RO-Why: The business value of a modern intranet

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1 RO-Why: The business value of a modern intranet 1

2 Introduction In the simplest terms, companies don t build products, do deals, or make service calls people do. But most companies struggle with isolated knowledge workers and a limited understanding of organizational expertise. Corporate knowledge is trapped in the minds, memory, and messages of your workforce, and these barriers hamper productivity, decrease employee awareness, and cripple innovation. Modern intranet solutions are all about breaking down those barriers. They re about creating connections between the people, information, and processes your employees need in order to do their jobs more efficiently and effectively, and they make you more agile, productive, and competitive. In this paper, we ll explore the benefits of a modern intranet solution. You ll discover the key metrics for success and learn about a simple framework for identifying, analyzing, and communicating business value. Top time wasters at work There s no shortage of office distractions that can take you away from the task at hand. Depending on your goals, here are a few of the biggest culprits that can help frame the business value of a modern intranet. 1. Managing A typical knowledge worker spends 7 hours per week reading, sorting, and replying to s. This equates to 432 hours or 54 days per year. One-third of this time is spent on questionable tasks, like reading reply all messages, reverse engineering threads, and trying to locate attachments. IDC: this costs companies on average $8,000 per employee per year. 2. Duplicating work Employees spend an estimated 2.5 hours a day duplicating or re-creating work that already has been done. Reinventing the wheel over and over again. IDC: this costs companies on average $5,000 per employee per year. 1

3 3. Searching for people and information Information is scattered throughout the organization and workers spend 2.5 hours per week searching for people and information within the company. Critical data is locked away in inboxes, file systems, and in employees heads. IDC: this costs companies on average $7,000 per employee per year. 4. Attending bad meetings Meetings are costly and a significant drain on productivity. According to EffectiveMeetings.com, over 31 hours a week are spent in meetings: Anywhere from 30-50% of time in meetings is considered wasted The average employee attends 62 meetings per month 91 percent of meeting attendees report daydreaming, 39% sleeping Business value starts with strategy Whether your company is considering setting up a modern intranet, or you already have one up and running, the most important question to ask is: How are we going to measure and maximize the business value to the organization? It s important to note that there s no one way to measure the impact of improved communication and collaboration, every company is different in their requirements, business objectives, culture, and way of doing business. Of course, most people can inherently understand the value of increased dialog, greater engagement, and better knowledge sharing in the workplace, but it's difficult to measure. Intangible assets, like employee skills and organizational culture, affect financial outcomes through a cause-and-effect relationship. Understanding the strategy link Before you can even begin to think about how to measure the value, you need to clearly understand your business strategy. Context matters; alignment is critical. If intangible assets are not aligned to the strategy, then little value can be created. Take the time to understand the pillars that drive your business forward, and how the capabilities of your intranet tile up to key business metrics. Often times, a company business strategy will focus on one of three core areas: 1. Productivity: improving corporate performance across the entire company - from your employees, teams and executives. 2. Innovation: bringing new ideas to life which accelerate your business - from 2

4 process improvements to the introduction of new products and services. 3. Competitive advantage: finding ways to set yourself apart - from fostering a unique employee culture to supporting better customer engagement. Categorizing the measures of success There are two generally accepted approaches to measuring business value, each with different audiences and outcomes. One focuses on the more conventional financial measure of return on investment (ROI), the other on the more subjective measure of return on objective (ROO). It s easy to shy away from subjective measures, but resist the urge. Even if the measures are imprecise, they can provide strong evidence of the value created. 1. Return on Investment (ROI) This is the traditional method favored by finance departments everywhere, where you spend $100 on software, you get $1,000 in return. It works well for simplistic processes that have a direct cause and effect. For example, automating a process that used to be manual, or reducing the travel costs associated with a meeting. Key stakeholders that are interested in ROI are typically information technology and finance and accounting. 2. Return on Objectives (ROO) This method looks at creating measurements related to specific problems solved. It is not about monetization, but measuring the incremental value a modern intranet brings to your business. It s about measuring how well a team or even the company is doing in meeting the business challenges they are trying to address. Key stakeholders that want to measure ROO are usually business unit leads and project owners. Intranet outcomes are traditionally a few steps removed from the impact on revenue or profit. That is why tying the return on a specific objective to a business metric is so important. The more closely aligned they are with the business strategy, the easier it will be to measure and connect to a higher-level goal. Has knowledge sharing increased the rate of responsiveness? Is the workforce properly trained and aligned to pursue a specific goal? Metrics that focus merely on activity (e.g. content created, viewed) offer insight into the adoption of a modern intranet, but they do not provide evidence of how they tile up to 3

5 your corporate KPIs. And identifying a causal relationship is not without its complexities, but it s essential for estimating the value to the business. Clearly define the problems you re solving Organizations can define the role of the intranet in many ways, from a corporate hub to disseminate news and share knowledge, to an online community for managing work and relationships. According to a report published by Gartner, a leading research and advisory firm, the wide array of uses for social software in the organization is diverse. Gartner, Inc. Survey Analysis: High Hopes and Mixed Results for Social Software in the Workplace. 10 February Don t let the sheer number of possibilities cloud your purpose though. Start small. Focus on the most important jobs to be done and design your objectives and measures of success around them. Evaluate where you are and determine where you re going, only then will you know when you ve achieved success. Determine the total cost of ownership IT cost has been and continues to be the dominant metric for CIOs. The initial set-up and costs to acquire technology, as well as the projected incremental expenses to 4

