SharePoint’s Return on Investment; How to calculate your SharePoint ROI

SharePoint’s ROI

It’s not always straight forward, so make sure to check under the cushions on your couch!

I hang my spurs in Houston, Texas and around here, people tend to love ‘one stop shopping’ for the sake of saving time and let’s face it MONEY.  Our big super stores allow us to get in, find what we need quickly, get everything from an oil change to bread and then get us back on our way.  When it comes to information and collaboration, SharePoint is that one stop shop, so if you’re starting to think about what return on investment should look like, keep that in mind!

Difficult to calculate ROI

ROI can be hard to calculate for SharePoint. Be sure to think about both of the below as intangibles that nonetheless contribute to a good return.

• Consolidated Overhead: Consolidating multiple solutions into one platform means you are going to do more with less just like our local Super Store.  Combing your needs be it intranet redesign, extranet capabilities, collaboration, document management, business process automation and/or business intelligence it into one tool means less hardware, less infrastructure and less support staff needed to maintain a well-designed and governed SP Solution.  This all in one allows you to eliminate legacy systems and empowers your end users to manage their own content and security meaning fewer support tickets.
• Search & Collaboration:  We all know SP software and its benefits of delivering the right information quickly and easily and fostering collaboration amongst our information workers, but assigning hard dollar signs to these productivity enhancements can be challenging.
• Business Process Improvement:  Think about your business and all the processes involved in keeping it moving and more importantly making it profitable.  Every organization is unique, but of all the industries I’ve worked in business process improvement projects are the easiest to calculate and show ROI.  Processes like contract lifecycle management, yearly employee performance assessments, new hire onboarding or help desk ticketing can see dramatic improvements when processes are well defined, automated and made visible to decrease inefficiencies and improve compliance.  I’ve designed multiple contract management solutions in SharePoint 2007 and 2010 and I must admit it is one of my favorite solutions to work on because the benefits are so quickly realized.  With a paper intensive processes the complaints are various but the top 3 are:

1. It takes too long to move from contract request to contract execution.
2. I cannot tell where my contracts are during the approval/execution process.
3. I have no visibility into how many contracts are being executed, rejected or when they are expiring without significant efforts to maintain contract tracking spreadsheets.

Number one is by far the easiest to calculate.  If you know it is taking 3 – 6 months to turn around a contract following processes in place today because you are pushing around a Word document through email and then printing it to manually route for signature, then you know this process is prone to inconsistencies and errors.  These operational inefficiencies lead to lower profit margins and increased legal and regulatory business risks.

I’ve seen organizations that had already started working projects without having contracts in place because these processes are so drawn out.  With SP content type templates for contract creation, automated workflows for approvals, notifications and reminders, and digital signatures you can turn this process into a well-oiled machine.

Moving quickly through contract creation in a template controlled by the powers that be, routing based on a number of parameters defined specifically for your organization, alerts to get the process moving again when it gets stuck can all help you execute contracts in weeks instead of months.

Calculating ROI: A Example

1. Assumed facts for estimating: 200 AFEs which require new Contracts per year, with the average time for execution equaling 3 months or 480 hours
2. The lost time waiting for execution is 96,000 total hrs. or 4000 total days of lost productivity
3. If we take the total days times 8 hours in a work day that’s 32,000 lost productive work hours waiting for contract execution
4. Multiple 32,000 times the average employee hourly rate (let’s estimate $50/hr) that’s $1,600,000!!!

Two & three may be a little less easy to put a dollar sign on, but contract administrators, managers and executives love to go into a dashboard so they can quickly see where in the process their contracts are, how many are executed/rejected within a specific time frame and who their most productive team mates are.

Another added benefit is being able to monitor ever green or auto renewing agreements and contract expiration.  Creating a calendar view of your library with these files can empower your contract administrators to quickly see which previously executed contracts need their attention.  This risk management should not be discounted and can be calculated if you survey how many of these contracts were neglected in a previous period.

Performance reviews and ticketing systems benefit in a similar fashion to contracts.  Turning around the tickets/reviews quicker and more efficiently with data capture allows for managers to look into the process like never before and do data analyses to reduce inefficiencies and/or better align their team and ultimately their organization to be that well-oiled fighting machine.

For more on getting SharePoint to pay off, read how increasing utilization can make a difference.