Any significant technology investment is typically followed by the post-implementation autopsy where either a great deal of back-patting or hand-wringing takes place. In this way, the IT world is not that far removed from the Bay of Pigs in the sense that "success has a thousand fathers, but failure is an orphan." Success, in the IT world, comes down to getting a return on your technology investment. But, this simple concept of "return" gets complicated real fast.
The Intuitive Approach To ROI
Some technologies, like those in supply chain, offer easy ways to measure their effectiveness via productivity gains. After the supply chain implementation, for example, you now move more boxes through your distribution center with less people. With a little number crunching, you quickly arrive at some measurable productivity increase.
With other technologies, however, measuring a return seems more like an act of intuition than mathematics. Generally speaking, EIPs (enterprise information portals) fall into this category. At its most basic level, portals offer a user-friendly interface to gain access to enterprise data. More complete EIPs combine search, content management, content integration, and database management technologies under personalized user interfaces that deliver information tailored for every user. The underlying technologies allow IT staffs to manage ever-expanding data, while the user interfaces control and enhance access to data.
At the end of the day - or implementation - what numbers can an IT staff use to justify the money it spent on portal technology? Unfortunately, those metrics aren't easy to come by. Instead, be prepared to get the lowdown from department and division managers. When a salesperson closes a big deal, he'll likely chalk it up to his innate ability to sell. Ask his manager, and you might hear that portal technology bred a more informed salesperson, detailed pre-call planning session, and targeted marketing collateral.
"How much more productive are we because of e-mail? Despite the time we waste on e-mail, there is no question that e-mail makes us more efficient every day. But, you can't put a real dollar amount on that productivity gain," comments David Seuss, president and CEO of Northern Light Technology (Cambridge, MA). "How many people did you layoff last year because you upgraded your e-mail system? In some sense, the answer is none. However, the pressure to hire middle managers probably went down because a middle manager can effectively control more people because of e-mail. Many technologies are evaluated based on the informed judgement of management practitioners." Launched in 1996 as an Internet search portal, Northern Light Technology began offering portal solutions to enterprise customers in 1997. Currently, 85% of the company's revenue comes from enterprise accounts. The consumer search engine generates the remaining 15%.
Finding The Hard-Dollar Savings
Trying to calculate an increase in employee productivity due to a portal purchase is "difficult to capture," concedes Jeremy Pollock, product manager, InfoExchange Portal at BroadVision (Redwood City, CA). Looking beyond employee productivity, however, portal technology can offer enterprises some real hard-dollar savings. Companies that manage tens or hundreds of Web sites can consolidate those sites into a few portals. This consolidation not only results in hardware and software savings, but also cuts IT personnel and human resources costs - all of which have definitive dollar values. Companies can also look for portals to decrease service calls and associated costs. "Using portals to enhance customer self-service is one area with big benefits and tangible returns," states Pollock. "We've had customers introduce portals as self-service environments and reduce support costs from about $6 to 35 cents."
Managing content and access are the overall goals of portal solutions, and this is another area where companies can expect to see hard-dollar returns. "Portals allow companies to integrate all of the external content that employees license into one application. Once this is done, companies determine the external content that is not being used and eliminate it. That's real savings," adds Seuss.
Consolidation, Opportunities On The Horizon
In a July 2001 report from Gartner (www.gartner.com) on the state of the portal market, the analyst group concluded that the 4-year-old industry is "one of the most dynamic in the history of enterprise software." In 2000, Gartner predicted that consolidation would take place in the market. According to its 2001 report, the predicted consolidation is right on schedule. While thinned, the portal market is still an overcrowded space. But, this hasn't dampened the enthusiasm of either Northern Light Technology or BroadVision. Both companies believe portals will become even more important to enterprises. "In the early days, the barrier to entry in terms of having a 'portal product' was very low for vendors," says Pollock. "Going forward, it is all about integration. The question will be, 'How deep can I integrate my portal into the applications, data sources, and processes that I have within my enterprise?'"
"We haven't even scratched the surface right now. Many opportunities are just now presenting themselves and momentum is starting to build," comments Seuss. "The problem that portals address has gotten so much bigger in the last 12 months, and it gets even bigger with each passing day."