ROI of Mass Notification

Transcription

1 An Osterman Research White Paper Prepared for Everbridge October 2006 Osterman Research, Inc. P.O. Box 1058 Black Diamond, Washington Phone: Fax:

2 Table of Contents Executive Overview... 1 An Overview of Mass Notification... 1 Why Mass Notification is Superior to Conventional Methods... 2 The ROI of Mass Notification... 3 Dealing with Business Interruptions... 3 Supply Chain Notification... 4 Customer Service Management and Outreach... 5 Routine Employee Notification... 5 Calculating ROI... 6 The Components of ROI... 6 Hard Costs vs. Soft Costs... 6 Economic vs. Non-Economic Benefits... 7 Identifying the Processes... 7 ROI Examples... 8 The Everbridge Value Proposition... 9 Summary and Conclusions Osterman Research, Inc.

3 Executive Overview A mass notification system is an integral component of an organization s emergency and routine communications capabilities. While these systems are most often associated with emergency notification for contacting employees during and after a disaster, mass notification dramatically improves an organization s operational efficiency and bottom line when implemented for day-to-day operations. Just a few common examples include alerting supply chain members about a needed change in delivery schedules; reminding employees about policy changes, deadlines, and other time-sensitive information; and mobilizing IT staff more quickly after a server goes down all make an organization and its employees more efficient and competitive. A $12 billion real estate development company used mass notification during Hurricane Rita in September 2005 to notify hundreds of employees and thousands of tenants in the Houston area. The reality is that timely and efficient communications with employees and others is becoming increasingly important and can provide a competitive market advantage. In contrast, the inability to communicate quickly and efficiently can have serious and dramatic negative consequences. A mass notification system provides effective communications when you need to deliver time-sensitive information in an emergency situation. Additionally, because a mass notification system is so useful for a plethora of non-emergency applications, it is important to use returnon-investment (ROI) analysis to measure the business value that such a system provides. This white paper does just that, discussing the benefits of mass notification for a variety of applications. It also provides examples of the ROI that mass notification offers. An Overview of Mass Notification A mass notification system is essentially a broadcast communications tool that contacts any number of people immediately with minimal effort on the part of the call initiator. The system works like this: 1. Contacts set up and preferences defined. When the system is set up initially, contact information for each employee or other individual is created in a directory. For example, an individual may wish to be contacted first via landline telephone. The second choice is to be contacted via cell phone. A third choice is to be contacted through a corporate , the fourth choice by home phone, and the fifth choice by personal Osterman Research, Inc. Page 1

4 In addition, individuals can be grouped by function or other parameters. For example, an individual can be grouped in a senior management group or server group. A call initiator can then contact an entire group very easily and quickly. 2. Voice and/or text messages created. When notification is required, an authorized individual creates a message to be distributed to a group or any selection of contacts in the directory. The communication can be a voice and/or text message and can contain information requesting a response. For example, in an emergency, a message can be sent to all employees to inform them not to come to work that day. The system can also request information, such as safety and location of employees, and medical assistance needs. A prominent dance and cheer company in the Midwest uses Everbridge to send news, updates, event information and instructional messages to more than 400 stakeholders. 3. Message delivered and report generated. During the notification, the system continues to attempt to contact each individual until a successful resolution is achieved. A real-time report can quickly communicate the overall picture: how many recipients have been reached, their statuses, and so forth. Detailed reports emphasize where individual follow-up is needed. Why Mass Notification is Superior to Conventional Methods In several respects, mass notification is dramatically more efficient than conventional methods of contacting a large number of people: 1. Call trees. A broadcast message can be initiated by a single individual with no more than a few minutes of work. A call tree, on the other hand, is very timeconsuming and error-prone, which results in a much slower response rate. Additionally, once a message is initiated using a call tree, it is nearly impossible to recall the message or to change it after it has begun its communication process. 2. Radio and television. Distributing information via radio or television can notify large numbers of people, but there is no guarantee that the intended respondents actually hear or see the message. Further, there is no guaranteed feedback mechanism that permits the sender of the message to know if the intended targets have been properly notified Osterman Research, Inc. Page 2

