ROI & ROO

Business value starts with strategy

Whether your organization is considering investing in a digital workplace, 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?

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. Digital workplace solutions are all about breaking down those barriers. It's about using digital technologies to help create 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.

It’s important to note that there’s no one specific way to measure the impact of your digital workplace on your organization. Every company is different – in requirements, business objectives, culture, and way of doing business. Of course, most executives can inherently understand the value of increased dialog, greater engagement, and better knowledge sharing in the workplace. But it’s difficult to measure. 

Before you can begin to think about how to measure the value, you need to clearly understand your business strategy. Context matters, and 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 support key business metrics. 

When your digital workplace strategy is constructed with specific goals in mind, it has a much higher probability to have positive impact on productivity, employee engagement, and innovation within your company. Start by developing a strong understanding of your culture, strategy, and the workflows you’re trying to augment, 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.

Three key business drivers

To get you started, here are the most popular business drivers for any digital workplace solution:


Improving productivity

Driving corporate performance across the entire company – from your employees, teams, and executives

Driving innovation

Bringing new ideas to life which accelerate your business – from process improvements to the introduction of new products and services

Creating competitive advantage

Finding ways to set yourself apart – from fostering a unique employee culture to supporting better customer engagement

Measuring business success

There are two typical methods to measure the success or value of your digital workplace solution:

  1. ROI: measures the cost savings and/or incremental revenue your digital workplace provides to the organization or,
  2. ROO: measures the incremental value the digital workplace brings to your organization

Return on Investment (ROI)

ROI (return on investment) is the traditional method favored by finance departments everywhere: you spend $100 on software and get $1,000 in return. It works well for simplistic processes that have a direct cause and effect: automating a process that used to be manual, for example, or reducing the travel costs associated with a meeting. The easiest and quickest way to measure ROI is calculating the anticipated savings from lost employee productivity. People drive business. They drive the growth of the company. The more efficient and effective they are in their daily jobs, the higher the return is on your digital workplace.

As you know, there’s no shortage of office distractions that can take employees away from the task at hand. Here are just five examples from a 2012 productivity report by IDC  that illustrates the potential cost savings a digital workplace can realize by improving overall employee and corporate productivity.


Productivity Losses Per Week

13.5 hours
9 hours
8 hours
6.5 hours
4 hours
Organizing & searching  email inboxes
Searching for corporate information
Analyzing & validating information
Communicating & meeting with teams
Publishing & editing information
$21K/year
$14K/year
$13K/year
$10K/year
$6K/year


Even if you make fractional improvements in these areas, your digital workplace will more than pay for itself in just a matter of months. But the business value of the digital workplace goes well beyond creating operational efficiencies. You can find additional hard dollar savings in both hardware and software, but first you need to understand your Total Cost of Ownership (TCO). 

Determining the total cost of ownership

IT costs continue to be the dominant metric for CIOs. The initial expense of setting up and acquiring technology, as well as the projected incremental cost to 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 – which spreads out the cost of ownership over time – against the more expensive upfront investment required by on-premises platforms.

On-premises platforms are typically associated with large, complex, customized deployments with many software and hardware dependencies, along with high operational costs. Consider a typical SharePoint implementation, where the IT team can be tied up for months or even years 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.

Cloud applications like Igloo deliver 1.7 times more return on investment than on-premises ones, according to Nucleus Research. They require 40% less consulting, cost 25% less in support, and 4 out of 5 deployments deliver increasing benefits over time.

Additional software license savings

The rich capabilities of a digital workplace platform mean that organizations can often stop paying for point applications by leveraging the functionality built into the digital workplace.  File sharing systems like Box and Dropbox are great examples of this. 

Return on Objectives (ROO)

ROO (return on objectives) measures the incremental value your digital workplace brings to your business. Rather than monetization, it's about measuring how well your employees, team, and organization are doing in meeting the business challenges they're trying to address. Measuring the ROO of your digital workplace depends on how well you've aligned your strategy with specific and measurable business outcomes. 

Digital workplace solutions often have loftier goals that help improve a company’s performance, but they don’t always have an obvious impact on the bottom line. That’s why you have to set key objectives right from the start. Whether it’s reducing the number of emails sent, aligning your teams around a specific vision, or sharing knowledge more efficiently, you have to be clear on what you’re trying to achieve.

There are two primary categories of intangible business objectives 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

A digital workplace 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, while helping to 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 more ways people have to learn and access knowledge, the better.

The cultural perspective

As companies grow, a digital workplace 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 has 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 passionate employees feel about their jobs and the better they understand overarching goals, the more discretionary effort they'll give.

To get you started, here are three areas where you can set objectives: 

Streamline processes and drive operational efficiencies

  • Reduce the time spent looking for information, people, and processes.
  • Ask employees for ideas on improving productivity and cutting costs.
  • Reduce time spent redoing existing work.
  • Reduce reliance on physical training centers and improve the productivity of in-house trainers.
  • Consolidate disparate technologies.
  • Reduce the reliance on support staff and management by empowering employees with self-service tools and knowledge bases.
  • Save time with simplified data entry and easy access to line-of-business systems.

Enhance communications, collaboration, and employee experience

  • Deliver frequent, transparent, and timely communications to the entire company in an effective manner.
  • Connect your leadership teams to keep everyone on the same page.
  • Engage people in the corporate culture.
  • Align people with the company's vision and objectives.
  • Enable easier organizational publishing and inter-departmental information sharing.
  • Improve employee satisfaction and retention.
  • Foster team collaboration across departments, business units, and partners.

Increase revenue and accelerate time to values

  • Deliver better customer experiences and satisfaction as a result of more empowered, educated, and satisfied employees.
  • Improve information sharing, consistency, and accuracy.
  • Drive incremental revenue from happier customers.
  • Reduce the number of unhappy customers and the costs associated with supporting, retaining, and reacquiring them.
  • Accelerate onboarding and reduce the need for retraining.
  • Generate sales leads and solicit feedback from your employees.

Never discount the intangible or hard-to-measure benefits of your digital workplace solution.  While appraising the ROI of your digital workplace, acknowledge the immense untapped, intangible value that's perhaps even more critical than the measured dollars and cents. When properly deployed, digital workplace solutions can dramatically improve corporate culture, knowledge sharing, employee retention, and – as a result – the customer experience. 

Conclusion

The people and cultural perspective both ladder up to employee engagement, and there's an abundance of research that shows the hard dollar impact of engaged employees.

  • Engaged employees are 87% less likely to leave the organization.1
  • Engaged companies grow profits as much as 3x faster than their competitors.1
  • Companies with low engagement scores earn an operating income 32.7% lower than companies with more engaged employees.4
  • Companies with engaged employees outperform those without by more than 200%.2 
  • Most-engaged workplaces experience 2x higher customer loyalty, 2x higher productivity, and 2x lower turnover.3
1 Dale Carnegie   2 Corporate Leadership Council    3 Johnathan Pont   4 MacLeod


Key Resources

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RO-Why

The value of an intranet comes from the collaboration it enables, not the technology itself. This whitepaper provides a simple framework for identifying, analyzing, and communicating the business value of a new intranet project.

Whitepaper: RO-Why

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