Topics

How to calculate ROI for a KM system? #value #metrics


andregalitsky <andregalitsky@...>
 

I'm writing a proposal to implement a KM system at my organization. A lot of details are still fuzzy. In order to sell this proposal to senior managers, I need to come up with a way to measure ROI for such a system. What are some of the metrics/indicators that we should be looking at? Which approaches work better than others?

Thank you in advance for sharing your thoughts and experiences.

Andre Galitsky


Kaplan, Bill <bill.kaplan@...>
 

Andre

 

It depends on what business or operational challenges you are intending KM to help to address…there is no one right answer…my suggestion would be as a start, to figure out what they are the challenges, and then what the baseline is before KM implementation, and then be able to reflect how KM made a difference in performance…KM is after all about performance improvement..your business case could make some projections…I know it’s a short answer for what can be a complex question…if you wish to discuss some more, please feel free to call me.

 

I know others have good insight as well….

 

Best

 

Bill

 

William S. Kaplan, CPCM

Chief Knowledge Officer

Acquisition Solutions, Inc.

 

(w) 703.253.6313

(c)  571.238.9878

 

"Knowledge at Work"

 

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From: sikmleaders@... [mailto:sikmleaders@...] On Behalf Of andregalitsky
Sent: Monday, March 30, 2009 10:20
To: sikmleaders@...
Subject: [sikmleaders] How to calculate ROI for a KM system?

 


I'm writing a proposal to implement a KM system at my organization. A lot of details are still fuzzy. In order to sell this proposal to senior managers, I need to come up with a way to measure ROI for such a system. What are some of the metrics/indicators that we should be looking at? Which approaches work better than others?

Thank you in advance for sharing your thoughts and experiences.

Andre Galitsky


Jack Vinson <jackvinson@...>
 

Andre-

The question I like to ask, in various forms, is "What is broken that the X
(X = "KM system") will fix?" How does the problem in question affect the
business? How does the resolution of that problem help the business? You
should also check that your proposed solution doesn't itself create other
unintended problems and nip those in the bud.

If the problem or its resolution are not important enough to the business,
then X should not be funded.

Jack Vinsoin

-----Original Message-----
From: sikmleaders@yahoogroups.com [mailto:sikmleaders@yahoogroups.com] On
Behalf Of andregalitsky
Sent: Monday, March 30, 2009 10:20 AM
To: sikmleaders@yahoogroups.com
Subject: [sikmleaders] How to calculate ROI for a KM system?


I'm writing a proposal to implement a KM system at my organization. A lot
of details are still fuzzy. In order to sell this proposal to senior
managers, I need to come up with a way to measure ROI for such a system.
What are some of the metrics/indicators that we should be looking at? Which
approaches work better than others?

Thank you in advance for sharing your thoughts and experiences.

Andre Galitsky


Peter Baloh
 

completely agree with every word from jack. the core of the question with any organizational change project, kms design / deployment included, is in looking a it as a solution to particular business-problem (which can be an opportunity or a negative problem).

once this is realized, roi/benefits/outcomes are very easy to identify. never try to force a kms (or any other org/tech intervention) when it does not have a clear purpose (of solving an existing problem). 

this way, the benefits will speak for themselves and suddenly you get from a push to a pull situation (from users).

this is the only way i had this working, and have also observed same stuff through scientfific research merthod in   
companies such as parsonbrinkerhoff and samsung electronics.

best
regards

peter baloh 

On 30 Mar 2009, at 18:48, "Jack Vinson" <jackvinson@...> wrote:

Andre-

The question I like to ask, in various forms, is "What is broken that the X
(X = "KM system") will fix?" How does the problem in question affect the
business? How does the resolution of that problem help the business? You
should also check that your proposed solution doesn't itself create other
unintended problems and nip those in the bud.

If the problem or its resolution are not important enough to the business,
then X should not be funded.

Jack Vinsoin

-----Original Message-----
From: sikmleaders@yahoogroups.com [mailto:sikmleaders@yahoogroups.com] On
Behalf Of andregalitsky
Sent: Monday, March 30, 2009 10:20 AM
To: sikmleaders@yahoogroups.com
Subject: [sikmleaders] How to calculate ROI for a KM system?

I'm writing a proposal to implement a KM system at my organization. A lot
of details are still fuzzy. In order to sell this proposal to senior
managers, I need to come up with a way to measure ROI for such a system.
What are some of the metrics/indicators that we should be looking at? Which
approaches work better than others?

Thank you in advance for sharing your thoughts and experiences.

Andre Galitsky


Matt Moore <laalgadger@...>
 
Edited

Hello,

Recent thoughts on RoI for E2.0: http://engineerswithoutfear.blogspot.com/2009/03/why-roi-is-terrible-place-to-start.html

N.B. I think that my first bullet point is a bit weak. The stronger the need to be solved (e.g. increase sales productivity, cut rework costs), the more powerful the "RoI". My examples are a little on the puny side.

