[Sigia-l] intranet ROI musings

[Eric Scheid]

This is from Gerry McGovern's latest newsletter "Intranet return on
investment case studies"...

> In a study entitled, 'Not an intranet portal,' Cisco Systems found
> that the intranet significantly reduced the cost of processing
> expense reports. The study stated that:
> * In 1996, Cisco processed 54,000 reports. The amount of dollars
>  processed was USD19 million.
> * This required four staff, with a total processing time of
>  four days.
> * The cost per report was USD50.69.
> * In 1999, the process had been moved to the intranet. 145,000
>  expense reports were processed, amounting to USD77 million.
> * The number of staff required was three and the total processing
>  time was four days.
> * The cost per report was USD1.90.

OK, on the face of it it looks like a successful implementation. After all,
they've reduced the cost per report from USD50.69 down to USD1.90. However,
those per-unit-costs don't tell the full story. With the manual system they
had 54,000 expense reports at $50.69 each = $2,737,260 in costs to process.
Then with the intranet there were 145,000 reports at $1.90 = $275,500. Which
makes a total savings of $2,461,760 ... which is looking darn good.

Except ...

With the manual system, in 1996, they had $19,000,000 in expenses, and then
in 1999 with the easier to use intranet system this blossomed to $77,000,000
... which could be entirely due to growth in the company, but I wonder how
much of that increase is due to staff claiming back every nickel and dime
now that they can do so easily, while before with the manual system they
only claimed back significant expenses, foregoing all manner of
miscellaneous and/or dubious spends?

A further question then arises: what if you are tasked with building this
system, one which could finally pay back heretofore unclaimed staff
expenses, knowing that it would cost the company many millions in expense
payouts?

e.

ps - something doesn't add up ... 54,000 reports, 4 staff, 4 days ... that's
421 reports processed per hour per staff ... so how does each one then cost
$50.69? At 421 reports per hour, that's just enough time to transcribe the
claim amount onto a cheque and rubberstamp a signature. Obviously there is
more to this story than what we have been told.