5 3. Written notices. Sending written communications, such as letters or door hangers, does not permit rapid distribution of information and is more expensive than mass notification. The benefits of a mass notification system are summarized in the following table. Benefits of a Mass Notification System The Disaster Assistance Response Team for a major city northwest of Los Angeles uses Everbridge during emergency situations to keep city residents informed. As a result, they are able to increase emergency response effectiveness by 80%. Focus Area Emergency notification Employee notification Customer notification Network, and backend systems Supply chain notification Mass Notification Benefits Improved safety for employees Reduced risk and liability Reduced recovery times Improved understanding of who has been contacted and who needs additional information Faster decision-making Lower costs Faster notification during time-sensitive events, such as boil-water situations or facility closures Improved customer service Improved customer experience Higher renewal rates Higher sales/revenues Faster resolution of downtime incidents Less employee involvement in contacting help desk staff Lower help desk costs Increased revenue Faster response to supply disruptions caused by labor stoppages, weatherrelated events, and other emergencies Reduced employee downtime The ROI of Mass Notification While mass notification is a very useful tool when emergency contact is required, most applications of the technology focus on more mundane, but equally critical business processes. These processes realize significant benefit from the use of mass notification, making any organization more efficient and making employees more productive. Dealing with Business Interruptions and network interruptions caused by server crashes, power outages, application errors, upgrades that do not work properly, or other problems can have a devastating impact on any organization. Organizations that rely on or the Web to conduct business, such as selling products via 2006 Osterman Research, Inc. Page 3

6 a Web site or receiving orders via , can suffer significant revenue loss during such a downtime incident. An emergency notification system can provide substantial cost savings and revenue benefits by helping IT staff to resolve problems more quickly. For example, let s assume that in a 5,000-employee company there are four downtime incidents per year, that employees are 25% less productive during downtime periods because they do not have access to , and that a mass notification system can reduce the length of each downtime incident by just 15 minutes. Using the Everbridge-Osterman Research cost model developed for Everbridge, the employee productivity cost savings would be more than $36,000 annually. A governmentfunded cancer research institute uses Everbridge during power outages to reduce the time needed to notify emergency team members responsible for ensuring the preservation of important research. Now, let s assume that an organization generates $15,000 per hour in sales from its Web site, that its Web site can achieve 99.9% uptime, that it experiences one downtime incident per month, and that a mass notification system can reduce the length of each downtime incident by just 10 minutes. Using the Everbridge-Osterman Research cost model, the net increase in revenue from faster resolution of a Web site downtime incident would result in an additional $30,000 in revenue generation annually. In addition to network- and -related business interruptions, there are a variety of other types of interruptions that a mass notification system can help to resolve. For example, a utility company that must issue a boil-water order to customers because of a contamination problem can do so rapidly using a mass notification system. Because such a system can also collect feedback from message recipients, the utility company can understand in real-time who has received the message and who has not. A utility company can also employ a mass notification system for non-emergency issues such as collections, making the payment collection process faster, more effective, and less labor-intensive. Schools can also employ mass notification to inform parents and students about a wide variety of events, such as school closures due to a storm or power outage, or simply to send out a reminder to return a signed form by the planned deadline. Supply Chain Notification One of the most important benefits of mass notification is the ability to maintain an efficient and effective supply chain Osterman Research, Inc. Page 4

7 Because many organizations have chosen to minimize inventories to keep costs down, they have become much more vulnerable to supply chain disruptions like storms, labor disruptions, and other problems. However, a mass notification system can mitigate much of this risk by allowing companies and their partners to respond to potential disruptions much more quickly. For example, let s assume that in an organization of 1,000 production workers there are eight hours of production stoppages per year because of a supplier inability to provide needed inventory on a timely basis due to a strike, storm, or other unforeseen event. If we further, and quite conservatively, assume that a mass notification system reduces these interruptions by just four hours per year by enabling an organization to find another available supplier and redirect inventory from that supplier, the cost savings to the organization would be about $77,000 per year. A leading staffing agency that operates in six US states uses Everbridge to assist more than 39,000 temporary associates in their job searches and has enjoyed a 35% decrease in the time required to fill job orders. Customer Service Management and Outreach A mass notification system also provides organizations the ability to notify customers proactively and efficiently about a variety of time-sensitive offers, such as upcoming sales, promotions, and special deals. For example, a mass notification system can be used to notify customers about a 48-hour sale on a certain item and allow the customer to place an order simply by responding to the notice. Companies can also use a mass notification system to remind customers of service or warranty expirations and allow them to renew the service for another year. There are three fundamental benefits of mass notification in the context of customer service management: Mass notification can increase revenue for an organization by proactively notifying customers. Costs are reduced by enabling a single individual to send out and manage the responses to a notification campaign. Mass notification can build stickiness for a company or brand by allowing frequent, low-impact interactions with customers. Routine Employee Notification Mass notification offers many benefits in the context of informing employees about routine events, such as 2006 Osterman Research, Inc. Page 5

