Joslin & Associates, Inc.
Knowledge Management ROI Overview
Knowledge
Management is an ongoing process of capturing, optimizing, and delivering
information. It is not a one-time
purchase of a new support center tool. Therefore
to calculate the Return On Investment, you need to evaluate the cost of
implementation and the cost of management.
The cost of implementation relates to the initial purchase of software,
hardware, communications, training, and services required for the knowledge base
to be placed into production for daily use.
The cost of management relates to the ongoing costs of maintaining the
knowledge base and the infrastructure that was implemented.
While
most support center managers are able to forecast the costs, they struggle to
forecast the savings. This is
partially because a number of the benefits of Knowledge Management are defined
as soft dollars. Companies struggle
to put a value on customer satisfaction, job satisfaction, quality service, or
even the intellectual capital that is captured into the knowledge base.
Another reason companies struggle is because they lack a benchmark.
Before you can forecast an improvement, you have to know where you are.
Once
you understand your current state, you must make reasonable forecasts regarding
the impact Knowledge Management will have on your organization.
The Knowledge Management vendors may offer to assist you with developing
your ROI. Some vendors provide
well-tuned and complex models. To
simplify things, let’s examine how some of the benefits can actually be
converted to dollars. Before we begin, we need to make some assumptions about the
support center. While these numbers
may vary in your organization, the assumptions provide an example for this
discussion.
Assumptions:
Now let’s examine how we might calculate a monthly
return. You may want to modify
these to focus on quarterly or annual impacts.
When doing so, it is recommended that you adjust your forecasted
improvements based on your expectations of the adoption rate and implementation
plans.
Reducing the Average Call Time on first contact.
Forecasted improvement: 1 minute
Savings = (Cases per month * Cost per case) * (Improvement / Talk Time for
first contact)
Savings = (5000 * $40) * (1/12)
Savings = $16,667 per month
Increasing the First Call Resolution Rate.
Forecasted improvement: 20%
Savings = (Cases per month * Improvement) * ((Escalated Talk Time – Talk Time
for first contact) / Talk Time for first contact) * Cost per call
Savings = (5000 * 20%) * ((18 – 12) / 12) * $40
Savings = $20,000 per month
Reducing the Escalation Rate.
Forecasted improvement: 5%
Savings = (Cases per month * Improvement) * (Cost per escalated case – Cost
per case)
Savings = (5000 * 5%) * ($150.00 - $40)
Savings = $27,500 per month
Reducing the time required for a new support
professional to become productive.
Forecasted improvement: 3 weeks
Savings = ((Improvement * Number of new hirers per year) * (Average burdened
cost of a support professional / weeks per year)) / months per year
Savings = ((3 * 8) *($70,000 / 52)) / 12
Savings = $2,692 per month
Redirecting repeat calls to Self-Service.
Forecasted improvement: 10% of
current cases redirected to self-service
Savings = (Improvement * Cases per month) * Cost per case
Savings = (10% * 5000) * $40
Savings = $20,000 per month
Developing
an ROI for Knowledge Management in your support center depends on your current
state, your implementation plans, your team, and your customers. The need for a
formal ROI depends heavily on the senior management responsible for the support
center. Some companies have
minimized this focus because of an existing strong support from senior managers
for Knowledge Management. Industry
research groups such as Gartner, Forrester, Yankee, and others have well
documented the value of Knowledge Management in the support center.
Download a copy of the Knowledge Management ROI Calculator today!
Right-Click on the download file and select the option to Save Target As.
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