The key to calculating Enterprise Social Networking ROI is to keep it simple.
If you dig under the surface enough, there is often a monetary benefit staring you right in the face…
A lot of debate goes on about the Return on Investment (ROI) of Enterprise Social Software… in my opinion probably too much debate. Sometimes the answer to making a business case is more straightforward than people think. In this post I’ll give an example of how an investment of £75K for an enterprise social networking solution was justified.
First of all, the technology itself is not important, so rather focus on what it will do to improve the organisation (tangibly or intangibly), and/or derive bottom-line benefit… in a normal business this boils down to the following question: how does it help you achieve an organisational objective, financial or otherwise?
An actual example
For example of a financial benefit, one technology organisation that I have worked with holds regular regional meetings for their European sales managers. Typically, they get together for 2 days every 1 or 2 months in a European city. These meetings are very valuable because these people all work in different countries, and never really see each other face to face outside of these get-togethers. It’s a great way for people to bond, for new starters to become integrated into the ‘virtual team’ and for everyone to share new ideas, success stories and best practices.
The “business-as-usual” way of doing things:
A typical event runs over 2 days; on day 1 they discuss some of the latest issues such as new competitive threats, latest product offerings, and top issues from “the field”. Of course they have the obligatory evening social event (which is great for team bonding) and then day 2 is all about making decisions and taking action based on the discussions from day 1.
Room for improvement?
This is all great, but there were a number of opportunities here for increasing effectiveness.
- The 2 day event is quite expensive just in terms of venue hire, accommodation and catering (£80K to £175K depending on number of people).
- Day 2 was the only day where decisions were being made, day 1 was just a necessary precursor to this happening.
- There was no continuation of the discussion and team interaction between these events.
- New starters were very dependent on these events for getting to know their counterparts and becoming more effective.
So how has an enterprise social networking solution helped them, and how do they measure this benefit?
- Discussion around important issues now happens on a day-to-day basis rather than once every few months. Due to these virtual conversations, the physical events can focus on “day 2 – making decisions” rather than needing a whole day prior for discussion workshops. This reduces the time required from 2 days down to 1 day, which is a significant cost saving of around £45K – £75K per event depending on location.
- Competitive threats can be addressed much faster, and the opinions and insight of many employees can be captured because there is no dependency on time zone or location.
- New starters can ramp up very quickly because all past interactions are captured in a transparent (yet secure) way. They can also get to “know” their geographically dispersed team members before actually meeting them, because everyone has a personal profile that shows their photo, background, bio, skills and expertise, and connections to others. There is a specific payback & return based on new starter ramp up time which I’ll cover in another post.
- Success stories are now told as they happen, which energises the sales teams in other subsidiaries and reinforces the unity of this large “virtual sales team”.
So, some of these benefits are tangible and some are intangible. I don’t think one is necessarily more important than the other, but when it comes to justifying expenditure, it’s quite important to present tangible benefits such as a cost saving or increased revenue opportunity, with the intangibles reinforcing your case and making it more appealing.
The bottom line
In this instance, forking out £75K in order to save £90K (2 events, saving £45K each) within 6 months made the investment decision simple and straightforward. The intangible benefits are probably even more valuable than this, but intangibles alone are not going to justify an investment unless the amount of £££ is extremely low.
Coming up with this justification had nothing to do with technology or tools, it was about “what does it enable us to better than we do today, and will that improve our organisation and save us money”.
If you have any examples of how you have made your business case for investment, I’d love to hear it!