Measuring the success of your KM initiative
by Kent Heyman

A knowledge management (KM) initiative takes time, money, and commitment to be successful. Given that investment, it’s important to quantify ROI and realize the success of your knowledge management initiative to show that the program can sustain itself and drive revenue to the company. To do that, you have to continuously measure the program’s achievements and returns by creating a repeatable model to measure those achievements. Whether your KM vendor provides guidance, or you decide to measure ROI without help, it’s important to identify and document the methodology for gathering the information, because definitions and calculations change over time.

Reporting tools
Though your KM solution provides returns, you may not have a complete understanding of the total value without instituting an effective analytical approach. To begin, you should use reporting tools to assess knowledge base usage and adopt a methodology to consistently measure baseline metrics with regular reviews to identify improvement.

For example, if your support team uses the knowledge base to find answers for every call, using a reporting system will produce metrics that measure the initiative’s success. Reporting can also help you with your gap analysis by identifying whether there are any holes in the knowledge base. Organizations with smaller product lines and redundant types of calls to the help desk can often achieve 100-percent knowledge base usability. Companies who have more complex product lines can use the reporting tools to monitor which agents are contributing knowledge, identify the most frequently asked questions, and track the most successfully used pieces of knowledge.

Baseline assessment
Although there are general "ROI Calculators," these are of very limited use to most corporations today because they take a narrow snapshot of a business with little or no context, and try to apply broad generalizations against complex environments without considering company-specific conditions. These tools don’t effectively capture the complex dimensions of a business (e.g., customer preferences and product footprint), much less track their changes over time and suggest strategies to adjust behavior.

A very important step in quantifying ROI is establishing a solid baseline assessment of current and historical performance measurements, which provide a benchmark to begin your ROI calculations. To measure the benefits of KM, you should look at the total environment and obtain metrics from various sources including:

• CRM System: FCR, Repeat Calls, Handle Times
• ACD System: Escalations, Talk Times, "Other" Time
• KM Solution/ServiceWare: Call Deflection, Knowledge Metrics, Productivity
• Reporting Packages: Analytics, Trend Analysis
• Customer Satisfaction Surveys: Primary Customer Research
• CSR Focus Groups: Secondary Customer Research

Three types of ROI
Based on your benchmark, periodic measurements will establish a systemic approach to evaluating success and help document improvements. There are three types of knowledge management ROI that indicate improvement: Efficiency, Effectiveness, and Innovation. Efficiency ROI includes issues such as decreasing average handle time, minimizing talk time, and reducing after-call work. Effectiveness ROI can include an increase in first-call resolution rates, shrinking call escalation percentages, and reduced employee turnover. Innovation ROI includes providing self-service for Web users, rerouting calls to e-mail or chat, and increasing satisfaction. Support organizations can achieve results in some or all areas depending on needs and opportunities.

To manage by performance, it’s important to begin tracking metrics immediately after implementation. Early on, you may want to look at weekly reports, and later drop back to monthly reviews. As opposed to projected ROI, actual ROI can only be measured after the implementation has been in place for a period of time and the organization is actively using the solution. Measuring the actual ROI is the only way to know what you’re getting from your KM investment.

About the author
Kent Heyman is President and CEO, ServiceWare Technologies, Inc., a provider of web-based knowledge management solutions for customer service and support. www.serviceware.com.