Very similar to comments from Bill & Jack.

Regards,

Matt


Bill Dixon
 

Andre –

 

Don’t forget to consider both qualitative measures as well as quantitative measures (if you can derive any from your context).  I have found our success stories to be more powerful than a benchmark that is met as part of an ROI argument.  Since few of us live in a laboratory, too often quantitative measures can loose credibility.

 

Bill Dixon

 

From: sikmleaders@... [mailto:sikmleaders@...] On Behalf Of andregalitsky
Sent: Monday, March 30, 2009 9:20 AM
To: sikmleaders@...
Subject: [sikmleaders] How to calculate ROI for a KM system?

 


I'm writing a proposal to implement a KM system at my organization. A lot of details are still fuzzy. In order to sell this proposal to senior managers, I need to come up with a way to measure ROI for such a system. What are some of the metrics/indicators that we should be looking at? Which approaches work better than others?

Thank you in advance for sharing your thoughts and experiences.

Andre Galitsky


DENNIS PEARCE <dennis4353@...>
 


Matt Moore <laalgadger@...>
 

Dennis.

That's a damn good start, there are a few others discussed here: http://innotecture.wordpress.com/2008/11/03/justifying-your-knowledge-management-programme/

I would make a distinction between where you source your data from (points 1,2 & 4 below) and then the area of improvement that you are looking at (point 3).

Regards,

Matt


--- On Tue, 3/31/09, DENNIS PEARCE <dennis4353@...> wrote:
From: DENNIS PEARCE
Subject: Re: RE: [sikmleaders] How to calculate ROI for a KM system?
To: sikmleaders@...
Date: Tuesday, March 31, 2009, 2:42 PM

I try to use 4 kinds of metrics to measure success:

1. Activity metrics: whatever I can get out of the tools -- number of uploads/downloads, posts to discussions, etc.

2. Success stories and anecdotes: someone who was able to land a big customer, solve a problem, etc. thanks to our content management and collaboration tools.  If you are looking to justify the system prior to implementation, you might turn it around and also look for stories of failure where the organization lost money or time because there was not a system in place.

3. Process improvement: this is where you can get unambiguous ROI if you capture process baseline data prior to implementation and then measure later to look for improvements in speed, quality, etc.  Any processes that depend on having the right information at the right time are good candidates.

4. Employee surveys: asking questions along the lines of "how satisfied are you with the information you have to do your job" can be an indicator of the need for a KM system, and used as a baseline to refer back to after implementation.  Periodically reissue the survey to see how or if things have changed.  I also have occasionally done SNA-type surveys to see how connections between employees are changing.

Dennis Pearce
Lexmark



fmremski <fmremski@...>
 

--- In sikmleaders@yahoogroups.com, "andregalitsky" <andregalitsky@...> wrote:


I'm writing a proposal to implement a KM system at my organization. A lot of details are still fuzzy. In order to sell this proposal to senior managers, I need to come up with a way to measure ROI for such a system. What are some of the metrics/indicators that we should be looking at? Which approaches work better than others?

Thank you in advance for sharing your thoughts and experiences.

Andre Galitsky
Hello Andre!

I'm new to the group, but I am definitely feeling your pain.

Something that is very clear to me is the important differences between KPIs and ROIs. Good and helpful key performance indicators may have nothing to do with proving a return on investment. I tend to approach ROI by identifying only the two or three biggest positive changes that I expect to happen as a result of adopting the proposal. Only then does it make sense to consider what measurements will work. Green dollar savings are easy...stop spending "X" start spending "Y" and since X > Y...thou hast ROI!:)

Measuring "blue" dollar or productivity improvement is much harder and more often the case with KM projects. Talking to a VP or CIO to get them to specify the ground rules for these measures can be invaluable. If you have to cook up your own, consider methods that will involve the people who will use the new system and/or their customer base. Before and after surveys with questions that require users to estimate productivity impact relative to the two or three areas of change that you are anticipating can accomplish this.

I have also been successful in mitigating a marginal ROI claim by making sure that there is a clean exit strategy in the event that the proposed solution is perceived a failure. Most vendors should be willing to stand behind their products and provide an exit during a limited "probationary period"...and if not, maybe you need to consider others who will!


Gregory Reid <greg.reid@...>
 

Hi,

We have used two different models to calculate ROI for KM/CMS
capabilities over the years. First is the Value of KM/CMS to a Role
within the company. For example, a call center agent has very specific
measures that KM hits (CHT, FCR, etc) that drive right to the bottom
line. These measures would differ for a PhD scientist but be no less
measureable. Your job is to figure out the metrics associated with the
critical roles and determine how KM tools and techniques hit these
measures.

Second, we have calculated the improvement of business processes based
on KM capabilities. For example, litigation, SOX, etc all can use KM
techniques. Understanding the underlying metrics for these process will
help you build a bottoms-up case for your ROI model.

Good luck!

Greg Reid
InFuture LLC