Home > KCS v6 Practices Guide > Section 2 The KCS Practices > The Evolve Loop > Practice 8: Leadership and Communication > Technique 8.3: KCS Benefits and ROI

Technique 8.3: KCS Benefits and ROI

Operational Benefits and Return on Investment Considerations

Since most organizations need to invest money to adopt KCS, and we all live in a cost-sensitive climate, a normal organizational metric is return on investment (ROI). In assessing the operational benefits from KCS, we use the same stakeholders we defined above: the customer, the employees, and the business. Each will benefit differently from the adoption of KCS. The stakeholder benefits will be realized at three levels as the KCS practices become mature:

  • Direct—operational improvements that are near term (3-9 months)

  • Applied—new ways of delivering service and support enabled by KCS—for example, using knowledge that is created to power web-based self-service (6-18 months)

  • Leveraged—the knowledge and the capacity created by KCS enables new kinds of value-added support services to be offered (12-30 months)

 

We will focus on the investment and benefits of the Direct and Applied levels of KCS as these represent the most credible near term benefits. Experience has shown that while KCS is valuable across a wide range of environments, the investment required and the benefits achieved from KCS vary based on the characteristics of the environment. The key factor in determining if KCS will produce value for the stakeholders is the degree to which knowledge or experience plays a role in responding to user's or customer's requests for assistance.

 

Additionally, as we look to measure the benefits, we have to consider both quantitative (objective) and qualitative (subjective) metrics.

Investment

Implementation of KCS requires investments in the following areas:

  • Leadership and management—Sponsorship, program resources, and leadership development (training and coaching)

  • Infrastructure and support—Modification of existing tools or the acquisition and implementation of new tools as well as the integration of those tools with existing systems

  • Learning and growth—Training and coaching for knowledge workers

  • Implementation and development of new roles and skills in the organization: Coaches, KDEs (Knowledge Domain Experts)  

  • KCS article management—The processes and resources for the Evolve Loop activities

 

Investments in these areas occur over the four phases of KCS adoption. These are:

  • Phase 1 Design—Builing the foundation elements like the content standard, workflow, and communications plan

  • Phase 2 Adopting—Running a pilot or "wave one" to test the foundation elements 

  • Phase 3 Proficency—Institutionalizing the practices across the whole organization

  • Phase 4 Leverage—Maximizing the benefits from self-service and improvements in process, policy, products, and services enabled by the Evolve Loop

 

Together, these areas and phases make up the total cost of ownership. Calculating the total investment can be difficult because many of the resources used are not incremental to the organization, in fact most are done with a redeployment of existing resources. Other elements, the incremental costs, are easier to identify. Each organization will have to calculate the non-incremental costs they wish to include. Once we have the total cost, we can divide it by the number of knowledge workers to figure the KCS investment per person. 

 

One of the most challenging cost elements to estimate is coaching. During the startup of each wave of adoption, coaching represents a serious investment in capacity. In most organizations, no real cost is incurred because the organization simply lives with the reduced capacity. Other organizations that are under intense pressure may not be able to suffer through even a few months of decreased capacity and must back-fill knowledge workers during the coaching phase. Leaders must make a clear statement of their plans for allocating time to coach and their willingness to support coaching and perhaps compromise service levels in the short term for a dramatic long term gain. 

Return on Investment

As we mentioned earlier, the benefits from KCS will be different for each of the stakeholders. Following is a summary of the benefits by audience:

ROI - Benefits by Audience

Sample KCS ROIs

Following are examples of the KCS ROI in three different environments. As we mentioned earlier, we must consider many factors in assessing the ROI. The complexity of the work most closely relates to the level of benefit. The following three examples are based on real organizations, and the actual results have been validated against this model. This ROI is solely based on the Direct benefits: the improvement in the operational efficiency of the group. It does not include the Applied benefits, such as self-service.