8 meetings, annual signup periods for health benefits plans, and notifications about new corporate policies. The use of a mass notification system can significantly increase the response rate for these events, inform management about who needs more detailed information about an issue, improve overall employee productivity by making sure that employees stay on schedule, and reduce the overall costs associated with informing employees about important events. Calculating ROI When calculating the ROI of a technology like mass notification, a new paradigm is necessary. For example, a mass notification system offers a wide variety of benefits, some of which are quantifiable and easy to model; and some of which are not. Some of the quantifiable benefits focus on enhancing revenue generation, while others focus on reducing costs. Further, some benefits emphasize improving business processes that may have an indirect benefit on other parts of an organization. A water utility services company with more than 200,000 customers in two states uses Everbridge s system for emergency notifications, such as boilwater instructions, service interruptions, and maintenance activities. The Components of ROI There are several components to consider when calculating the ROI of a mass notification system: The labor savings provided by a mass notification system will result in lower costs to an organization. Decreased downtime results in increased productivity and, ultimately, higher revenues. Similarly, the ability to make decisions more efficiently through the faster notification and feedback mechanism provided by a mass notification system results in higher revenues and lower costs. An improved customer experience that results in more stickiness ultimately results in higher revenues and, potentially, improved customer loyalty. Reduced risk translates to lower costs. Hard Costs vs. Soft Costs Another significant consideration in calculating the ROI for a mass notification system is factoring in the hard-cost vs. softcost benefits. An example of a hard-cost benefit is the production stoppage example above. If inventory is 2006 Osterman Research, Inc. Page 6

9 unavailable, production staff stand idle and are often paid hourly wages until production can resume. Soft costs, such as the ability to enhance revenue through faster decisionmaking and faster time-to-market, while often easy to quantify, are often not as acceptable to decision-makers because they do not result in an actual cash outlay. However, it is important to treat soft costs as a real cost of doing business and just as important a component as hard costs given their significant impact on the long-term bottom line for an organization. A railway company operating in 22 US states and parts of Canada uses Everbridge to notify and coordinate logistics with every member of its Incident Command Teams in three different locations. Economic vs. Non-Economic Benefits Another important consideration in calculating the ROI benefits of a mass notification system is the non-economic benefits that the system offers, not least of which is the ability to save lives by notifying employees and others before they get into harm s way. While non-economic benefits are virtually impossible to quantify, they are a critical consideration in evaluating technology initiatives like mass notification systems. Identifying the Processes One of the most important benefits of a mass notification system is its positive impact on many different parts of an organization. The benefits of a mass notification system can be phased in over time to increase the ROI that the system provides. For example, a mass notification system could be deployed strictly to keep IT staff better informed about network and other system outages. Several months after this deployment, a product marketing team might begin to employ the system to proactively notify its customers about upcoming events. After that, HR could begin using the system to notify employees about a change in the company health plan, and so on. In identifying the processes to convert to mass notification, it is important to understand current business processes and the pain points associated with them. For example, the first and most important application of mass notification might be to improve service-level agreements for the corporate system. If an organization is experiencing long resolution times for outages, the most expedient application of mass notification might be in the IT department so that downtime can be reduced and employee productivity improved. Alternatively, an organization might find its renewal rate for the services it provides to certain markets to be well below the industry average. In this case, an important application of mass 2006 Osterman Research, Inc. Page 7

10 notification might be in a customer-facing role designed to improve renewal revenues. ROI Examples What follow are two examples of the benefits and ROI that a mass notification system provides. In the first example (a small company), we have conservatively assumed that the only benefits an organization will realize from the use of a mass notification system are the ability to notify external contacts about time-sensitive events, such as a notification of a supply disruption and reducing production stoppages. Small Company with Few Processes 100 Knowledge Workers and 200 Production Workers A healthcare provider with three hospital campuses in New York City uses Everbridge s system to notify every member of its critical staff within seconds. Ninety percent of staff members confirm receipt of these communications within 20 minutes, a task which used to take two hours. Activity Number Cost Benefit Notifications of external contacts per year, such as supply chain members 4 $10,769 Reduced amount of production stoppage per year (hours) 4 $15,385 TOTAL ANNUAL BENEFIT $26,154 INITIAL COST OF Everbridge MASS NOTIFICATION SYSTEM 1 $10,000 ONE-YEAR ROI 162% THREE-YEAR ROI 554% In the second example, shown in the following table, an example for a much larger company is examined. In this example, we have assumed that there will be a variety of benefits, including the same examples as for the small company, as well as reducing network downtime, proactive customer notification by call center staff, setting up regular meetings, and increased revenue from greater network and server uptime. 1 Assumes annual cost of 20% of initial deployment cost Osterman Research, Inc. Page 8

