Archive for ‘analytics’

October 7, 2010

ROI of SharePoint – An Example


In a recent post, I talked about ROI of SharePoint and how there are many hidden “soft costs” within business activities — which are probably not measured in most organizations today.    A good use case for measuring ROI of SharePoint is a set of business activities around managing IT contractors.

Many IT organizations both large and small utilize contractors and consultants. In many global enterprises, you might have several thousand contractors in and out of your organization over a calendar year. The process of hiring contractors and consultants is often times a painful one. It takes weeks if not months, lots of back and forth emails, paper forms and approvals, resumes, interviews, rate discussions, on-boarding, and more… Project timelines are impacted and the demand for IT project requests starts to backlog because it takes too long to get the right IT resource into your organization and onboard. In the absence of an expensive “vendor management” system, the end to end process can seem like a chaotic dance of emails, paper, and documents.

Just as there is a cost in hiring a full time employee, there’s a cost of on-boarding a contractor. Additionally, if you’re not tracking vendors, candidates, or rates, how do you know you know you’re getting the best candidate for the lowest rate? Do you know the average bill rate of your contractors or for a particular vendor? Are you measuring the cycle time for an IT manager to initiate a resource request through the on-boarding? Do you know the dollar impact resource delays have on project schedules and costs? Do you know what metrics you should be measuring at all? These types of questions beg for a solution built on SharePoint to help you manage the information and documentation, communicate status, and report on key performance indicators (KPIs) you indentify to be important to your organization.

Before you even begin to start building your solution on SharePoint, you’ll want to begin by mapping the end to end business activities, approvals, and flow of information and documents. The next step involves developing an “information architecture” with the appropriate content types and metadata you are looking to capture. Part of this exercise involves understanding what KPIs you are looking to measure as that will drive some of your taxonomy. Where possible, you also want to attempt to estimate time and dollar costs of the existing process so you can compare those estimates after you implement the solution built on SharePoint. There are obvious hard costs like the hourly rate of a resource. Soft costs might be the time required for approvals, time waiting for hiring decisions, or interview feedback. There are also less obvious soft costs such as cost of turnover, lost productivity, low morale, lost sales, or missed opportunities.

So let’s look at an example to see how much lost productivity we might find in this example of IT contracting staffing requests:

  1. Let’s assume you receive about 2000 IT staffing requests a year.
  2. The average processing time for fulfilling IT staffing requests is on average 6 weeks (or 240 working hours).
  3. The lost calendar hours waiting for staffing requests to process would equate to 480,000 lost hours per year waiting (2000 requests * 240 hours waiting per request).
  4. Those 480,000 total calendar hours divided by 24 = 16,667 days total waiting.
  5. Multiply 16,667 days waiting times 8 hours in a day = 133,336 Lost Productive Work Hours Waiting for IT Staffing Requests in this example.
  6. The average hourly rate of your employees (those submitting and fulfilling the requests) is estimated at about $55/hour.
  7. $55 * 133,336 lost productive hours = $7,333,480 as the Total Cost of Loss in Productivity

Once you understand the end of end process and estimate the current loss in productivity involved in the current set of business activities, you can then begin to set a target such as reducing the request fulfillment time by 50%.  Then you can begin to leverage the capabilities of SharePoint.  The assumption is you probably already have it inside your organization and all you need is your own Site Collection.  The costs are minimal and you can now provide IT managers a place to request resources via a centralized SharePoint web form and self-track the progress of their requests and candidates throughout the interview process.   You can empower the individuals who work with outside staffing agencies to manage the candidates and resumes, present them in SharePoint to the hiring manager and include the in-flow of information and documents all within SharePoint lists and libraries with appropriate metadata.   Managers can enter feedback and executives can approve billing rates.  Lastly, you can begin to report to executives and measure cycle times, average billing rates, and more — all from the data and information captured in the solution built on SharePoint.

Just imagine this SharePoint solution allows you to reduce the time it takes to fulfill IT Staffing requests by 20% or 50%?   In our example, that’s a cost savings of millions that are measurable and easily communicated to executives and business leaders to justify the cost of SharePoint and showcase the value and ROI of the technology platform.

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September 30, 2010

Why is measuring a hard ROI for SharePoint just so hard?


Traditionally when it comes to implementing technology, the financial bean counters and decision makers have looked for hard dollars for the ROI of a technology investment. However, when it comes to SharePoint, it seems we have thrown a hard ROI out the window. In a manufacturing or factory environment, it’s generally easy to measure hard dollar costs of raw materials or labor costs or costs per hour. Centuries of economic theory and practice led to the pioneering of the “scientific method” in the early part of the 20th century by Frederick Taylor and Henry Ford among others. Implement “robot X” into the assembly line and produce more widgets and save on labor costs. We have also had a few decades of TQM (total quality management) which has evolved into many buzzwords all seeking efficiencies in productivity of manufacturing and supply chains. In Business School, I remember learning all kinds of management theory on these subjects and “generally accepted accounting principles” to calculate hard dollar costs and manage budgets to actual as well as profitability of goods sold. So what happened to measuring ROI of SharePoint and why isn’t there enough written on it?

I have read tons of articles on web 2.0, collaboration, and SharePoint. They evangelize about grand topics like innovation and creating opportunities through communities and connecting people through social sites. Some talk about the vision of enterprise content management being realized at an enterprise level. And some articles even try to address ROI and talk about the “downstream effects” of capturing ideas and information in blogs or wikis. Then we hear from executives and decision makers that evangelizing the technology sounds great, but all the benefits are “soft” and too hard to measure. Okay, so why not measure “soft costs”?

