Return on investment (ROI) these days is on the table for virtually every IT project, but unless you are an e-commerce company, ROI can be conspicuously absent for Website builds and maintenance. Is this sound IT strategy, or should Website ROI matter?
"The number of organizations with IT departments starting to measure Website ROI is rising," says Jason Sherrill, president of Website developer INET Solution. Sherrill says that smaller financial institutions with less than $50 million in assets rarely consider ROI, but that interest in Website ROI increases for banks in the $50 million to $500 million asset range, and continues to grow correspondingly with financial institutions in successively larger asset classes.
"Virtually no small and medium-sized businesses that are not engaged in e-commerce seriously consider Website ROI," agrees Colin Allsheimer, marketing manager for Website developer LevelTen Interactive. Allsheimer also concurs with Sherrill that interest in Website ROI, even for smaller, non e-commerce organizations, is growing.
One argument for Website ROI may be continuing frugality in a tough economy, with Website projects on average consuming between 10 and 20 percent of the IT budget. Consciousness of marketing and IT Website investments are well established for e-commerce companies whose Websites constitute either significant lines of business or the total business. In these environments, metrics like the number of page views, consumer abandon rates, site visitations that convert into sales, and newly acquired customers, etc., are reviewed regularly by senior executives and boards of directors.
But should you care about Website ROI if your business isn't strictly e-commerce? Companies like FedEx and Kia answer this question in the affirmative. FedEx compares the cost of answering customer tracking requests online to doing so through the call center. Kia analyzes consumer browsing behavior for its Website investment decisions, assigning higher scores to visitors who request a dealer location than to those who are simply perusing its Website for the latest product information.
"If you're going to measure Website ROI, you first have to identify the goals for your Website," says LevelTen's Allsheimer. For example, if you are a non-profit organization, the primary goal for your Website might be to raise awareness of the cause your organization is promoting. The number of unique visitors to your Website will be a major measuring point. Conversely, if the focus of your organization is education, the number of page views per visitor on your Website might be important.
In each of these scenarios, the corporate Website is a major vehicle for extending company brand and for encouraging the Website behavior the organization is pursuing, whether that behavior is successful selling, educating, assisting, or communicating. By identifying Website behavior goals and then measuring them, organizations can determine whether their Websites are giving them acceptable returns on their investments.
One factor that has favored a non-ROI approach to non-e-commerce Websites is the number of projects with ROI demands that IT already has on its plate. It takes time to develop ROI measurements and then to evaluate and report on results. And as everywhere else, that time means money. There already is enough ROI activity going on with the greening of data centers and the need to measure equipment footprints and energy consumption.
"Many organizations come to us and say that they have so much to spend on their Websites because it is what their boards [of directors] have approved for the year," says INET Solution's Sherrill. "They don't do ROI to determine what they will invest."
Nevertheless, traditional IT arguments that it is going to cost a certain amount of money each year to maintain the corporate Website as a "cost of business" are starting to wane, even with boards. Website design and development are growing into major budget items. Board members are asking about who visits the Website, what areas of the Website they visit, and how these visits advance the brand or generate revenue.
"There are growing pressures to measure Website ROI, and more organizations are beginning to identify their own Website visitor 'conversion points,' even if they are not e-commerce companies," notes Allsheimer. "In this economy, even the corporate Website should be a value center."
Is Linux the biggest and brightest? Why Linux and not OS/2 or Windows NT? Define your criteria please. What about the role of the OSF in providing a functional underpinning to Linux? If the Linux architecture was not a Torvald contribution I imagine there was still an inner circle driving things. An intellectual boardroom that could drive forward one subsystem model based on economics and a second subsystem's model based on aesthetics.
Is it appropriate to bring up Linux in the context of ROI? Linux was not a for-profit enterprise and Torvald controlled what went in and when, so the organization definitely had a top. ROI measures did not have to be used because the enterprise was something of a 'skunkworks'. And those in the next layer down were free to organize hierarchically or organically with associates, were they not?
'Web eliminating hierarchies' does not prove a productivity advantage, although I would agree that is the objective. Destroying hierarchies also means destroying audit and control points. That's dangerous unless the computer/human interface is already in place and demonstrating a significant advantage, so there is no immediate cutover.
