Measuring Lifecycle ROI.

Beyond ROI, Measuring Project Results©

Part of the lifecycle for an image system project should be the measurement of gains and efficiencies achieved. In many cases, an imaging project will be approved based on some anticipated gains in business efficiency and these gains provide the return on investment (ROI) that pays for the system costs. If the project began by analyzing the potential benefits of reengineering a business process, then at some point after installation those gains should be measurable.

This resource paper applies to document imaging, document management, groupware, and workflow technologies.

If the project is based on a positive cost-justification analysis, then the groundwork for the post-implementation study is already laid and the tools for measuring results are already available. If the project is not based on a cost-justification analysis, then it may be difficult to measure gains since there is no benchmark to measure against.

The easy answer is to review the new system against the original cost justification. Was the 35,000 square feet of floor space recovered? Were 20 FTEs (full time equivalents) released or reassigned as predicted? Is paper usage down from 500,000 sheets per month to 10,000? Are business processes completed faster such as resolving a claim in 3 working days instead of 15?

The answers to these questions are relatively easy to determine and will provide part of the answer or at least an indication that the newly installed system is working as expected. However, what if your system purchase is not based on retrieving floor space, or cutting printing costs, or eliminating FTEs? What if your system purchase is based on intangible benefits such as improving customer service or providing new work processes that were not previously used? What if the new system is not based on previous processes?

Intangible benefits are difficult to prove or disprove and even harder to measure. How do you know that employee moral has improved as a result of the new system and is responsible for an eight percent decrease in employee absenteeism? How do you measure customer satisfaction in dollars and more so, how do you attribute the increase (or decrease) to the new processes and systems?

Measuring the benefits of a system must be planned for as part of the overall cost justification process. Reviewing the basic cost justification process, the following areas are typically considered:

Current operations: This is an analysis of the current operations and provides a snapshot of how many people employed, what their cost is to the organization, and what resources are required to maintain current operations. As part of the current operations analysis, the study should provide some detail about how long a process takes, what steps are involved, what resources are needed to complete the work, and what are the current bottlenecks. Process efficiencies can only be predicted if the process has been analyzed in sufficient detail to breakdown individual steps and associate costs to these steps.

Business process engineering: Once the current operations are understood, the next step is to determine where improvements can be made and efficiencies gained. Can a twenty-two-step process involving five people be reduced to six steps involving two people? If so, what are the new procedures, process steps, and associated resource costs? In addition to calculating these efficiency gains, the cost-justification process must also recognize new or additional resource costs that were not part of the previous system. For example, these costs may include:

* Additional personnel for scanner operations or computer operations

* Additional communication line charges

* Recurring costs for training and maintenance

Image system costs: After the current operations have been reengineered and the processes defined, then the appropriate system resources can be defined. These resources include workstations, communications sizing, servers, software, application development, and project implementation costs.

When the current operational costs have been determined, they can be compared to the projected costs for the image system. The difference in costs, or delta between current and projected, results in a positive or negative cost benefit analysis. If this type of analysis is not performed prior to installing an image system, it will be difficult to quantitatively measure results because previous baselines were not established.

The results of installing an image system may not become evident for at least a year and possibly longer. If a complete overhaul of the business is undertaken, the changes will cause short-term increases in problems, which may cause a temporary spike in the work for a department. If the measurement is undertaken before the "electronic dust" has settled, the conclusions will be false.

For example, if the current company benefits system is replaced with a new and improved method, the people who are the "customers" of the system may respond with increased questions about benefits (they were reminded about a question previously forgotten), confusion about new forms and procedures, or simple inquisitiveness about the change.

This increased activity should not be calculated as a general increase of questions from 100 per day to 150 per day. The increase is temporary due to change, and if the new processes begin to work, the actual number of questions should drop based on having better procedures and systems in place.

Gains due to increased customer satisfaction may only be calculated after years of continuous monitoring and be based on a previous understanding of customer satisfaction. For example, customer turnover may have been previously established at twelve percent per year by reviewing the past five-year’s records. Turnover may have been traced, in part, to poor customer services such as lack of response, poor response times, and quality of response. A new turnover percentage calculation may require as much as a year or more before customer turnover can be analyzed due to annual contract renewals and other factors. And perhaps only after several years can it be established that customer turnover has been affected by the new system.

Measuring results should be planned for as part of the original project. A proper baseline must be established, the original figures maintained and available for several years, and the appropriate resources must be dedicated to a new analysis. A side benefit to revisiting the cost benefit analysis is that mid-course corrections may be made based on new data and further process improvement may occur.

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