11 Large Company with Few Processes 5,000 Knowledge Workers and 1,000 Production Workers Activity Number Cost Benefit Notifications of external contacts per year, such as supply chain members 4 $84,135 Reduced amount of production stoppage per year (hours) 4 $76,923 Number of network, server, or related problems assuming 25% productivity loss 4 $36,058 during a downtime incident Number of telephone calls made per month to proactively notify customers using 500 $5,769 call center staff Percentage of managers that set up meetings on a regular basis 3% $9,375 Increased revenue generation from online sales due to faster response to -- $30,000 network/server downtime TOTAL ANNUAL BENEFIT $242,260 INITIAL COST OF Everbridge MASS NOTIFICATION SYSTEM 2 $50,000 ONE-YEAR ROI 385% THREE-YEAR ROI 938% The Everbridge Value Proposition Everbridge provides a mass notification system that is designed to enable corporations, government agencies, and schools to achieve considerable bottom-line savings through rapid and efficient communication in routine, urgent, and emergency situations. Whether organizations are concerned with implementing cost savings in daily communications, minimizing financial impact from disasters or other crises, or ensuring a quick return to normalcy, the Everbridge mass notification system provides the most rapid return on investment of any notification system on the market. How is the Everbridge mass notification system different from others? Focus matters and it shows in the Everbridge system: Everbridge maintains complete focus on notification to provide you with an effective, reliable solution you can depend on every time. Everbridge s experience shows with the maturity and robustness of features and functionality 97% of Everbridge s customers recommend the Everbridge system for ease-of-use, flexibility and functionality. 2 Assumes annual cost of 20% of initial deployment cost Osterman Research, Inc. Page 9

12 Everbridge takes a mission-critical approach to your data security. Everbridge s system is built to the most rigorous of security standards to ensure the unparalleled privacy and security of our most important data yours. The Everbridge system operates the way you do. Everbridge provides integration and data synchronization with other systems without sacrificing the robust and flexible functionality you need to operate independently in critical times when other systems aren t an option. Everbridge helps you make quick, informed decisions. The Everbridge system offers comprehensive reporting and management tools that give you the ability to manage all your notification in a powerful, yet simple-to-use, interface. You can send your first message today. Everbridge delivers unparalleled ease and time of implementation. Implementation and training are measured in days, not months. The Everbridge mass notification system is as effective for daily use as for emergencies and provides immediate operational benefits and significant ROI proven through customer experience and the Everbridge-Osterman Research ROI model, the only in the industry. The Everbridge system works optimally in any situation including during high-stress, time-sensitive circumstances so even nontechnical users can get a message out. In rigorous usability tests, untrained users are able to send a notification in just over a minute after running through the system one time. Everbridge partners with customers for ongoing support and success. Everbridge recognizes that the company only succeeds when you do. To show commitment to your ongoing success, Everbridge provides best-of-class customer support and has live operators standing by to help you 24/7/365. Everbridge is trusted by the world s most sophisticated global organizations and the country s most security-conscious government agencies. More than 1,000 corporations, schools, and government organizations such as Salesforce.com, AirTran Airways, the American Red Cross, and Virginia Tech rely on Everbridge for proven performance. For more information about Everbridge, please visit or call Osterman Research, Inc. Page 10

13 Summary and Conclusions A mass notification system is an increasingly critical component of an overall corporate communications strategy. While originally designed for notifying large numbers of people during an emergency, these systems can provide benefits for a wide variety of non-emergency related business processes, including routine employee notification, proactively contacting customers to increase revenue, notifying members of a supply chain about disruptions and other events, as well as other benefits. The ROI provided by a mass notification system is substantial, regardless of the organization s size. To see the potential benefits to your organization from deploying a mass notification system, this white paper is intended to be used in conjunction with the Everbridge ROI of Mass Notification model. For further information, please contact Everbridge Osterman Research, Inc. All rights reserved. No part of this document may be reproduced in any form by any means, nor may it be distributed without the permission of both Osterman Research, Inc., and Everbridge, nor may it be resold by any entity without prior written authorization of both Osterman Research, Inc. and Everbridge. THIS DOCUMENT IS PROVIDED AS IS. ALL EXPRESS OR IMPLIED REPRESENTATIONS, CONDITIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OR FITNESS FOR A PARTICULAR PURPOSE, ARE DISCLAIMED, EXCEPT TO THE EXTENT THAT SUCH DISCLAIMERS ARE DETERMINED TO BE ILLEGAL Osterman Research, Inc. Page 11