How do we calculate the ROI of Enterprise Social Software? Is it actually possible? Should we even care?
Measuring the ROI (Return On Investment) of information technology is not new. It’s been part of an intense discussion around Enterprise 2.0 since Andrew McAffee coined the term back in 2006 to describe the impact of web 2.0 tools on organizations.
As an executive I need to justify my investments. One way is to use qualitative measures such as ”we are able to collaborate more effectively”. The other way is using quantitive measures which give a number to for example the percentage of workers that are more satisfied since a new collaboration tool was introduced. What makes it complicated is that we are measuring mostly the intangible aspects of organizations.
When looking at the above picture we see that those factors that have an impact on an organization as a whole (e.g. becoming more innovative) are most difficult to measure. On the bottom line it may be easier to calculate how much costs we are saving when implementing an IT solution, because that is a hard measure. But that has less direct impact to the organization than for example the agility to adapt to customer demands.
I do believe that every buyer of an enterprise solution (and user for that matter) should think about ROI. Those that have successfully implemented social software have thought carefully what problems they aim to solve with the solution. While doing this they will look at how they will be able to measure the success of the solution. Social solutions should support organizational processes and therefore align a process with a goal. This presents the user with tons of data about efficiency and in the end also ROI.
Social solutions should be able to provide you with a lot of data. LumoFlow for example can tell you how long it takes from an idea to the implementation. But also comparative user data such as document creations versus task completions. This may tell you whether your workers are using the social software as a content repository or as a place to collaborate on projects. This data can be correlated with KPI’s and from there measure ROI.
In the end I believe, although ROI is important, we should not place too much emphasis on it. The success of a solution should not relate to a specific ROI number, in my opinion. Enterprise 2.0 is a journey that an organization undertakes. It’s a journey to create a more collaborative, more innovative and more customer focused culture. It’s a change process that comes with ups and downs. There will aspects that are more easy to measure than others, but don’t let that stop you. With such low up-front investment, user and running costs even the smallest gain by enterprise social software provide you with a positive ROI.