ROI calculations: K-Logs vs. traditional Intranet Portals

I recently read the ROI document produced by Plumtree Software for estimating the value portal software (you have to sign-in to get it, lower right).  Let me sum it up quickly for you. 

The document assumes a 5,000 person organization. 

Portal costs:

• Portal license:  $2,000,0000   ($400 per desktop for the core package)
• Hardware:  $110,000
• Collaboration and portlet development tools:  $675,000
• Operational costs:  $1,250,000  (very expensive admin)

TCO over one year:  $4,035,000  for 5,000 desktops or $807 a desktop

Portal benefits:

• Lower cost of delivering web front ends to business apps:  $1,200,000
• Lower cost of adding a web front end to business apps:  $1,050,000
• Large document publishing via portal lowers costs of publishing via e-mail:  $56,000
• Lower extranet, directory, and Intranet management costs:  $1,038,000
• Lower training costs due to portal integration:  $1,800,000
• Efficient information delivery lowers compliance costs:  $432,000
• Collaboration improves project effectiveness:  $300,000
• Elimination of paper-based distribution of corporate media:  $800,000
• Employee self service:  $182,000
• Customer and partner self service:  $80,000
• Increased productivity via a single Web interface:  $2,500,000

Net benefit:  $9,342,000 or $1,886 per desktop.

Total ROI of a traditional Portal system:  240%

What is amazing to me is how many of these functions are available via a K-Log network at a small fraction of the price.  Here is how I would construct the ROI document for a K-Log portal. 

K-Log Costs (high end estimates):

• K-Log portal software license:  <$250,000 ($50 a desktop at the high end -- using a variety of vendors as models).
• Hardware:  <$60,000
• Custom K-Log portal development:  <$100,000
• Operational costs:  <$300,000

TCO of a K-Log system over one year:  $710,000  for 5,000 desktops or $142 a desktop  (a well run project could probably cut this to under $75 a desktop).

K-Log benefits:

• Lower cost of delivering web front ends to business apps:  $1,200,000  (100%, this can be done by personal K-Log systems by template control and self editing of navigation links). 
• Lower cost of adding a web front end to business apps:  unknown  (a portion of this could be accomplished by using the low cost CMS that the K-Log system is built on, but I will count this as a zero for sake of argument).  
• Large document publishing via portal lowers costs of publishing via e-mail:  $56,000 (100%, self published files with human understandable version history is easy via a K-Log system)
• Lower extranet, directory, and Intranet management costs:  $1,038,000 (100%)
• Lower training costs due to portal integration:  $1,800,000 (100%, I would argue that a K-Log system is even easier to train an employee on than a portal package since this is a system that is in wide use on the Web).
• Efficient information delivery lowers compliance costs:  $432,000 (100%, through both RSS and K-Log publishing) 
• Collaboration improves project effectiveness:  $300,000  (K-Log networks include discussions, comments, e-mail bulletins, trackback, RSS, and more for collaboration)
• Elimination of paper-based distribution of corporate media:  $800,000 (100%, RSS -- including enclosures -- and K-Log publishing) 
• Employee self service:  $182,000 (100%, information and application access is even more under the control of the individual employee in a K-Log network, and therefore more able to radically enhance power users -- which typically are some of the most productive employees) 
• Customer and partner self service:  $80,000 (100%)
• Increased productivity via a single Web interface:  $2,500,000 (100%, easily done through template control and integration of web front ends with employee weblog interfaces).

Net benefit of a K-Log system:  $8,292,000 or $1,658 per desktop.

Total ROI of a K-Log system:  1,170%

Other benefits of K-Logs over Portals involve traditional KM goals that Portal software can't hope to match.  In many ways with a K-Log network running on your Intranet you get the all the benefits of Portal software and the best KM system that has yet been envisioned.

Questions and comments:  jrobb@oddpost.com

Sincerely,

John Robb