Iknow is often asked to help identify and develop a clear and compelling return on investment (ROI) for KM projects. Iknow will work with senior business, financial, and information technology management to develop the business rationale to justify the KM investment and to evaluate its overall financial impact. Our process typically follows four steps: defining the current state, defining the future state, quantifying the benefits and costs of moving to the future state, and then summarizing these to create the business case.
The types of business benefits from knowledge management are quite varied, and include both tangible (hard) benefits and intangible (soft) benefits. Tangible benefits include shortened business process cycle times; faster response to business issues: reduced costs, mistakes, and rework; and increased productivity, efficiency, and effectiveness. Intangible benefits include increased employee skills and competencies, increased value-added of jobs, more fulfilling work, and greater employee satisfaction. The results from business process mapping and external benchmarking can be helpful in estimating the potential scale of benefits. Project/program costs cover the people resources involved in solution design, development, implementation, training, and ongoing operation, as well as the software product and other technology infrastructure costs.
We can also broaden the scope of business case development to consider other factors that are critical to the success of a KM initiative, such as identifying appropriate executive sponsors, gaining senior management buy-in, and integrating the project with other ongoing initiatives.
Iknow has worked with numerous clients to develop business cases for knowledge management. Our teams work with clients to create comprehensive business cases that demonstrate a clear and compelling ROI for the KM project or program.
Resource investments in knowledge management must generate a financial return. Preparing a strong economic justification to support KM investment is essential to achieve full management buy-in and ongoing internal support.