Putting 2.0 Technologies in ROI Calculations


Whether it's social networking, wikis, RSS feeds or blogs, most Web 2.0 technologies are about collaboration. They make it easier for groups -- including those previously not connected to each other -- to communicate and share ideas and best practices. You'd have to be a real numbskull not to see the value of this. But try telling that to a CFO. Such technologies probably won't help you reduce headcount or trim any major costs.


Granted, they won't cost much to implement, which is a big part of their appeal. They may speed some processes, so you might be able to show that they'll help work get done faster and more productively. But it's notoriously hard to present a clear-cut "If we spend X, then we'll save Y" case for them. That remains a sticking point for many companies, as I wrote just last month, citing a Burton Group study.


You'll find some hard numbers in these case studies for Socialtext collaboration software. According to Socialtext, its clients have compressed sales cycles by over 10 percent, increased time-to-market by 25 percent with improved product management, and some have reduced e-mail by over 30 percent. Impressive, right? But I suspect it may not always be easy to directly connect the collaboration software to these benefits. John Parkinson, CTO of TransUnion, one of the nine featured case studies, estimates the company saved a whopping $2.5 million in less than five months after spending some $50,000 on Socialtext software, largely by employees figuring out problems by brainstorming with each other vs.asking for new hardware or software. Socialtext founder Ross Mayfield quotes Parkinson:

The savings mostly come out of teams that would have historically said, "Buy me more hardware" or "I need a new software tool" or "I need more processing capacity," who figured out how to solve their problems without asking for any of those things.

Fair enough, though light on specifics. The main impetus, says Parkinson, was to keep employees from collaborating via more public channels such as Facebook, a key concern since TransUnion works with sensitive credit-related data. Parkinson had apparently discovered some 2,000 TransUnion employees were already on Facebook before the company installed the new software.


Interestingly, the Socialtext software co-exists with Microsoft Sharepoint, where collaboration with formalized processes (bringing on a new customer is the example offered in the case study) still takes place, so Sharepoint's workflow tools can track these processes.