An Audit Tale

In a post-implementation audit of its intranet, Mitre Corp. focused on the benefits of knowledge sharing and collaboration.

Mitre Corp., an independent, not-for-profit company, provides federal agencies with system engineering and information technology expertise. Founded in 1958, the Bedford, Mass.-based company's more than 4,000 employees support four primary customers: the Department of Defense, the Federal Aviation Administration, the U.S. intelligence community and the Internal Revenue Service.

In June 1994, Mitre began work on a corporate intranet with the goal of transforming the company from a culture that fostered intellectual fiefdoms and internal rivalry to one with an accessible corporate knowledge base and intellectual collaboration. As a provider of intellectual capital to government agencies, company executives felt that collaboration was imperative to Mitre's long-term success. In May 1995, the corporation debuted its Mitre Information Infrastructure (MII) companywide. Three years later, in an effort to make sure that its goals were being achieved, Mitre began a post-implementation audit of the evolving MII system to capture both its tangible and intangible benefits. (Mitre won a CIO Enterprise Value Award for the system. For more on the MII, see "Common Knowledge," CIO, Feb. 1, 1999.)

To date, Mitre has invested $7.2 million in the MII, netting an ROI of $62.1 million in reduced operating costs and improved productivity. But financial impact represents only part of the story. According to Al Grasso, vice president and CIO, "Our most important gain can't be as easily measured-the quality and innovation in our solutions that become realizable when you have all this information at your fingertips."

In order to gain a complete picture of the system, Mitre conducted an analysis not only of the hard financial benefits but also of the soft benefits the system provided-specifically, how the MII helps employees collaborate more effectively. "To deliver technical excellence, it's essential for us to share information. It's how we bring all our resources together to solve problems for sponsors," explains Mark Maybury, director of artificial intelligence and executive director of the IT division for Mitre. "Our high-level objective with the MII is to make it easier for people to give information to others and to use information from others to solve the next problem that comes along."

The Hard Benefits

1. Reduced Operating Costs

Government restrictions forbid Mitre from increasing its workload or even making a profit. As a result, Mitre's perspective on ROI is more qualitative than quantitative. "We have a fixed number of dollars and staff we can deliver because of our unique role as a group of federally funded research centers," explains Maybury. "Therefore, we need to make people more efficient or save on other indirect costs so that we have more staff to deploy to government projects."

Assessing reductions in operating costs was fairly straightforward. One of the key measurements Mitre sought to capture was whether the MII enabled the company to apply fewer people more effectively to a task. The Innovation Team, a panel of IT directors responsible for managing Mitre's IT resources, decided to track efficiencies along operating cost centers. Within each of those cost centers, Mitre examined the impact of moving a number of tasks toward self-service on the MII. For example, with employees able to log on to the MII and update their own human resources records or research routine questions, fewer HR staff were required to support benefits administration. Call logs also indicate that the HR staff now typically handles more sophisticated queries.

In all, the MII has enabled Mitre to save $16.6 million in labor and material costs since 1996. The savings are allocated as follows: human resources and administration ($5.6 million), information systems management ($2.9 million), financial operations ($3.6 million), technical operations ($2 million) and miscellaneous other services ($2.6 million).

2. Improved Staff Productivity

To validate the notion that shifting many mundane activities to the MII would make people more efficient, Mitre focused measurements on three tasks that affect all employees: document management, daily time card submission and purchasing. In the area of document management, the Innovation Team focused primarily on how the MII expedited the dissemination of documents to employees and sponsors. In the past, employees spent tens of minutes a day laboriously converting documents for publication. Today the MII automatically translates PowerPoint presentations, spreadsheets and documents into HTML, and indexes and publishes them so that they're immediately available companywide. Through surveys and observation, the Innovation Team determined that the technology was saving employees at least five minutes a day that they could devote to other tasks.

By comparing the time spent filling out physical time cards each day with the time it took to submit that data over the MII, the Innovation Team determined that employees saved at least a minute a day with electronic submission. And using a purchasing card online and tracking the status of one's purchases over the MII, instead of relying on a central purchasing organization, saved the average employee at least two minutes a day. The Innovation Team also factored in improvements in help desk operations and job pricing activity due to the ready availability of key information through the MII. According to time logs, help desk staff saved an average of eight minutes per call; job pricers saved an average of one hour per job. By multiplying these aggregate time savings by the salaries of a conservative three-quarters of the Mitre population ($436,800 per minute), Mitre estimated widespread use of the MII was saving $12.8 million in improved staff productivity.

In the case of the help desk, the Innovation Team also based its estimates on the number of calls handled and the average staff salary-which comes to 56 cents a minute. The value attributed to time saved in performing job pricing was based on 600 jobs priced quarterly and the average salary of staff covering that function ($70,000).

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