I dimly remember a conversation I had with IT Business Edge VP Ken-Hardin, which he mentions in a blog post from 2008. He wanted to know what kinds of benefits companies were deriving from social networks, and he seemed disappointed that the benefits I had seen were more evolutionary than revolutionary. Because social networks largely just facilitated and improved capabilities that were already largely possible through tools like e-mail, it was hard to come up with a compelling ROI for them. The name of his post said it all: The Elusive ROI of Improving Communication.
Since then, of course, showing ROI for social networks and other Enterprise 2.0 technologies has become a bit of an obsession. Particularly keen to demonstrate quantifiable value are companies that stand to benefit from increased use of such technologies. Which explains why Cisco set out to show it had garnered about $772 million in returns on its $82 million investment in Enterprise 2.0 technologies.
IBM is another company with a vested interest in acceptance of Enterprise 2.0 technologies, since it's positioning its Lotus software as a competitor to both Microsoft's SharePoint and Google's Apps. Big Blue earlier this year released research it completed with help from the Massachusetts Institute of Technology that attempts to demonstrate the value of social networks in the workplace. Researchers analyzed the e-mail traffic, address books and buddy lists of 2,600 IBM consultants over the course of a year. Among their findings: Consultants with strong e-mail links to a manager produced an average of $588 of revenue per month over the norm, while those with weak ties to a number of managers produced $98 per month less than average. Interesting stuff.
Companies like McKinsey are also devoting a fair amount of time and effort to quantifying the value of Enterprise 2.0 tools . Respondents to a recent McKinsey survey tapped benefits such as quicker access to knowledge (68 percent citing access to internal sources and 51 percent mentioning external sources such as partners and suppliers) and reduced communication costs (54 percent saying costs of internal communications dropped, and 49 percent mentioning external communications, with a median 20 percent reduction cited for both categories).
Advance Consulting's Doug Brockway has a great take on value of Enterprise 2.0 in his guest opinion for IT Business Edge. He refers to "disintermediation" or taking out intermediate steps, processes, systems and people no longer needed to get to an end point, and then offers a great example of how an early version of e-mail in the 1980s helped a manager at DuPont improve information flow. He writes:
His division became leaner and faster and more successful, he was promoted to head the department, the entire department transformed, and those who insisted on the traditional flow of reports from manager to manager to manager lost roles and influence.
Enterprise 2.0 technologies can do that and more, especially if companies are willing to extend their social networks and other communications to partners, customers and other external partners. Writes Brockway:
Because social media flows inside and outside the company, you may need to look less for reduction layers (as in the 1980's) and more toward creating a 360 perspective on strengths, weaknesses, opportunities and threats.