I've been working on intranets since 1997, and on plain ol' web sites for even longer. I run One Intranets, the firm that co-created ThoughtFarmer -- an enterprise collaboration platform for Windows-based intranets.