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The ROI Conundrum: Making the 'Impossible' Possible

For all the hype and enthusiasm about social collaboration and the rhetoric about the potential it has to bring about huge changes in the way an organization operates, it remains extraordinarily hard to find good examples of where a business can justify its investment in clear financial terms.

That’s not to say that there are no identifiable benefits in today's social collaboration success stories. But these are often anecdotal, tied to specific use cases and more indicative of the broader opportunity for the business, rather than necessarily demonstrating a return in financial terms. For early adopter organizations that already bought into the concept and are seeing evidence emerging in their own business context, this may not be a problem. But for the majority that are not trailblazers in this space — those just starting to look at whether social collaboration is a worthwhile investment opportunity — it's not surprising that they want real, tangible, evidential proof of its value.

The Search for ROI Continues 

So why are ROI examples for social collaboration so hard to come by? Many argue that it’s because the benefits of social collaboration — like knowledge management before it — are intangible in nature. That better sharing of knowledge, better communication and increased connectivity between employees (for example) is not a measurable entity, that it’s represented in the culture of the organization. While I absolutely agree about this being about transforming an organization's culture, I disagree that that means you cannot measure the impact of that shift, at least in part — but I'll come back to that later.

I believe the real reasons why we don't see many clear examples of cost-based ROI for social collaboration are in fact threefold:

  1. It's still early days for this technology area in terms of broad, enterprise-wide adoption, and therefore the number of established, successful case studies is very small. Even the most well-publicized success stories don't come close in technology adoption statistics to the existing preferred enterprise communication medium, i.e. email, and often they only achieve up to 20 percent adoption in real terms.
  2. This is a business change exercise (not just an IT deployment) with the goal of changing the behaviors of people right across the organization. Even with the most committed and well-resourced program in place, this will take several years to achieve, particularly in large organizations. In that time there's the potential for a wealth of other factors which could impact the performance of the organization, such as leadership changes, mergers or acquisitions, or changes in market conditions, and this will inevitably skew the ROI calculation.
  3. Organizations typically don't think about measuring ROI — or any kind of cost justification at all — for social collaboration until the initiative is well-underway, by which time the data is hard to retrieve.

The lack of a formal, cost-based ROI for social collaboration in the majority of cases does not necessarily mean that it’s not possible, just that there’s often no pressure on those responsible to do so. As I suggested earlier, if the CEO believes that this is the right direction for the organization, a formal ROI may be deemed unnecessary (though this situation can of course change when a new CEO takes charge). If you have a clear understanding of what your organization is aiming to achieve through better collaboration — and you start thinking about ROI early enough in your initiative — there is no reason why you cannot measure the benefits in tangible terms, and therefore calculate your ROI.

ROI Takes Time

Once you have clearly articulated the purpose of your initiative — specifically in the context of your own organization, drawing on the overriding goals of the business — you need to identify the key metrics that will determine whether you have succeeded in your efforts. It's important for these to be clearly measurable and clearly identifiable as business metrics — not just levels of adoption, or new ideas created for example. Think about things like improving time to market for new products or services, reducing call center times or costs, reducing employee turnover or employee onboarding costs.

To know whether these things have improved, you need to have a benchmark — which is where you need to be thinking ahead, because it can be hard to acquire some data retrospectively if you haven't. The issue of to what extent external factors impact these metrics will remain, but if you are upfront about tracking this data in the context of your social collaboration initiative, it will be easier to convince senior management of the relationship between the initiative and the results.

It’s worth highlighting that you should not disregard the value of anecdotal examples of how the organization is benefiting from better collaboration. These will add extra weight to your ROI measurements and reporting, and will help to provide context for skeptics about the day-to-day use cases for social collaboration, as well as providing reassurance to employees about the value of their collaborative efforts.

Above all, executive (and employee) confidence in your initiative is about setting the right expectations for what your initiative will deliver. It won't deliver everything on Day One, or within six months, or even — in cultural change terms — in a year. It will take a significant period of time to change the established behavior patterns in a large organization. Unless everyone is clear about this, you’ll be setting yourself up to fail. Transparency about your goals, the organization's progress and successes, and your strategy moving forward will help to bolster your social collaboration initiative — and the ROI will eventually come. You just need to be looking for it.

Title image by Piotr Marcinski (Shutterstock)

About the Author

Angela Ashenden is principal analyst at MWD Advisors and leads the collaboration practice, specializing in social collaboration. With 14 years' experience as an industry analyst, Angela is a highly accomplished writer and public speaker, with expertise in many areas around Collaboration and Information Management.

 
 
 
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