Wednesday, February 13, 2008

Those wishing to go beyond Kirkpatrick's 4 levels that I discussed in my previous blog, can talk about Return on Investment (ROI). In short, does the dollar value of the benefit exceed the cost, and if so, how does it compare to other investments a company could be making? Cutting to the chase, what do companies get for their investment in technical communications (measured in financial terms)?

First, the math: ROI = $Results/$Investment.

You face three challenges when you try to do an ROI justification (or claim an ROI victory):
  1. Isolating the effect that technical communication had from what everybody else did. For example, did the Help desk calls go down because the Help was better or because the product's design improved?
  2. Putting a dollar value on the benefits. In the case of improved efficiency, this is easy enough: (time saved per transaction) x (number of transactions) x (labor cost). Putting a dollar value on increased customer satisfaction scores gets a little foggier.
  3. How does the return get harvested?

Challenges 1 and 2 get a lot of attention in the ROI literature so I'm going to skip them. I think #3 is the elephant in the room that nobody wants to talk about.

The R in ROI is "return" and can occur in one of two ways: Checks coming in get bigger, or checks going out get smaller.

I see lots of ROI examples and arguments around scenarios where better documentation reduces the search time of the user. I know that Information Mapping's web page used to have a calculator program that would help you arrive at the dollar amount for what you could save your company. Let's say you do such a calculation and can show a return of $175,000 a year for an initial training and document conversion cost of $100,000. That's a good ROI. But what do you do when the sponsor asks for her $175,000? After all, she did her bit and forked over the $100,000. Where does it come from?

"Uh, people did more work."

Great, did we charge more for the extra work, is my $175,000 in income? Can you point me to it?

"Uh, well, they were more efficient and did the same work in less time."

Great, did my payroll go down $175,000? Was headcount reduced as a result of this innovation?

And this is the problem with many ROI scenarios. They look great until you try to lay your hands on the money. So what's my suggestion? Don't go there unless you can actually produce the increased savings or income in real ways that can be pointed to. If DITA reduces translation costs, go for it. If you say you're going to make content more reusable, be prepared to see headcount cutbacks in future budgets. Hey, you were the one that said you would be able to do more with less.

Bottom line: Don't get into the ROI game because it makes you sound more business-like. Use it only if you can cough up the bucks when your investor asks, "Where is my return?"

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