in ROI

The Value of Collaboration #4: Reducing the cost of internal communications

How much does your intranet cost?

The Intranet

In addition to the core infrastructure, add all the different applications – content management systems, Sharepoint, blogs, wikis, etc. Then add the engineers that customize the tools to make them look like modern websites. Then add the people dedicated to producing the newsletter and e-zines and other corporate content.

How much does all of that cost? You probably have no idea.

It turns out that most large firms can comfortably reduce their total intranet spend by $3 million to $7 million if you effectively use modern social platforms and practices.

The problem

In an era where anyone can cheaply and easily publish their own book, ebook, or blog – where even the best newspaper are cutting costs while citizen journalism is on the rise  – most firms are spending far too much money on tools and specialists dedicated to communications.

If I want a beautiful, mobile-friendly, professional website complete with social features, analytics, and more, I can create one in a few minutes for free. Maybe add a few dollars a year to eliminate ads or select a premium design.

Now try and do that at work. You’ll be pointed to a variety of poorly integrated tools, most of which will require customization to have basic features like comments and customizable pages. And that customization, multiplied by 100s or even 1000s of websites, adds up. (A popular statistic, cited here and here, is that for every dollar a firm spends on Sharepoint licenses, they spend $6 to $9 on customization.)

Worse, there are a lot of people involved in producing and governing content. Traditionally, we’ve relied on dedicated communications professionals tell employees the news of the organization. They’re often gatekeepers, too, deciding whether you’re even allowed to have a presence on the intranet. Now, though, the news spreads much more quickly and cheaply, and Communications departments must either be smaller or change what they do.

The solution

The solution involves replacing traditional intranet tools with a social platform and replacing traditional Comms practices with a greater reliance on employees publishing and sharing information.

A modern social platform makes self-publishing at work as easy as it is at home. They tend to support a wide range of content (sites, documents, video, photos, blogs, discussions). Search works extremely well. And the best ones have social and mobile features as core elements of the platform. In all the benchmarking we’ve done, almost every firm that introduced a modern platform has eliminated old tools and greatly reduced their use of dedicated staff or design firms for customization.

And when it comes to content, you may still need people to craft the latest org announcement or news about quarterly earnings. But, since around 2008, people have increasingly relied on social filters for their news rather than professional curators. It’s the popularity and ease-of-use of social platforms that are the cause of that shift.

When everyone can publish, the information flow in your organization can be more relevant, more real-time, and cheaper than ever before.

What’s it worth?

The reduction of communications costs comes in 3 areas.

Consolidating the intranet: Firms I’ve spoken to have eliminated up to a dozen or more  applications and hundreds of websites. That reduces software licenses, hardware, and engineers who develop and support the tools. In all cases I know of that have pursued an intranet consolidation strategy, the savings exceeded $1 million.

Customization: This is one of the most insidious and often the most poorly-controlled costs because it’s typically found in pockets throughout the firm without any central oversight. Combined, my estimate is that large firms spend between $2 million to $10 million on intranet customization by staff and by 3rd-party design firms. (My own group, for example, once spent over $100,000 customizing Sharepoint to support our communities of practice. I’ve heard of internal sites at some firms costing 5x or even 10x that amount. And a large firm might have 100s of groups doing customization of some kind.)

The era of spending large sums tweaking intranet sites should be over. Firms should slash their customization costs by at least 50% for savings between $1 million to $5 million.

People editing content: Perhaps the most contentious and political category is the number of people producing official content and governing the intranet. Of course, most  Communications departments do far more than this. But a considerable subset of what they do is “focused on the announcement of management conclusions and the packaging of management thinking into messages for mass distribution to the ‘troops'”.

Adding up all of the work related to this subset could easily equate to 50 people across a large firm. And this should be reduced by at least 20%. Assuming a fully-loaded cost of $100,000 per person, that’s another $1 million in savings.

Why doesn’t everyone do it?

The biggest barriers seem to be control and fear. The people who own their particular tool or website cling to it as part of their value to the firm. And it’s the rare person who actively seeks to reinvent their job while trying to keep it.

But even communications professionals recognize the need for change, as described in this useful post entitled “The Internal Communications Department of the Future” by a former Communications head:

 “No longer can we afford to (only) cascade messages down from the top. Our organizations have become too complex and too slow to rely upon such an antiquated method. We need to be more nimble, transparent, and inclusive.”

He then points out that the story can be about more than cutting communications costs. It can be about changing the very work of Communications to make it more useful and meaningful:

“…Even though I advocate a future where everyone is a communicator, communications professionals still have a pivotal role to play: helping others, throughout the organization, to become better communicators, and highlighting the best of employee contributions, while also reinforcing key messages around strategy and values. Such reinforcement aids in prioritization, so that scarce resources are more productive on the right things.”

In addition to saving millions, such a change would be good for the firm and all the people in it.

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  • http://www.webwisedom.com/ Mike Wise

    You speak the truth with respect: “And it’s the rare person who actively seeks to reinvent their job while trying to keep it.” Absolutely critically important. We all know that the only constant is Change. Why do we work so hard to avoid it? Because it’s harder than staying the same.

