Unlike other enterprise-wide applications intended to improve the bottom line, corporate portals tend to live up to vendor’s promises and, more often than not, begin to save companies money as soon as they go live.
According to a just-released Delphi Group study, only 2% of portal installations failed to return any ROI. This compares very favorably to CRM installations, which, by some analysts estimates, fail 40% of the time.
The Delphi report, which looked at hundreds of installations, found that 22% of firms reported ROIs between 21% and 50%, while 18% of installations returned over 100%.
But, as with most IT implementations, there is a caveat emptor: poor planning prior to installation will negate management’s reasons for installing the portal in the first place and probably lead to poor ROI.
“Whenever my clients come to me and ask me ‘Who do we pick for portal technology?’ I’m like, ‘Back up a second,'” said Laura Ramos, an analyst with Giga Information Group. “‘Let’s talk about what the portal is going to do.'”
The are at least three things that must be decided prior to picking a vendor, said Ramos. One: what problems will be addressed or solved by installing a portal? Two: what is the state of your current IT infrastructure? (A grandiose vision of an enterprise-wide portal probably won’t work on 23 un-networked, proprietary databases.) And, finally, how will you measure the success or failure of the installation?
This last decision may be the most critical. “When you ask people to talk about what it is they’re going to measure they start to get real clear about what is important in a portal and what isn’t,” said Ramos.
Nathanial Palmer, vice president, chief analyst and author of the Delphi Group study, found the highest ROI comes from a well-planned implementation strategy with relatively simple goals like eliminating excess paper work and printing. “By in large the greatest value came from fairly prosaic applications,” said Palmer.
AmeriKing, the largest franchisee of Burger King’s in the country with 376 restaurants and 13,000 employees, for example, saves over $192,000 per year through volume discounts on office supplies by incorporating a centralized purchasing function into their franchise-facing portal that allows its store managers to buy from Boise Cascade’s online store.
At many corporations some of the biggest savings come from the integration of intranet web sties onto shared Web and application servers, said Nate Root, a Forrester analyst. This simplifies IT’s job and reduces the need for extraneous hardware and software purchases, and maintenance costs.
“Going into a portal effort a lot of companies have dozens or hundreds or even thousands of different intranet sites and, by putting a portal in place, they can consolidate all that and get rid of all that old excess infrastructure,” he said.
Hewlett-Packard, for example, consolidated some 1,200 intranet sites when the company instituted its portal project, Root said. “They built up over time because it was so easy to put a Intranet site up.”
Savings can be further enhanced through the use of single-sign-on and authentication tools. When Verizon was consolidating GTE and Bell Atlantic, the company discovered 60% of internal helpdesk time was spent answer password questions, said Root.
“Each employee had 10 pages of their own personal passwords,” he said. “By having all those passwords you would think (the system) is really secure but it just makes it worse” because one employee leaving with or loosing a sheet of passwords can expose the entire network to infiltration. Hackers also love multiple entry points since it makes the job of finding a chink in the corporate armor that much easier.
“From an access perspective,” said Robert Lancaster, senior analyst at the Yankee Group, “providing single-sign-on through a portal environment relieves a huge amount of IT strain purely because people only need to remember a single password for up to a dozen applications.”
Softer ROI based on things like improved productivity or improved search engines is harder to measure, but it does exist, he said. Often times, in the case of vendor portals, for example, usage is the main factor in determining success or failure. If vendors use the portal that saves everyone time and money and probably leads to increased sales since vendors are becoming more aware of your products and services.
Finally, from an IT perspective, portals are relatively simple installs. ‘Simple’, of course, is defined by the scope of the implementation, but most IT departments can handle the technology with relative ease. Problems tend to creep in from the non-IT issues such poorly thought out usability or taxonomy (the portal’s organizational hierarchy) issues, said Giga’s Ramos.
“A portal is a glorified Web server when it comes down to it, with a little bit of custom application server type development and a little integration work but its nothing that the IT shops that are out there now can’t handle,” agreed Forrester’s Root. “Nine times out of 10 its organization and content, and that kind of stuff that gets in the way.”