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May 24, 1999

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A Hard Look At Soft Benefits

By Charles Waltner

ssessing soft benefits for intranets--such as improved customer service, quicker time to market, or more accurate inventory forecasting--can be one of the most challenging tasks of creating a return on investment for the technology. To add to the problem, soft benefits often make up the largest part of a total ROI for intranet applications.

Gene Phifer, a research director at Gartner Group, says IS executives struggling with ROI have two ways to avoid the issue without being financially irresponsible. One is to categorize the cost as infrastructure, much as companies write off telephone expenses. Or a computer network manager can roll an intranet application's development expenses into a bigger project, such as a company's knowledge-management initiative.

But for a precise measure of an intranet application's ROI, IS executives need to grapple with some intangibles. Managers must discover exactly what benefits might arise from a new intranet application. For example, an intranet that provides an online employee manual equipped with a search engine would offer savings by reducing the amount of time people spent looking for the manual and information within the manual.

This could be done through a time-and-motion study, by asking employees to look up something in their manual and then timing them, Phifer says. The average time is used as the basis for calculating overall time savings.

To assess improvements in accuracy provided by an intranet knowledge base, such as an archive on product information, IS managers could look at the company's history for how inaccuracy might have hurt in the past, such as from lawsuits. In the end, however, all soft benefits are at best rough estimates, says Phifer, who adds that, "They tend to be very subjective."

return to main story, "Intranet ROI: Leap Of Faith."