Measuring ROI for Enterprise 2.0 and Collaboration

I’ve just returned from the Enterprise 2.0 conference. (I took the long way home through Waterloo).

It was fun, I got to meet some of the twitterati, and show off Open Texts’ very cool new products.

Much of the conversation there, however was about the ROI of the various initiatives around Enterprise 2.0 – and there was not a lot of satisfaction found in the conversation. So I’m sharing my thoughts on the subject.

First lets define some terms. Enterprise 2.0 generally refers to two major initiatives – one is to use social media to create and improve relationships and communication with the marketplace. The other is to faciliate knowledge worker efficiency within the organization.

I’m talking about the second case – what Open Text likes to call the Social Workplace (vs. the Social Marketplace).

So – ROI. How do you measure the ROI of knowledge worker efficiency. There are basically 2 ways to do this.

One is to try to measure the value in general. This is very hard to measure unless you equate social media to email, the phone, the intranet – they’re modern tools of work, and we don’t measure the ROI, its just how business is done. This really only works in one of 2 situations. Either you have a visionary senior leadership who just feel its strategic and important, and they want to do it regardless of a fuzzy ROI. The other is if you have a small grass-roots effort that can show demonstrable results, and those results can be assumed to grow with further adoption across the organization.

The real thinking behind this is that you acknowledge that you aren’t sure what will happen when you enable a collaborative culture within your organization, but your pretty sure some good stuff will happen in the realm of efficiency, innovation, and solving as yet unpredicted problems because people within the organization will have a much better chance of connecting the dots.

The second way to measure ROI is to recognize that Social Media and collaboration tools are enabling technologies that can solve certain business problems. You don’t measure the ROI of the technology, you measure the ROI of sovling a specific problem. So – if you don’t have the organizational culture or backing to take the leap of faith that method one requires, you need to identify a business problem – teams are spread across the globe, email trails are out of control, information silos are causing lots of redundant work – probably you can come up with your own list.

The ROI in this case is the ROI of solving that specific problem. What’s your business problem? What is the cost of that problem? How will you know if its solved?

That’s your ROI.

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6 comments

  1. I wonder if there is a way to measure the delta between the tool set that a company provides to their internal knowledge workers and the tool set that these workers are used to working with OUTSIDE of the enterprise.

    Back in the day (gads, I hate that phrase, what the heck does it actually MEAN!??) the enterprise drove the majority of worker innovation in its constant quest for productivity. While that is still true today, we also see innovation happening in many places outside of the enterprise – FaceBook, for an over used example.

    In short, historically the enterprise has been the only stimulus to worker tool set evolution, yet today there are many influences upon a knowledge workers expectations of tool set capabilities. Forcing a worker to use what are perceived as less capable tools will certainly affect not only her productivity, but overall morale as well.

    I suppose this all falls into the fuzzy area of ROI, but it seems that breaking common tools down into their functional blocks and grading those areas with an ease of use or user rating, etc. would begin to put a concrete number on how big of a gap there really is.

    If 78% of your workers use MyWizBangTool.com and rate the User Search feature a 9 out of 10, but your User Search feature rates only a 2 out of 10, there is without a doubt concrete productivity being lost.

    People think the MyWizBangTool way, and fighting it is pointless. Anything else will be less productive, until innovation sways the crowd a different direction.

    While this doesn’t necessarily put a dollar figure on these items, it does give us a way to compare and contrast them, which I think is the necessary first step when one is distilling an ROI.

    Thoughts?

    -A

    PS –

    I think the overall problem may be one of us not having a unit of measure for productivity. I say we invent one and call them Productons – sounds like micron, but different.

    Complete efficiency at any one task with a specific resulting quality level would be set to 100 Productons. This would be the value for a person performing this task in a complete vacuum where all of the information needed to make a decision was instantly available in any and all situations. 100 Productons would not be feasibly achievable – much like Absolute Zero is used as the bounding value for temperature.

    Any limiting factors would reduce the Production value by some derived amount based upon how much it skews the process from time for perfect efficiency. A 75 Producton process would be better than a 60 Producton process, though both would yield the same result.

    I know this sounds an awful lot like percentages, but Productons are cooler than percentages because the name is way better. :^P

    1. Andy – totally love the producton concept. its funny that creativity and thinking – innovation and problem solving are so hard to measure. Absolute Production = 100 productons = a perfect vacuum or absolute 0. Beautiful.

      As for the mywhizbangtool vs the crap i have in the office – sadly, its not the right measure in most circumstances. Because what i need to achieve at work is different from what i need to achieve in my personal life. ok – so maybe its fair to say “my search aint as good as google, but how do you measure the level of collaboration and knowledge/doc sharing you do at work vs. home?

      collaboratons?
      Thanks for stopping by in a chatty mood.

      1. Hmm… That is a conundrum. I think a model could possibly be developed, if ground rules were established to distinguish the applicability of features to a specific task.

        Maybe it is all getting too diluted. Still, it would be an interesting exercise. I wish I was back in school and had a thesis to write. YIKES! Did I actually just say that!?

  2. Great comment Andy – would have expected nothing less!

    I think Andy also touches on the struggle we have when building software between (a) wrongly tell the customer they are wrong and must do it “our” way and (b) ensuring reasonable expectations exist (for example everyone wants “Google” like search but becomes a big challenge when security and precision are required since Google does not have to focus on either).

    Seem better collaboration amongst the product team and customers should make a positive impact on both of these challenges. Ideally this would translate to ROI measuring the % of a projects goals that were met (in relation to a new software package being purchases & implemented).

    1. Thanks Tim! Great to hear from you!!

      You are spot on with your Google / Security example. So often there are conflicting requirements that customers would classify as “critical”! It really is a client education process, isn’t it?!

      I see what you mean about potentially measuring ROI via the % of a project goal, but I’m not sure how to connect the “last mile” of that. As I see it, ROI can only be calculated if we have a way to value the overall gains from the project. The measurement you mention is great and should absolutely be done as it would be extremely helpful to communicate the success of the project and could be used to validate further investment. Putting on my sales hat though, I’d love to find a way to measure a potential ROI PRIOR to the sale and implementation rather than afterwards…

      Of course, it is certainly in the realm of possibility that doing so is entirely impossible given our current methods of measurement. 🙂

      Hope you are doing well!

      Cheers,
      -A

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