Business case for the corporate website

Need for a business case

If you are planning to invest in the improvement or redesign of your corporate website, it is definitely worthwhile to consider drawing up a business case. A business case is the cost-benefit analysis of an investment proposal. The business case illustrates whether an investment will be useful for the organization and yield a profit. Generally, the management requires a conclusive business case when handling an investment request. No business case, no budget.

A business case, however, is more than a formal tool for securing a budget. During a project’s entire life span, a business case can help project team members with their decision-making. It indicates how much may be spent on certain activities and what results have to be achieved in order to be profitable.

Concrete proceeds from corporate website

It has to be said: a business case for a corporate website is more complex than a business case for a marketing website or just about any other investment. Not so much with regard to the costs, but rather the estimate of the proceeds. The potential proceeds are largely abstract and difficult to express in terms of financial revenue. And that’s what a business case is all about. Moreover, a corporate website consists of quite a few different features. This makes the preparation of a business case a work-intensive endeavour, but that’s no excuse for not doing it at all. A business case based solely on empirical figures and rough estimates still offers more insight than not having one at all.

Elements of the corporate website

A corporate website has a variety of objectives, stakeholders and features. Jungle Minds’ online corporate communication model identifies the different focal areas of online corporate communication (see figure 1). A mini business case based on each focal area can then be drawn up for the corporate website. Together, all of these mini business cases constitute the total business case. To illustrate what we mean, we will discuss below some of these focal areas in relation to the corporate website.

Figure 1. Focal areas in online corporate communication (Jungle Minds, 2009)

Labour market communication

Of all the corporate website components, the potential proceeds from online recruitment are the easiest to estimate. If a new corporate website makes it more convenient to find vacancies and if it provides a user-friendlier application process, it will generate more online applications. These additional online applications will result in direct savings in recruitment and selection costs. A recruitment and selection agency readily charges 20% of a candidate’s first annual salary. With the help of a few empirical figures and a simple calculation it is possible to easily visualize the savings potential (see figure 2).

Based on the same reasoning, it is also possible to calculate the extra online recruitment campaign efforts.

Financial accounting

Listed companies are obliged to provide adequate information to their shareholders and to publish an annual report. This is frequently still done on paper. By offering their annual report online (HTML), companies can save considerably on printing and postage costs.

Figure 3.KPN’s online HTML annual report

KPN placed its yearly review, annual report and sustainability report on its corporate website. The aim is to satisfy the wishes of the various stakeholders to the largest possible extent. For instance, some analysts receive the annual report on paper, others in PDF, while another group prefers an interactive HTML format. A concomitant result of offering the annual report online was a 25% reduction in printing and postage costs. A sufficiently conclusive business case for KPN.

In addition to the direct cost savings, research also revealed that adequate financial reporting increases investor confidence. Research conducted by the University of Fribourg even demonstrated that cost of equity capital is 2% to 5% lower in companies that provide transparent financial information through their corporate website. It’s simply easier for transparent companies to obtain capital.

Press communication

A good relationship with the press is worth its weight in gold. But exactly how much gold it is worth only becomes apparent in difficult times. However, the proceeds generated by specific functionalities can actually be expressed concretely in terms of hard cash. For example, this is the case with an online form that enables journalists to subscribe to press releases. This kind of functionality reduces handling costs and increases the reach of journalists worldwide. And that also applies to concrete functionalities, such as an online media bank or participation in a press release distribution service. Summed up, that results in a cost reduction equal to several FTEs.

Corporate branding

Estimating the value of corporate branding is the most troublesome element of the business case for a corporate website. In a B2B environment, a visit to the corporate website can be the deciding factor when placing an important order. In this sense, online corporate branding is often compared to exposure at a trade fair. The proceeds of online corporate branding are then calculated on the basis of the costs incurred for the fair, though this is obviously weighed against the number of visitors to the fair and the corporate website.

In B2C environments, a website visit is comparable to the branding impact of a TV commercial. The value of corporate branding is determined on the basis of cost per view of the TV spot and length of visit: a two-minute visit to the corporate website is equal to four 30-second TV commercials. The comparison falls somewhat short, but does give an indication as to the value of investing in a corporate website.

The complete business case

When you add up the costs and benefits of the aforementioned items, you’ll have a business case for the total corporate website.

When drawing up the business case, assume an average life span of three to five years at most for a corporate website. To clearly show the risks involved, prepare a worst-case scenario and an optimistic scenario.

But that’s not all. A corporate website concerns a lot of people. Seek the opinion and suggestions of specialists in the organization about your business case. This will not only improve the quality of the business case, but also ensure sufficient commitment and support.

1103 views| 0 Comments| | Add to social bookmarking