The reality is that all businesses have soft costs such as turnover, lost productivity, low morale, lost sales and missed opportunities. And any combination of those might drive soft cost dollars in your organization which can have big impact on your bottom line — sometimes just as much as the hard costs and other times even more. Many organizations simply don’t measure these types of costs because they don’t understand it or simply don’t have the capability to measure them. Or perhaps people are just focused on meeting deadlines without questioning the value or impact to the customer. Meanwhile, project management within many organizations seems like chaos, deadlines get missed, decisions are delayed, tiger teams get formed, and the insanity of our day to day work life continues. Projects that should take only a few weeks or a few months, takes 12 or 18 months to complete and quality suffers as does employee morale. You continue to wonder why things in your organization aren’t as easy as what we see on Google or Facebook. Then we recharge on the weekend, read the Dilbert cartoon in the Sunday paper, laugh and think of our own work environments, and do it all over again next week. All the while we continue to email each other on our smart phones and at best upload documents to a site on SharePoint. And if you’re paying attention, there are no doubt hidden costs in many of the things just mentioned.

In today’s economic climate, it’s time we take a hard look at dollars and sense and focus on driving analytics from a collaboration & information management platform like SharePoint. In my next series of blog entries, I’m going to focus on making measuring a hard ROI less hard and relate it specifically to real solutions implemented on SharePoint.

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August 26, 2010

Visualization is the Key to Information Overload


Visualization is indeed the key to information overload….and it’s not just powerpoint, pareto charts, or histograms….

August 19, 2010

Is it Knowledge Management or Business Intelligence?


I was recently speaking with someone whose background was all in business intelligence and data.   They had years of experience building data warehouses and datamarts.  They knew how to create cubes of data and slice and dice and store and manage all the financial and customer data you could imagine.  Because this person was from the “structured data” world, they just couldn’t wrap their arms around the concept of knowledge management.  And we began a lengthy conversation about this abstract concept of knowledge management (KM).

Knowledge management — the buzzword of decades past that might be synonymous with other buzzwords like collective intelligence or intellectual capital.  Or maybe you’ve heard of tacit and explicit knowledge — differentiating between what is in our heads vs what’s written down.  From a technology perspective, KM represents the mounds of documents, information, conversations, blogs, wikis, emails, social networks, knowhow, and expertise …. it’s all the “stuff” that continues to overload us daily and continues to present challenges for individuals and organizations in filtering out what is important vs. what is just noise.   KM is also about the way we create, collect, manage, consume, share, and leverage the unstructured information combined with the structured data my colleague was so familiar with.  It’s about learning, learning curves, and reuse – be it structured or social or organizational.   And KM can be also be about talent, innovation, revenue and costs as well…

Ultimately, KM is about individual, group, and business performance and providing a competitive advantage.  KM is also about adapting to change and managing it as the more you or an organization knows, the better decisions it can make and quickly recognize the need to change, adapt, and drive innovation.

As I explained and defined KM to my colleague and what this abstract buzzword KM is really about…he then said to me:   “Rich, it sounds exactly like what I’ve been doing for the last 2 decades with business intelligence… figuring out ways to collect, organize, structure, and mine data to help businesses make better decisions”.    And the reality is my colleague was right.   BI has many parallels to KM… and at the end of the day it’s all about being able to filter out the noise, identify all the variables in the equation, and make the right decisions based on what you know and assume to be true — be it structured or unstructured.

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July 28, 2010

Top 5 Reasons Why Strategic Initiatives Fail and a Way to Make Success Visible


Great article by a colleague of mine….published in Greater Charlotte Biz.   SharePoint provides the enabling capabilities to implement Executive Dashboards.

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http://www.greatercharlottebiz.com/article.asp?id=1069

We have all found ourselves, at one time or another, lamenting the “what ifs” after a great new strategic initiative comes charging out of the gates only to lose momentum and eventually fall into a ditch dying a slow quiet death. It happens in every company. The interesting part is it happens less frequently in some companies than in others. Do they avoid or minimize the pursuit of new initiatives? Do they take some magical approach to driving initiatives?     In these increasingly tough economic times, companies are not afforded the luxury of avoiding new initiatives. They are either getting better or they are falling behind, so the answer is obviously the approach they’re taking. Let’s take a quick look at the top 5 reasons why strategic initiatives fail and what companies can do to help keep initiatives out of the ditch. According to a recent study performed by Industry Week, the top 5 factors that are common elements of a failed initiative are:1. Strategy is not clearly communicated to the stakeholders 

2. Lack of support by key leaders in the organization

3. Decision-makers do not understand the relevance or are unable to measure progress

4. Lack of impact on employee compensation

5. Technology needed for implementation is not available

It comes as no surprise that these items will spell doom for most any initiative. It doesn’t have to be all of the items together either. A single setback in any one of these areas can knock an initiative right off of its tracks. If you are going through the efforts of researching, funding and implementing a new initiative, you certainly want to put a system in place to help ensure its success.

An excellent tool to use is called Dashboarding. Dashboarding is taking key metrics associated with your strategic initiative and displaying them in easily digested information. With Dashboarding you are taken through the process of identifying metrics that quantify success.

If you had to narrow down the Key Operating Indicators around the initiative to a handful, what would they be?  Now let’s put them in an easy to read and understand format that will be visible to everyone. As this dashboard is updated and distributed on a regular basis it keeps the initiative fresh and allows you to measure your success on an ongoing basis. In a word, it is POWERFUL!

In summary, continue to roll out great new initiatives as they are needed to insure your companies continued growth and success. Just remember, using Dashboarding as a tool to avoid the common elements of “initiative failure” will keep you out of the ditch and headed straight to the bank.