The concept of Return on Investment (ROI) is intuitive. You plunk down money for a business asset or service. If it makes you more money or saves you some, it’s earning a return on your investment. Hopefully, it will earn or save enough to pay you back what you paid out—and quickly. For software, it can be a little more challenging to figure out ROI. It’s there, but it can be hard to see. This article explores this issue for enterprise search (ES), a type of software that enables employees to search for information inside their organizations.
The “R” in ROI is the most important element for calculating ROI from software. The “I” is usually well known, or at least it should be. You know what you paid for it and you have a good idea of what it costs to run. The “R” for software is almost always a matter of savings. In some cases, software will enable you to earn more revenue, but usually, software ROI comes from avoiding expenses or enabling people to work more productively.
To understand ROI for Enterprise Search, it helps to have a basic grasp of how the technology works. Enterprise search is analogous to consumer search, e.g. Google, but with some notable differences. An Enterprise Search solution is usually private, inaccessible to the outside world. And, instead of indexing and returning search results just for websites or images, Enterprise Search indexes all kinds of enterprise data: emails, PDF files, Word documents, databases, intranets, document management systems and so forth. The enterprise search portal may look a little like Google, but it’s reaching into a far broader data set inside the company walls. It is also secure in the sense that people can only find and discover content that they have permission to see according to the underlying systems.
Employee productivity is one of the primary drivers of ROI for Enterprise Search. If people can get more work done in less time, they’re more productive. For ROI purposes, productivity gains are equivalent to savings. This is more easily understood in a physical context, e.g., if Sally can weld 10 more widgets a day than she used to, her labor cost per widget has gone down—a per-unit savings. For information work, figuring out productivity gains can be more difficult, but it is definitely possible.
Call center operations offer a good example of how Enterprise Search can make information workers more productive. At a telecom carrier, for instance, call center employees have to field a wide variety of questions from customers. Often, they must then complete information-heavy tasks while the customer is on the phone. The more calls an employee can handle, the more productive he or she will be. Call center management software measures such job performance.
Enterprise Search contributes to greater call center employee productivity by enabling workers to find out answers to questions more quickly than they could before the solution became available. While answers to routine questions may be readily available on call center information systems, or simply be common knowledge, more difficult questions can lead to overly long calls. If the customer service representative has to put the customer on hold and start digging around for information about rates and regulations, for instance or calling people in the company to find the answers, the clock starts ticking and productivity goes way down. He or she is handling fewer calls per hour. The cost per call goes up.
ES can speed up the process of answering difficult questions. The employee can quickly look up the needed information, which may be available in PDF files on the intranet or in a document management system. The cost per call goes down. These savings constitute the “R” needed for ROI. Additional benefits include a number of intangible, but still financially meaningful factors. ES enables a better customer experience, which can lead to greater customer loyalty and retention. Employee morale may also improve, resulting in lower rates of staffing turnover—a hidden drain on resources.
A marketing team needed to prepare plans for the coming year. Everyone knew that they had to use a standard planning template. The problem was that no one had any idea where it had gone. One option was to recreate the template from scratch. That would have been an unproductive use of time. Someone would be paid to do work that theoretically wouldn’t have to be performed if only they knew where to find the old template. ES can solve this problem.
Natural Language Processing (NLP) in ES is helpful in this use case. If the marketing team doesn’t know what the old file was called, they can enter a phrase like “last year’s marketing plan” into the ES interface. The ES solution uses NLP to determine the best way to search for possible results. The utility of NLP also relates to a problematic fact about information workers: people leave jobs and take knowledge with them. In this case, it’s possible that someone on the team just always knew where the templates were, but then, he quit, and didn’t tell anyone where he stored them. With ES, this is no longer an issue.
The ability to find expertise quickly is another way that ES can boost productivity. For example, an international law firm set up ES so that employees could lookup files and information about cases. This made people more productive by saving them time. The system also had the benefit of enabling employees to locate experts. For instance, if a partner in the New York office needed a review of an office lease in Singapore, she could discover exactly the right expert in half a minute on the ES system. This saved a lot of legwork and opened up the schedule for more billable time.
Industries like energy and pharmaceuticals, which are subject to government regulation, can see ROI in ES by getting better at managing risk. The costs of poorly managed risks can be quite high, ranging from fines and penalties to huge, costly disasters that end up in litigation and brand damage. ES gives employees of firms in these businesses the ability to look up arcane details of regulations that affect their risk profiles. With ES, they can be up-to-date on compliance and manage risks effectively—and avoid the costs of a risk going bad.
Enterprise search generates ROI in multiple ways. It can make employees more productive. An ES solution helps people avoid unneeded extra work. Experts can be discovered quickly. It even helps manage risks. All of these are money- savers, drivers of ROI that make clear the value of an investment in enterprise search.
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