There’s no way to put this delicately, so I’ll be blunt: quantifying the financial benefits of an enterprise social network is turning your company -- and the entire social technology industry -- into a three ring circus.
The ongoing demands of individual executives, archaic software evaluation processes and an obsessive focus on employees as productivity centers instead of human beings have turned collaboration into chaos, and social analytics into a spectator sport. As vendors, consultants and analysts vie for customers and relevancy in the enterprise social networking space, we’ve become elephants that do tricks for peanuts, or tigers that jump through flaming hoops when the ringmaster says it shall be so.
Why? Because the enterprise continues to demand that we prove the financial return on investment of social technology initiatives. And the reality is, this can’t be done easily, effectively or most importantly, accurately. Thus, we resort to feats of the imagination to attempt to move our industry forward, dangling shiny ROI numbers and magical (yet made-up) metrics in front of buyers in an attempt to win them over.
This madness has to stop. The ROI of an enterprise social network (ESN) cannot be perfectly quantified, and to achieve the true benefits of a collaborative, cooperative workplace, companies must tear down the circus tent and trust in the power of social technology. ROI has become Return on Insanity, but we have the power to make this stop.
The Customer as Ringmaster
Since the first enterprise social networks were deployed, customers and vendors have been promoting their benefits. But fast-forward to 2014, and many companies who have still not adopted an ESN are looking for concrete proof that “social” will generate a positive return. It’s not enough that there are hundreds of case studies from companies of all sizes extolling the value. Certain executives and decision-makers want hard and fast numbers -- or “social” isn’t going to happen.
As players in this circus, we have bowed to the ringmaster and decided to play the game. If the customer wants ROI, they’ll get their ROI. Vendors and analysts have put together massive reports that attempt to quantify the financial value of enterprise social efforts. McKinsey’s 2012 Social Economy report asserts that companies across certain sectors could generate up to $1.3 trillion in productivity gains. Forrester has created Total Economic Impact (TEI) reports with Microsoft’s Yammer (asserting 3-year, 365 percent ROI of $5,676,103 NPV) and with TIBCO's tibbr (asserting a 3-year, 333 percent ROI of $36,231,676).
Holy monkeys riding tiny bicycles, Batman! Those are some big ROI numbers. It would be very hard for an executive to look at these reports and decide that an internal social network wouldn’t be a good investment. So we, as actors in the circus, have done our duty to please the audience. Applause, anyone?
Rosy ROI Calculations are Just Magic Tricks
The problem with these reports, studies and underlying calculations that purport to quantify the ROI of an ESN is that they’re hypothetical. While rooted in company surveys and data, none of the studies point to exact, real ROI measurements. The studies all talk about representative organizations and possible productivity gains. They don’t quantify actual ROI achieved by a real company through the use of an ESN. Why not?
Because there is no practical way to get that data. Vendors and analysts are putting together these ROI reports solely for the purpose of convincing companies to invest in social. So the best that they can do is share potential scenarios rooted in simple salary and time-based calculations about possible productivity gains that will probably save hours and thus money. The end result is a set of numbers that looks good on paper. Realistically, it’s an illusion, and not the hard truth.
Research being conducted in academia, where there is less personal financial reward tied to the outcome of work, validates this concern. There is a steadily growing body of work that argues that current ESN measurements lack a valid theoretical and scientific basis and can only be seen as indicators for the potential use of an ESN in practice. Yes, I believe that there are tangible positive financial returns from launching an ESN. But none of the numbers in these reports actually shows you the real, complete set of data. Executives deciding to launch an ESN based on these reports are making decisions on a social slight-of-hand, and in our attempt to further the industry, we are jumping through hoops to show possibilities and potential outcomes, not reality.
Behind the Curtain – What We Choose Not to See
There’s another problem when we choose to buy-in to the possible ROI benefits as calculated in the studies above. If we elect to look at the potential positives, why aren’t we looking at the potential negatives, too? The actual total economic impact of an enterprise social network can’t be calculated from simple time-based productivity gain equations, nor can it be calculated without including the ways that an ESN might negatively impact a company.
For example, what if an ESN triggers more stress in employees who are now using it outside of business hours to collaborate? Employees being able to share spontaneous ideas over the weekend or quickly answer questions from colleagues across the globe via mobile device are frequent benefits of an ESN touted by vendors. But what about this recent Gallup study that links higher employee stress with mobile device usage outside of working hours? How do we account for the negative ROI that greater employee stress due to off-hours ESN use has on their productivity?
The reality is that we can’t. There are too many variables in the ways that employees work, a company’s culture, how ESNs are used by individuals and teams, and existing communication patterns and flows to accurately measure the real ROI of an enterprise social network. If we’re going to calculate value, we must take a holistic approach.
Escaping the Circus
So how do we end this social ROI chaos? As the industry continues to publish ROI studies that claim to capture true financial gain, we are perpetuating the ancient methods of technology evaluation that force us to put dollars and cents on every decision. We continue to treat “social” as if it’s about technology and not people.
It’s time to escape from the circus by focusing on the myriad intangible benefits of an enterprise social network, advocating that instead of seeing social as a way to get more out of employees, companies should be modernizing their communication channels to give employees choice and freedom. If we stop selling tickets to the social ROI sideshow, nobody will come. And if we want enterprise social networks to flourish and grow universally, it’s time to stop pretending that we can measure their ROI.