I have always enjoyed the debates here in this group but have seldom joined in since I’m more of a KM hobbyist than professional.
I’m going to take Bill’s approach and be the contrarian here. Using cost savings as a justification is a 0 sum game. It becomes a race to the bottom and ultimately is as quantifiable as marketing. That is to say, not impossible but very difficult.
Enterprise search sucks. Even Googlers think their intranet search sucks. Internal search just doesn’t scale yet at the middle of the curve. It’s handling too much info for basic search and not enough for Web type search.
The real advantages of KM, IMO, is the expansive nature of the learning. It’s about innovation and the ability to connecting the connectors. What you should be focusing on is the quality of the information people are co-creating, sharing and discovering. You should be focusing on the ability for people to find and discover other people across the organization based not on roles and job descriptions but on the knowledge they have and are willing to share.
I would look at things like # of non core team participants, cross collaboration, etc. Just like the challenges I face in Marketing if the measurements aren’t set up in advance they’re meaningless afterwards. You need to be able to look at your power users and measure how their productivity has increased, because collectively, for every hour your power users save finding something your laggards will waste.
Management raises the level of productivity of an organization through hiring, motivating and firing the right people. KM raises the productivity of the individual and at best the work team.
I guess what I’m saying (speaking from an outsiders perspective) is that the benefits of KM are very difficult to measure in aggregate unless a base line is established in advance and every stakeholder buys off on KPI’s. KM is better measured on a granular level.
From: firstname.lastname@example.org [mailto:email@example.com]On Behalf Of Bill Ives
Sent: Thursday, August 14, 2008 7:04 AM
Subject: Re: [sikmleaders] Weighing the benefits of productivity improvements
I agree with Andrew on the time savings ROI - It is meaningless. It does not go to the bottom line. What are the people going to do with the time savings? leave early? It is more effective to tie the performance improvement to bottom line measures such as increased productivity on factor x or less money spent on factor Y. The time savings ROI has been around for a long time and given KM a bad name. I am surprised to see it still being used. Sorry to not agree but this hits a hot button for me (it has been around for so long) and I am a big believer that real measurable savings can be found from KM or enterprise search. Finding it is a good test that we are employing the initiatives to address business issues. Bill
On Aug 14, 2008, at 12:25 AM, Andrew Gent wrote:
Yao and Bill,
With improved enterprise search ... knowledge workers can reduce the amount of the time spent on search ... a saving 10% of the time (1 hour per week) can be translated into potential saving of $1,425 a year per worker.
I am going to play devil's advocate here. Not because I don't like your arguments. I have used almost the exact same argument myself. But I have also had the following discussions with senior business managers. The conversation goes something like this:
- We just spent $XXX thousand dollars last year on a new search engine. Where are the savings from that improvement?
- 1 hour a week is 2.5% of a 40hr week. Show me where I am getting a 2.5% increase in production or performance? (Not theory but actual improvements in the bottom line.)
- "... a saving of 3,000 x $1,425 = $4,275,000" $4 million return on an investment of what? -- say 4 people for a year, approximately $500K -- that's an ROI of 700% in one year. Who are you kidding? Real ROI for things like SAP are 200-400% over a 6 year period, not even breaking even for 2-3 years. I don't believe it.
Now having said all that, it occurs to me that there are two types of conversation like this. The justify-your-program discussion with your direct manager and the justify-your-expenditure discussion with upper management. What I have just described is the latter, which is why justifying KM programs is so difficult. Saved time and unmeasurable performance improvements simply don't go over in budget discussions.
However, for justifying your program to your direct manager, the argument concerning saved time is important, because usually that person is also managing the people whose performance you will impact. So I would suggest three things for that discussion:
- Keep the argument about saving time. This has meaning to that manager (since they directly manage employees such as yourself)
- Don't bother getting in to the theoretical monetary savings, because it is meaningless. That manager is not going to see that money, so it is a waste of time.
- As Stan has suggested before, use multiple arguments. Argue the saved time. Also provide supporting evidence -- emails, forum postings, performance review input -- from people who say your program has helped them save time or be more effective. It is best to collect this information on an ongoing basis so you have it handy when you are asked to justify your program. It is hard-to-impossible to collect in a hurry at the last minute.