Internet and Businesses Articles

The days of easy money are over

In these post-dot-com days of the 21st Century, the hype attached to IT is well and truly over. The modern Board is deeply suspicious of large IT projects with questionable benefits and a long-term payback period.

The good news is that a world-class portal implementation has the power to completely transform your organisation and touch everyone, from the office of your CEO to the lady in the canteen.

First a little on Costs

Sorry, but the cost of the software is only a relatively small part of the overall bill; with other major costs in hardware, process change and integration activities. Your first (and major) portal project is (in terms of cost) more an infrastructure investment than it is an application.

As a rough rule of thumb (for a user base >10,000), budget for £250 per desktop to put in the essentials (including portal and content management solutions). If you are also integrating to (and exposing) your ERP or CRM systems, add £150.

Direct Benefits

Based on my experience, Direct Benefits (those that you can directly bake into line budgets and make an individual directorate accountable for realising) are only 20-25% of the total prize and will not generally cover the portal implementation costs by themselves. Direct benefits include reduced printing and distribution costs, decommissioning legacy intranets and FTE savings in operational areas (including IT development & support, Finance & Procurement ledger processing and HR employee services).

Soft Benefits include improved employee satisfaction, better communication and corporate belonging, the importance of which should not be under-estimated in your business case. After all, there is always an emotional, as well as a rational, reason for every purchasing decision.

However, the bulk of portal benefits are Indirect Benefits, where time saved in line areas leads to (for example) reduced call times in call centres, higher sales, faster time to market for new products, fewer failed projects and so on. Benefits realisation is the issue with such benefits. After all, you can't fire 10 minutes of a person a day! The time they have saved is real - ultimately saving cost and driving sales - but it cannot be readily tracked to either.

Making the Business Case: A 10 Step Approach

In the Business Case and ROI chapter of my (free to access) Intranet Portal Guide, I outline a 10 step approach to making the portal business case.

1) Seek External Legitimacy

Consider using a leading consulting firm to lend weight to the business case. They can bring with them experience (from having done it before elsewhere), a knowledgebase (of facts and figures about the benefits other companies have achieved) and a fresh perspective on your organisation, valued by executives.

2) Benchmark other Organisations

I have included in my guide details of public-domain benefit claims from early UK & US portal adopters, including British Airways, BP, Ford Motors Company, IBM, Bell South, Dow, Cisco and BT. Showing your Board that others have delivered real benefits lessens the feeling that their decision is a ‘leap of faith’.

3) Collect Hard Metrics

Direct benefits may be only 15-25% of your total benefits, so work hard to identify savings in Intranet & Collaborative decommissioning; Print, Postage & Distribution Costs, Processing Manpower reductions; and Third Party expenditure savings.

4) Use a Comprehensive Time Survey

In my guide, I suggest that you survey several hundred (representative) users to establish how much time per day they expect to save by using key portal functionality. This will help you to put a financial value on indirect benefits. I outline 10 sample questions and provide benchmark results you could expect to see.

5) Build a Wall of Benefits

When you are trying to build an ROI based on indirect benefits, you can expect those benefits to be challenged vigorously. By having literally hundreds of individual line items and a big overall total, you improve your chances of surviving the Finance ‘Red Pen’. In my guide, I outline 101 benefit ideas to get you going.

6) Link to the Strategic Agenda

Tie the investment closely to the Strategic Agenda of your organisation. If there is another key initiative currently grabbing all the attention at board level (e.g. CRM or ERP) then make sure your portal case complements, or ideally completes, that strategic picture. Use camouflage if necessary, as all is fair in love and war!

7) Identify 2-3 Killer Apps

That will focus the attention (and support) of key sponsors. Look for win-win apps, where the user loves using them but the provider department also extracts key benefits. For example, a self-service HR application where the employee can keep their details up-to-date easily and the company can reduce employee service heads.

8) Use a Cost Avoidance Argument

Your investment will reduce future project costs. After all, a portal is essentially a free infrastructure, a free user interface, a free user client with pre-built security & authentication and a free development framework. HP and others have saved up to 20% on development costs, post-implementation. You could too, so raid the budgets of other approved projects!

9) Consider Larger Scope

Could you make your case if you include internet and extranet in scope? An extranet allows you to securely expose part of your intranet to selected third parties, including B2B customers, suppliers, regulators and government agencies. The incremental cost is quite low, once your intranet platform is there, but the benefits can be large!

10) Use Innovative Phasing

Most companies budget on an annual cycle and are under huge pressure from investors to deliver short-term profitability. The bitter pill of portal costs might be easier to swallow if you spread the implementation over a two-year period.

Conclusions

Making the business case for a corporate Intranet Portal will not be easy. You will need all your reserves of patience, cunning and good old-fashioned hard work. Good luck and don’t forget to check my guide for more detail, help and tools.

About the author:

David Viney (david@viney.com) is the author of the Intranet Portal Guide; 31 pages of advice, tools and downloads covering the period before, during and after an Intranet Portal implementation.

Read the guide at http://www.viney.com/DFV/intranet_portal_guide or the Intranet Watch Blog at http://www.viney.com/intranet_watch.