Quantifying the benefits of a knowledge management system can seem daunting. Nearly every employee at a company without one can attest to the problem. Among them:
-Employees with institutional knowledge leave the company and take that knowledge with them
-Support team members can’t find quick answers to customer questions
-Company teams are not on the same page
And these are just a few of the problems companies without a knowledge management system have.
In a recent article on Business 2 Community, Sameer Bhatia made a persuasive case for companies investing in knowledge management. He provided “6 Reasons Why Entrepreneurs Should Focus on Knowledge Management,” which included:
- Enhances the decision making process
- Simple access to relevant information
- The brilliance of recycling
- No poorly directed effort
- The knowledge library benefits
- Stimulation of growth
But if you choose a knowledge management system to allow you to better share information, how do you quantify the return on your investment?
If there is one metric, however, that persuades companies to consider investing in a knowledge management system it’s this one: according to McKinsey, employees spend 20% of their day looking for information they need to do their jobs. Think about that… That’s a day a week. But how much is that?
If you’re a company of just 150 people with an average salary of $60,000, you’re spending $1.5 million to employ your people to search for information. A good knowledge management system reduces the time employees spend looking for information dramatically. Even if we assume a knowledge management system can cut the time employees spend searching in half, a company of 150 would save $750,000 a year. And no knowledge management system costs that much. Larger companies have even bigger problems — so their ROI is even larger. This is why, typically, knowledge management systems pay for themselves in months — not years.
Can knowledge management really cut the time employees search for information in half? A good one with great search and browse functionality will do better than that.
To learn more about understanding the ROI of Knowledge Management, download our white paper, “Calculating the ROI of Knowledge Sharing Software.”