Examples of KCS ROI

Complexity

 

High

Med

Low

       

Average Minutes To Resolve Known Problem

10

7

3

Average Minutes To Resolve New Problem

90

40

15

Average Incidents Closed Per Day

4

12

44

Estimated % of Problems Which Are New

50%

35%

20%

       

Monthly Analyst Cost (Fully Loaded)

$9,000

$7,000

$5,500

Investment in KCS Per Analyst

$4,500

$3,500

$3,000

       

Number of Analysts In the Group

10

10

10

Cost Per Resolution (Base)

$107

$28

$6

       

Average % Analyst Participation Rate

70%

65%

65%

Months to KCS Article Set Maturity

8.6

4.2

2.1

Average Analyst Daily Capacity at Maturity

8.5

18.9

53.3

Average Group Daily Capacity at Maturity

84.7

188.9

533.3

Analyst Daily Capacity Improvement

112%

57%

21%

Cost Per Resolution at Maturity

$50.60

$17.65

$4.91

% Improvement in Cost/Resolution

112%

57%

21%

       

KCS ROI

     

ROI—First 12 Months

736%

802%

286%

ROI—First 24 Months

2450%

1564%

525%

The increased capacity is a function of the fact that it is much faster to find a KCS article in the knowledge base than create a new one. By consistently capturing the experience of solving issues in the knowledge base, a great percentage of the work moves to the known category (shorter time to resolve). We find that once KCS is implemented, most organizations are surprised at the level of redundancy in their work. The 80/20 rule (80% of the requests have already been answered somewhere in the organization) represents a good average.

 

This model forecasts the time it will take for "KCS article set maturity." Maturity is when most of what the organization knows is captured in the knowledge base. Maturity is measured in months. In the examples given above, it varies from 9 months for an environment with complex issues to 3 months for an environment with low complexity.

 

The assumptions used for this model are:

245

Work Days Per Year Average

 

21

Work Days Per Month Average

 

8

Work Hrs Per Day

 

168

Total Work Hrs Per Month

 

101

Available Work Hrs/Mo, Utilization rate 60%

 

288

Available Work Min/Day, Utilization rate 60%

 
     
 

Fully loaded annual cost/responder High

 $108,000

 

Fully loaded annual cost/responder Med

 $  84,000

 

Fully loaded annual cost/responder Low

 $  66,000

A Few Words of Caution

KCS is a powerful best practice that initially improves the capacity of a support organization and over time creates new capabilities and benefits. At the outset, we need to consider how the increased capacity will be used and set knowledge worker and executive expectations realistically. These are the Leveraged benefits described earlier.

 

While the model shows a dramatic return on investment through the reduction in the average cost per problem, the savings may not be in a form the organization can or wants to directly realize. For most support organizations, the primary cost component is labor. While the adoption of KCS can reduce the labor costs on a per-unit-of-work basis, the savings can only be realized by reducing staff. This might be either difficult or undesirable due to shift coverage requirements or diversity of the technologies being supported. Reducing staff also diminishes the longer-term opportunity to create new capabilities and value-added services.

 

Capitalizing on increased capacity is a tricky thing. Organizations that do not have a plan for how they will use the capacity are at risk of losing it. Incremental capacity can be absorbed by an organization without even thinking about it. In the absence of a plan, the existing work will naturally expand to fill the time. 

 

Text Box: Capitalizing on increased capacity is a tricky thing.Having a plan for how the increased capacity will be used is also an important element of setting executive and participant expectations. Executives like to see numbers that they can track, but some of these numbers (like incremental costs) are estimates. Be selective about the numbers touted. Placing the benefits of KCS in the bigger context of organizational goals including customer loyalty is very important here, to communicate the complete value of KCS (see the section on the strategic framework).

 

Of no less importance, knowledge workers want to know that their work to adopt KCS will not be "rewarded" with a layoff notice. Show them a plan and document the executive support for implementing the future changes and, specifically, how the incremental capacity will be used.

 

Following are some options to consider for how the organization can leverage newly available capacity:

  • Improvement in service level to requestors without incremental cost.

  • Creation of predictive and preemptive capability that will reduce demand

  • Creation of value-added services that will increase revenue

  • Increased interaction with product, process and policy owners to drive improvements that are based on user or customer experiences.

  • Higher levels of participation in product testing during alpha and beta phases of development (this participation is also the best way to seed the knowledge base with experience about the new products).

  • In an environment with increasing workload, the need for additional headcount can be reduced or postponed.

  • In an environment with flat or decreasing workload, a reduction in staff may be the right thing. KCS will enable a lower cost of support while sustaining service levels. But we must be sure the reduction in staff is feasible.

You must to post a comment.
Last modified
18:32, 20 Apr 2016

Tags

This page has no custom tags.

Classifications

This page has no classifications.