ROI Dashboard – User Experience Indicator 4: Aggregate and simplify

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Up to now, we have found values for our project, we have defined KPIs that support these values and we have created financial relations to emphasize the business value of our core values.

That are way too many indicators; we have to look at so many things that we might loose the big picture easily. This is not a good dashboard; dashboards stand for simplicity and for information delivered at one glance.

On the other hand, information is only good, if it is based on many and widespread indicators; you can’t control your business with a narrow minded view on what’s going on.

Another missing part of information in our sample project is the expense-side: What is your invest, what is it you want to get a return on? This is something we have to clarify before we can proceed to aggregate our financial values.

A first issue that will occur especially in media projects is dealing with the relations of onetime costs vs. running costs – what do you want to related and how do things belong together?

If we go back to our example project of running and relaunching an intranet, the expenses we need to consider are:

• implementation of the relaunch project

  • planning, designing

  • developing

  • training, roll out

  • contentmigration

  • evtl. software licenses, evtl. new hardware

• operational costs

  • ongoing software and hardware maintenance, support

  • hosting expenses

  • application maintenance (SLAs, software upgrades)

  • security and backup costs

• editorial costs (time the editors spend on creating and managing contents, evtl. costs for buying/producing specific content (eg. movies, audios etc.)

• usage costs (time users spend on the intranet)

• eventually promotional expenses (internal marketing)

• additional expenses (travel related to the project, education for project- or editorial staff etc.)

Most of these are ongoing costs that can easily be monitored on a monthly basis. The project itself is a onetime investment with a lifetime of (hopefully) several years. How can we integrate this in our picture?

All financial values we have defined so far are short term and frequently changing factors; they probably look very small if compared to major onetime invests.

There are several ways to deal with this:

• We can split the invest into monthly amounts for it’s assumed lifetime

• We can calculate the total costs (onetime + ongoing costs) for an assumed lifetime and split the total amount into monthly amounts

• We can add the project price as an entrance fee and add a timeline similar to a break-even-calculation: This will clarify, that the ROI-figures will look pretty bad for a certain time, but that we can expect changes, and it will tell us how we are doing on our way towards these changes.

In our intranet project, we decide for the third option. This may need some additional explanation for user who see the ROI dashboard for the first time in an early stage (why is it so negative?), but it simplifies the handling of data over time: In fact, we now have to deal with monthly costs only; and the first month is a very expensive one.

That said, how can we proceed to get a better overview of things? A first step is to cluster expenses – there again, we have several criteria. An option may be to group them by cost centers, so that the responsible managers feel addressed. The disadvantage here is that the organizational division ist not always the most logical one, it is not always the best to capture the real processes. Another option is to sort costs by how they are caused:are they caused by the daily use of the system, are they caused by more users or more traffic, are they caused because of regulatory issues or just because of weaknesses in the organisation etc. The advantage here is that we have a chance to make obvious were the costs come from (they are not always due to additional wishes of editors or developers…), but the problem is, that you may have endless discussions on the origin of costs – that quickly turns into a philosophical discussion.

My favorite setting is to just focus on technical costs and usage costs. This covers the most important stakeholders in the project, and it somehow mirrors the idea of onetime and ongoing costs in the project.

Technical costs – in our project – would be

• project implementation

• operational costs

Usage costs would be

• editorial costs

• usage costs (in the narrower sense as defined before)

• promotional expenses

• additional expenses

Technical costs can be assumed with 1,5 million euro for the initial project and 20 k euro monthly operating fees

Monthly usage costs sum up from 12 k euro for editorial costs (three editors who spend 50 % of their time creating and maintaining content) 3 million euro for usage costs (10.000 users using the intranet for 20 minutes a day on 20 days per month), 2,5 k euro for promotional expenses (creating training materials etc.) and 8 k euro for additional expenses.

Costs	I	II	III	TOC period 1-3
technical costs				1560000
project implementation	1500000			1500000
operational costs	20000	20000	20000	60000
usage costs				9067500
editorial costs	12000	12000	12000	36000
user costs	3000000	3000000	3000000	9000000
promotional expenses	2500	2500	2500	7500
additional expenses	8000	8000	8000	24000
total	4542500	3042500	3042500	10627500

So if we look at the true and actual costs, there are huge amounts of money. The biggest amount – user costs – are actually savings, because we assume that using the intranet (especially a good intranet) is cheaper then always asking colleagues for help, browsing in printed archives (or badly designed intranets) or informing employees on employee events. But this is what we have to prove.

The clustered revenues look similar:

That now allows us to compare costs and revenue

This tells us several things:

• we are not quite there yet (as long as the ROI is smaller then 1)

• but we know our handles and we can watch how they affect our ROI

• and we get some insights on the actual financial dimensions of media projects

An easy overview of costs and ROI-development can look like this.

The data obtained that way show that online business affects the whole company, that the financial value of media is not always related to advertising and that there is a way to determine values – and that seemingly small changes can have really big effects.

The ROI Dashboard is a product, it is not just a concept or an idea, it is a product that can be customized for several projects and that can grow over time. I think of it as a relative of the balanced scorecard: It sums up a lot of different aspects, it adds insights from different views and it includes more than just the obvious financial dimensions. – But we should not forget, that after all, everything should lead us to values we can express in hard currency. Even if we want to add more, we can only estimate the benefits of our project, if we can finally express things in cash.

I started a few discussions on this and will get back with some updates.

The data sheet with all calculations can be found here, an overview of the values, their charts, their monetization formulas and the overall outcome can be downloaded from slideshare.

Part 1: ROI – social media metrics based on investments in the future

Part 2: ROI Dashboard – User Experience Indicator 2

Part 3: ROI Dashboard – User Experience Indicator 3 – Bring in the money

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