6 maintain it, are critical measures of success and provide a basis for calculating a return on the proposed improvements. Be sure to weigh the merits of a hosted solution and subscription-based license that spreads out the cost of ownership over time, against the more expensive up-front investment required by on-premises platforms. Frame the question around the costs required to acquire these capabilities or the savings to replace the current legacy system. On-premises platforms are typically associated with large, complex, customized deployments with many software and hardware dependencies and high operational costs. Consider a typical SharePoint implementation. This often equates to months or even years that the IT team is tied up managing the complexity of a migration. Looking purely at licenses can mask the vast majority of costs associated with running these solutions - real cost of ownership can include hardware, third-party software, and vendors to make it all work, plus internal staff to manage and maintain it. Osterman projects this cost at $46.54/user/month for SharePoint - $27.28 for licenses and hardware, plus $19.26 for each staff member to manage it. List of the intranet costs for an on-premises solution: Software: user licenses, additional modules Hardware: infrastructure, networking, storage Implementation: planning, architecture, design, configuration, launch Development: integrations, customizations Training: end user, power user, administrator Maintenance: upgrades, patches Staffing: community managers, content authors, technical support Cloud applications, like Igloo, deliver 1.7 times more return on investment than onpremises ones, according to Nucleus Research. They take 40% less consulting, cost 25% less in support and 4 out of 5 deployments deliver increasing benefits over time. Analyze your key indicators of success Whenever you re framing a conversation around business value, always look beyond simply justifying the expense. The value of an intranet comes from the collaboration that the technology enables, not the technology itself. A return on investment calculation that is based solely on the technology platform is an important measure, but does little to identify the long-term benefits. 5

7 Balance an understanding of your IT costs with your business goals. Once you ve defined the jobs to be done, measure the impact of your intranet on your intangible assets and the processes you ve defined. There are two primary categories of intangible assets that you ll want to explore: 1. People: talent, knowledge, and relationships that your employees possess. 2. Culture: employees shared values and connection to the company mission. The people perspective Human capital is a measure of workforce capacity. It s determined by whether employees have access to the skills and expertise necessary to do their job. A modern intranet can serve as a platform for maximizing the value of your people, enhancing how you onboard and develop them. It can facilitate the delivery of training and help bring together people across the organization by establishing informal networks that live outside the hierarchy. If you can measure whether the workforce is fully trained in support of a specific goal or share anecdotes that provide proof of the value of the network, that s all you ll need. The easier it is for people to learn and access knowledge, the better. The cultural perspective Organizational capital is a measure of engagement and alignment. It s determined by whether employees understand and believe in the mission and core values. As companies grow, a modern intranet can serve as a platform for communication and engagement. It can advance the conversation, build trust, and open up the flow of information and knowledge to, from, and among employees. An assessment of employee perceptions have typically relied on surveys, but tap into the power of technology, too. Use online discussions to foster dialogue and measure participation through analytics. The more employees feel passionate about their jobs and understand goals, the more discretionary effort they will give. Use the intranet platform to capture and share success stories more broadly in order to increase the likelihood of replicating that success. The measurement timeline An intranet is a journey, not a destination. It must evolve to meet the changing needs and culture of the business. That means the measures of success must change, too. In practice, complete intranet redesigns occur about every 3 years, usually triggered by a significant strategy change. With that in mind, it s important to align the timeline for 6

8 measurement with the intranet s purpose, and revisit key metrics regularly to ensure that they fit with the objectives as the business evolves. Gartner defined an array of uses for social software in the workplace, but there are 5 common scenarios that frequently appear: 1. Communications: a platform to disseminate news and announcements 2. Knowledge management: a way to capture, organize and diffuse knowledge 3. Application gateway: a single point of access to systems and apps 4. Collaboration: a central location for working across teams and projects 5. Process management: a virtual location for coordinating tasks and activities Selecting the right scenarios and metrics will not only help to assess the level of success, it will also be a great source of feedback on your path to improvement. Conclusion A modern intranet has a tremendous impact on productivity, employee engagement, and innovation within your company, but it can be difficult to measure. An investment in technology that improves employee skills, fosters knowledge sharing, and enhances culture affects financial outcomes through a cause-and-effect relationship. But even intangible assets can be measured with the right timeline and approach. Start by developing a strong understanding of your culture, strategy, and the workflows you re trying to support, and compare that with the cost to acquire the technology. As you define the relevant metrics and monitor progress against your goals, you ll gather the insight required to keep evolving, and that s the true measure of success. About Igloo Igloo is a collaboration platform that helps you do your best work. We make sharing information simple, fit with the way you work, and feel like home. Put simply, Igloo is an intranet you ll actually like. It s a digital space designed to bring organizations and their people closer together. That is why Aetna, Nextel International, ATP Tour, and over 300 companies in 80 countries choose Igloo. Learn more at igloosoftware.com

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