I love metaphors, they single handedly enable people to view a concept from exactly the same perspective, even if only for a brief second. So allow me if you will…
Imagine that you are building a house and that you are discussing the design plans with the builder. You are both on the same page and are going over some of the detail when he asks you about the style of doors. He does not ask you if you want doors, but what style of door. You do not hesitate, you respond. You explain that you are going for an industrial feel so you want lots of metal framing and glass, and you discuss roughly the number of doors but agree that the size of the house and number of rooms really dictates what is right.
Enterprise 2.0 is like doors in a house – necessary… period, but customisable depending on what you want to achieve.
What is the ROI on a front door in a house? Well… You will be able to enter and exit for a start… My point? To measure ROI in a traditional sense you need to have a $ value for exactly what it is you have gained from an investment.
You can tailor the size and feel around your organization, you can pick the tools you wish to utilize based on the type of interaction you want to achieve, but an ROI on enterprise 2.0? A calculation where you can plug in numbers? Hmmmm…
Blendtech made an investment in enterprise 2.0 and experienced a 700% increase in sales. This was as a direct result of a youtube video campaign that I discuss in my previous blog. How do we know this massive growth was a result of web 2.0 and only web 2.0? Because it was the only factor in the equation that changed. This situation lends itself to a traditional ROI calculation, little money out, lots of money in, clearly measurable $ value gain.
What about completely new territory?
• Knowledge Retention
The above rarely have a $ value that translates directly. What if your organisation doesn’t increase sales by 700% but the number of disgruntled customers reduces by 30%? What if revenue stays the same but your employees take less sick days? What if your customers report feeling more connected to your product?
Legitimately calculating ROI for enterprise 2.0
Establish exactly what value means, first. I like this diagram from ZDNet, it demonstrates that much of the value gained from web 2.0 is gained as a cascading and indirect effect of its introduction.
Therefore, it is extremely hard to measure, traditionally anyway. The organisations who have got it right, take for example Accenture, Coca-Cola, IBM, even blendtech, have not been afraid to think outside the square, and establish what value is to them, specifically.
This is why you so often see enterprise 2.0 ROI loosely addressed as a list of statistics rather than the result of a calculation as per Charles’s blog, who discussed Accenture.
To effectively calculate ROI for enterprise 2.0 endeavours:
- Decide what value is to your organisation in terms of web 2.0, what do more “likes” mean? What do more employee “profiles” say about how connected an employee feels?
- Introduce appropriate metrics to capture this information and change of state as it occurs (you would not measure a quarter mile time in years, would you?)
- Keep your finger on the pulse, monitor the positive changes, monitor anything that is negative also.
- Keep in mind that cascading changes take time
- Accept that some of the metrics you use are going to be new because enterprise 2.0 is a new technology and part of a paradigm shift.
Organisations are then able to monitor the state of their businesses taking all aspects of enterprise 2.0 into consideration. All areas influenced by web 2.0 should be monitored. Then, and only then, after monitoring, reviewing and cultivating web 2.0 into something effective are they able to talk about the positive impact it has had.
Enterprise 2.0 is still very much in it’s infancy stage and this is largely why it is so hard to measure, what works really well for one company may totally back fire for another,and this has not traditionally been the case. I have no doubt that the future will reveal a standard ROI calculation for web 2.0, or at least for different aspects of its implementation but for now organisations need to keep their fingers on the pulse and concentrate on what works for them.
Do you think a global enterprise 2.0 ROI calculation is possible?