In fact over thirty years I still find the human/computer interface under monitored, under documented, and under optimized. So give me more insight into these advantages you believe exist, jabailo.
First of all, a billboard ad would generally be regarded as an expense, a cost of doing business and not an investment. Second, you can bet the professionals have an idea how much increased business to expect and will shut down a billboard ad that doesn't work. Third, if business expenses do not track with revenue the billboard ad will be examined for its effectiveness. It could be moved, it could be enhanced, it might need a new theme.
The important point is not to consider a web site as just an ad because some fraction of your customers or patrons want an interactive mechanism. If the only thing desired is advertisement, buy ad space and list an 800 number.
Ok, so you're talking about an organizational structure (peer to peer) that the Website would either reflect or dictate.
It could work and it has worked under truly collaborative conditions--particularly in smaller organizations or in organizational enclaves where communications and exchanges are easily facilitated. These peer "pods" can interlink into worldwide communities and the Opensource community is a good example of it.
This is a very nice suggestion of methodology that fits neatly into IT's "play book." It might get more complex if the corporate Marketing Dept. is responsible for Web design, since most Marketing departments are decidedly anti-analytical--but a market research analyst (if the Marketing Dept. has one) might be a good person to champion this.
Well, ok, maybe you think you dodged a punch there, but I'm not going to let you get away with it just now, because you opened the subject up.
My point was not "web replacing face to face communications" my point was "web eliminating hierarchies" and the costly top layers that run them.
The web becomes the manager. Case in point: the greatest and most successful software project in the history of mankind is Linux. Was there a Linux CEO? Or a Linux "Chief Architect" -- not really. There are many many many eyes and hands that went into the ever evolving 'product' beyond just Stallman and Torvalds.
Case in point: Quick...name the CEO of Twitter. Right. Who cares!! I want to know who's developing the AJAX API, not who is sitting in a big office!
See, Web has only just begun to achieve "ROI" because the real transformation is the empowerment of line and professional workers! Imagine if GM could finally scrape away millions of dollars of layers and layers bureacracy and replace it with a computer/human peer-to-peer system of communication and self-organization!
Products would go down in price by an order of magnitude! And productivity up by the same!!
Good, and important article, Mary.One of your commenters suggested that one should measure the ROI of the website’s goals rather than the ROI of the website itself.He has a good point, and goal achievement can sometimes be measured at the aggregate level, but often measurement needs to take into account that there should be a “chain of accountability” from the goals to each feature of the website.Under this approach, goals are either articulated by management or they are recognized as business case criteria.The goals are then broken down into specific requirements for the website, and website features are designed to satisfy the requirements. Each feature decision should be weighed in terms of how it contributes to achieving the website's goals and how its success can be measured.
Understanding this “chain of accountability” not only helps keep the website design project within scope, but provides a basis for metrics for those features that are measureable and helps identify those “soft features” that require other forms of performance verification such as surveys, focus groups, etc.
Internet will definitely make its contribution, jabailo, yet I still think there is that intangible value in face to face communications that cyber can't fully replace--the stuff that is not only written and spoken words, but body language and the immediacy of face to face contact.
It is the reason why some of the largest organizations in the world (with remote sales forces) insist that salespersons visit their regional offices at least weekly or monthly.
I think in their effort to squeeze pennies, they'll be surprised just how much ROI websites are providing and how they should be using social techologies much, much more...
The biggest efficiencies from business operations these days will come from automating management tasks and flattening organizations. Rather than eliminating a few remaining paper pushers, in the 21st century, websites will become the foci of self-management and peer review that drive the business.
Though I fully agree with the concept of investing where the return is greatest. A web site that informs your potential customers of your services or products is comparable to a "billboard on the information superhighway"
Now how did we ever measure the return on a billboard? Driving down Interstate 95 from Virginia on we had billboards for "Pedro's South of the Border", by the time you hit Dillon SC you just had to stop to see what it was about.
Commerce web sites that have ordering and tracking functions are easy to measure.
In these lean times measuring and applying ROI is imperative, some things are difficult to measure.
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