A business case requires more than estimated or proven return on investment (ROI). A true business case requires a cost-benefit analysis that not only underscores the dollar value of the intended investment but also iterates solutions and outcomes to current problems.

 

I was recently cited and paraphrased by someone writing about ROI who suggested I place too much emphasis on ROI. Well, believe it or not folks, your senior executive likely does not see much value in the intranet. Yes, there are exceptions. Most, however, view the intranet as a cost center. ROI sells.

 

Nonetheless, ROI is just one tool and I have never advocated it as the sole weapon in your arsenal when lobbying for a redesign, a CMS or portal, or new application. Many of you have seen my white paper Finding ROI: Appraising the Value of Intranet Investment and may know the chapter, “More Than Money” (Download a free copy of the Finding ROI (Intranet ROI) white paper).

While appraising the return on investment of an organization’s intranet or portal is critical for most executive leaders, there exists a great deal of untapped, intangible ROI that is perhaps even more critical than the measured dollars and cents.

 

David Upton, a professor at the Harvard Business School, believes that it is foolhardy to measure only the value of either an intranet or Internet site merely in terms of cost savings and cost avoidance. "The Internet has the potential to lead to new business models that managers may not currently be aware of," explains Upton in a CIO Web Business Magazine article. Upton believes that the best means for measuring an intranet’s value is to treat it as a financial investment.

 

Upton encourages organizations to experiment with technology while basing decisions on lessons learned from their experimenting. "It's like an option-value in the future," he says. "The value of investing in the Web comes from the options it will create for an organization in the future." 

 

Mitre Corp executives agree. "Our most important gain can't be as easily measured – the quality and innovation in our solutions that become realizable when you have all this information at your fingertips," says Mitre CIO Al Grasso in an interview with CIO Web Business Magazine.

 

"Our high-level (priority)…is to make it easier for people to give information to others and to use information from others to solve the next problem that comes along," adds Mark Maybury, Mitre’s director of artificial intelligence and executive director of the IT division.

 

A well-planned and executed intranet or portal can enhance many, many more non-savings benefits including:

    • improved customers service
    • increased employee productivity
    • enhanced collaboration
    • faster time to market
    • better employee retention
    • and the list goes on….

“The Employee Portal may help your sales team respond quicker to customer queries,” write Tan Shong Ye and Thyag Venkatesan in Going Beyond ROI (CIO Asia). “The customer perception of quick and reliable service may lead to increased sales. However, it may not be possible to attribute the exact increase in sales as a result of this initiative. Yet again, this may be an initiative that helps provide your firm a competitive advantage over other firms that lack a similar portal. Another possibility is that your competitors may already have introduced such a portal. In that case, the initiative will not help you gain new customers or increased sales but it may be essential to retain your existing customers.”

 

If you’re looking for a great story to help prove the point or sell your executive team, Shong Ye and Venkatesan cite the now famous GM OnStar story…

“Chet Huber, OnStar’s President, must feel justified in persisting with this initiative through its long, challenging and doubt-ridden journey since 1997. There were times over the last 10 years when questions were raised on continuing support for the project. Had GM decided to use ROI as a measure to evaluate the value of the OnStar initiative, the answer would have been clear—discontinue support for the project. This stems from the difficulty of measuring the direct financial benefit of the OnStar system. Chet Huber decided to gain support for the application on the basis of the ability of GM to gain competitive advantage through improved customer service. Today, the OnStar service helps improve GM sales because of the safety features and has nearly 4 million subscribers.”

Great stories are also great sales tools. Your business case should weave a complete story that not only includes ROI but sells the story of how the intranet or portal will improve your whole organization.

 

RELATED READING:

Intranet ROI

Measure your efforts

Intranet kingdom remains an unknown quantity

 

WHITE PAPER:

Finding ROI: Appraising the Value of Intranet Investments

 

© 2006 Toby Ward - Prescient Digital Media