What degree of return can be expected from knowledge management?

     Of course the answer depends on your company's current situation, but it is possible to see returns thousands even millions of dollars. Organizations realize these returns through educed support costs that come from improvements in performance metrics.

     The following are typical metrics that can be expected from a knowledge management initiative, with the average KnowItAll, LLC customer improvements in parentheses:

• Increasing First Call Resolution - (55%)
• Reducing Escalations - (30%)
• Shortening Handle Times - (40%)
• Reducing Training Time - (30%)

     IT projects today get more scrutiny than ever before in the history of IT. Accordingly, more people are involved in the selection of a solution and its implementation into the enterprise. Any successful implementation of a knowledge management solution should be in line with corporate and departmental goals. It's no longer just IT decision makers involved in the buying process, but rather entire departments and end users. In some cases even financial executives are now part of the process of selection and implementation of IT projects. Each party will play a role in determining the success of the implementation or not. Managing the company's intellectual assets is everyone's responsibility in addition to fiscal responsibility.

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How can my company be sure to achieve a substantial ROI on knowledge management?

     Organizations can achieve a return on their knowledge management investments by applying a systemic approach to evaluating needs, opportunities, and organizational commitment levels-and then establishing realistic and achievable goals. Some method must also be adopted to measure the actual results against projected goals. It will be the success stories that can be used to further stress to employees the importance of using the knowledge management system. The following topics will explain how knowledge management and return on investment is measured, and what results can typically be expected. An enterprise must get a "buy-in" to the implementation in order for it to be successful. Many times the implementation of a knowledge management system is a complete paradigm shift in the way a company does business.

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Why take the time to accurately calculate ROI?

     A knowledge management initiative takes time, money and commitment - ongoing measurement of the program's achievements will show that it can pay for itself and even start driving revenue to the company. Although a knowledge management implementation may not create revenue it can be used to increase customer satisfaction and reduce customer churn thereby maintaining revenue.

The following reasons create a compelling case for measuring ROI:

1. Benchmarking metrics establishes a baseline
2. Set expectations of all parties involved (an often ignored step in IT projects)
3. Gain management acceptance
4. Create a repeatable model for measuring success
5. Recognize true Return On Investment

     Basic project management practices require that organizations take these steps. It is important to go through these processes to ensure you've done your due diligence regarding your baseline measurements and what improvements are possible in your situation. This process assists you in setting appropriate expectations, gaining management support, and setting the stage to recognize a true Return On Investment in your company.

     There are three basic types of improvements: Efficiency, Effectiveness, and Innovation. Each time a customer, either internal or external touches you, you have the opportunity to increase the previously mentioned improvements.

Some of the specific metrics for measurement can offer cost reductions in the following areas:

Efficiency

1. Decreasing average handle time
2. Minimizing talk time
3. Redeploying FTE (Full-Time Equivalent) Resources
4. Reducing after-call work
5. Reducing "other" (or unaccounted for) time

Effectiveness

1. Increasing first call resolution rates
2. Shrinking call escalation percentages
3. Reducing repeat calls
4. Reducing employee turnover
5. Reducing employee training time

Innovation

1. Rerouting calls to e-mail or chat
2. Creating sales via cross-sell and up-sell opportunities
3. Increasing customer satisfaction
4. Decreasing customer churn

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How to accurately measure Return On Investment?

     KnowItAll, LLC recommends starting with a good baseline assessment of your current and/or historical performance measurements. How often you choose to measure is a function of what information is available and whether or not the time frame you are considering is subject to cyclical variations-such as seasonality. You should also establish regular reviews to identify improvement opportunities and enhance Return On Investment metrics.

     Whatever the sources, it is important to identify and document the methodology for gathering the information, because definitions and calculations can change over time. You may start realizing a return upon implementation of a knowledge management solution, but you will not have a complete understanding of the true value without instituting an effective analytical approach.

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When can a return from knowledge management be realized?

     Many organizations begin to see improvements almost immediately after implementing a knowledge management solution. For example, short run Return On Investment is possible simply by creating a centralized knowledge base of accurate customer service and support knowledge. This positively leverages human capital and eliminates redundant work by employees and management. Most companies see significant improvements after just a few weeks and the majority of customers experience a break-even or payback between 1 and 3 months.

     It is important to begin measuring immediately after implementation to manage by performance. Early on you may want to look at weekly reports, and later on drop back to monthly reviews. As opposed to projected Return On Investment, true Return On Investment can only be measured after the implementation has been in place for a period of time and the organization is actively using the solution.

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How does knowledge management improve first call resolution?

     Without a knowledge base, employees are answering customer and employee questions from memory, asking other agents for answers or even searching through information from manuals or sticky notes. These methods provide very little version or quality control. By providing employees with a robust knowledge base, they have quick access to accurate, approved answers and the ability to solve customer and employee questions during the initial contact. This assures quality service and consistency of answers provided to customers.

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How does knowledge management affect employee-training time?

     A properly deployed knowledge management solution puts information at the employee's fingertips, allowing the new employee to find accurate answers quickly. This not only cuts down on the amount of time needed for formal training, it also empowers the employee to solve problems with more confidence, and frees up time that might otherwise be spent asking questions of busy more experienced employees or management. The overall result is a win-win situation where the company saves money while insuring greater job satisfaction for the employees.

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