    As examples of reinventing, I speak about the Round Org Chart in the Social Tech Boot Camps, something that Disney was an early adopter of. Ranks-off Meetings, Virtual workspace, and Gamification – these are the concepts of the future for those willing to shed so-called ‘control’

    Netnet, if I may? Tools like Jive Software are the real deal. Tools like Sharepoint are more of ‘the garage’ with Yammer creating a lot of ‘noise’ but not solving anything. Seriously… CIO’s beware: and I know you know this, but the IT paradigm needs a wholesale makeover, don’t you think? Yeah, it’s a lot of work…

    Great Saturday read by someone who knows what he’s talking about.

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  • http://www.lbenitez.com Luis Benitez

    Great post. We see many of our customers ( http://www.ibm.com/social-business/us/en/customers.html ) leverage IBM Connections just for this purpose.

  • http://www.elseinc.om Robert Drescher

    Hi John

    I feel that the social environment changes both internally in business and externally with suppliers, customers and consumers, are a necessity today, as life cycles for a product and service change so rapidly older traditional methods of driving business decisions are just to slow to keep up. The old fashioned idea of creating a plan and flowing it is just to outdated, in business we have to start to think the way the military has for a lot longer, you need to get information to those who needed it when they need it, otherwise your results will not be very good. It will also shift the senior roles in most companies dramatically away from trying to control daily operations, to constantly adapting and changing their plan to meet current needs. Social media tools are just one way those senior people can more rapidly get and share information with their organization, and the end result will be that they will be spending more time actually doing planning, and far less trying to make people follow an existing outdated plan.

    I think that the fear of not being able to point to some plan they are going to follow constantly frightens many senior executives, yet it was never a realistic position. Just like General Eisenhower always found the real planning work is not before the battle actually starts, but after it as been launched. He and his staff did more work in less time after they launched the D-day assault than they did in the months leading up to it. And it was their ability to adapt and adjust their plan that in the end delivered their victory. Today most military leaders will tell you that the ability and speed with which you have to adapt and adjust a plan is even greater, though with the aid of information technology systems, it is also easier for them to do it successfully, as many of tho decisions that once required the highest commanders to make, are now being transferred to lower level commanders, who now have greater access to needed information, and are empowered to take required corrective actions. Today many NCOs and enlisted men have access to information that once only the top generals had, but it allows for faster and better decisions at every level. Business leaders have two options as I see it either they adapt to the new reality, and allow the more rapid sharing and use of information and thus allow growth and performance to improve, or they can stick to attempting to micro-manage and control their organizations into extinction.

  • http://www.gensteam.com Andrew Krone

    I think you are thinking to broad here. I just so see how you can say “$3 million to $7 million if you effectively use modern social platforms and practices”. Examples? Evidence? Support?

    You have to answer this question FIRST: What is it that a corporate intranet is trying to achieve? This is important because you have to understand what it is your company needs an intranet for before starting yet another project. Is it Document Sharing? Great, there are literally hundreds of tools to share documents. Is it Document management and revision control of documents? Great, there are tools for that. Is it marketing collaboration? Also tools for this. Is it Training? Plenty of tools there.

    I would think education/training of ALL users using a new tool would be a large part of the investment.

    • http://johnstepper.wordpress.com John Stepper

      Hello, Andrew. In large firms, I think you’ll find there is no single goal for the intranet. Rather, the intranet is often a federation of a wide variety sites sponsored by a wide range of groups, each with different goals.

      Many of those group are spending money to customize websites like we used to do 10+ years ago. These are largely websites that may look nice but lack interactive features or aren’t mobile friendly.

      My estimate is based on data I’ve seen at a few large firms that have decommissioned applications, reduced customization spend, and reduced the costs/people required to produce content for internal consumption. Yes, document management is a use case. If I included that, the savings numbers would be even higher.

  • http://twitter.com/sammarshall Sam Marshall (@sammarshall)

    Hi John
    For sure there are intranets that are inefficient and could be improved. But I think you place too much hope in the transformation that social software would bring about. Making it easier to publish doesn’t necessarily mean everyone will start generating content. We’ve seen the same with countless collaboration platforms where discussion areas lie fallow. There’s often a big change management element that you haven’t costed in here.

    • http://johnstepper.wordpress.com John Stepper

      That’s a good point, Sam. Given the participation inequality you see on the Internet (90-9-1), you have to do something extra to get useful content.

      That might include embracing traditional content owners (people already publishing inside the firm) as well as creating new structures/roles organized to produce content (like CoPs).

      For sure, it doesn’t just happen organically.

  • http://www.wysetalk.com Ewald Horn

    Great article John.

    It’s sometimes shocking to see how much companies are spending to get their intranet infrastructure up and running, and maintaining it, yet they have nobody driving the USE of the intranet. At WyseTalk, we’ve found that by eliminating the cost and ramp-up time associated with building their own collaboration platforms, we’ve allowed companies to focus on building communities instead. Not only is this approach much more cost-effective, but the results are also far more impressive.

    Thank you for the great article, it’s great to see more and more people are becoming aware of the problems associated with the traditional intranets.