Why is it important to calculate ROI for your Knowledge Sharing project?
Measuring the return on investment (ROI) for knowledge sharing can be a real challenge. But, whichever stage you’re at – whether you’ve already implemented your platform, or are just beginning to – it’s important, and can sometimes be vital in order to get your project off the ground.
ROI is a key part of any business case, especially if there are risks involved with the project, such as heavy upfront costs financially or demands on human resources. McKinsey cite management support as one of the key first steps in your knowledge management journey, so it’s important to demonstrate clear business benefits. Those in top positions can sometimes be sceptical about implementing new technologies, and tools with features of social media can seem trivial. Hard evidence can present a stronger case for your project and get them on board.
Once you’ve begun your project, it’s important to be constantly measuring whether you’re achieving the initial objectives that were set, and are providing good return on investment in order to shape the future of the project. Showcasing clear, tangible results can also create a sense of achievement which can fuel those who were perhaps originally sceptical to further engage with the tool.
So, what are the challenges?
Return on investment is not so easy to calculate for knowledge sharing. Internal communication tools are rarely used as intended, so it can be hard to predict usage and forecast engagement.
It is all about productivity, communication and worker efficiency, which are notoriously difficult to measure.Oliver Young, Forrester Research
Commonly cited benefits of knowledge sharing often include improved productivity, communication and employee efficiency. There are a few ways to measure these, but the outcomes are somewhat difficult to attribute to the tool itself. Also, these intangible assets often affect financial outcomes through chains of cause-and-effect relationships, which are difficult to measure. For example, in a consulting company, it may be possible to identify signs of platform use, such as the number of files downloaded or active users, but the platform’s highest impact may be its impact on the quality of client proposals and delivery time . These benefits undoubtedly impact the organisation financially, but are much harder to accurately attribute to the tool.
However – it’s not impossible. You may have already heard a few statistics on the benefits of knowledge sharing, such as in the study by McKinsey which showed that without knowledge sharing, employees spend an average of almost 2 hours a day searching and collecting information. We can expand this to suggest that in a team of five employees, only four are producing value – with the fifth one merely looking for answers. This shows how enlightening measuring behaviour in your own organisation can be, and gives the opportunity to examine financial implications and therefore return on investment.
So how should you go about collecting these kinds of insights for your own organisation? And, what should you be looking for? The pitfalls are plentiful. But don’t panic, we have a few tips and tricks to help you get around them in our next few articles (coming soon!), which will take you through what you should be measuring and how you can calculate the ROI benefits for your organisation.
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