Enterprise 2.0 … Show me the ROI

While Enterprise 2.0 is often described as “web 2.0 meets the enterprise”, what Enterprise 2.0 encompasses is much bigger. Enterprise 2.0 represents a radical change in the way businesses operate and is as much about the people, the culture and the processes as it is about the technology, tools and platforms.

More than simply Web 2.0 applied to business, Enterprise 2.0 could indeed be considered as the synthesis of new technologies, models, processes and mindsets that are revolutionizing the way business is conducted. Technologies and models have also emerged that have had a dramatic impact on the future of the industry: open source, offshoring, services-oriented architecture (SOA) and software as a service (SaaS). Rather than one single trend taking the lead, Enterprise 2.0 will be the combination of all of these new technologies and models.

In this context, measuring the impact and evaluating the ROI of Enterprise 2.0 is fast becoming a hot topic. Although these may not always be the technologies cited as the most widely used by companies across industries, collaborative and communications technologies (including wikis, blogs, and RSS) are usually considered as having immediate value for the organizations. We also find that those firms with the largest number of tools deployed see the best value, although no "killer combination" of tools has emerged yet.

While many assert that Enterprise 2.0 technologies are subject to the same scrutiny as other investments, a general sense emerges that it is, in many cases, too soon to tell. However, these technologies can be assessed by their impact on business performance, which could be defined in many ways, including better customer engagement, more efficient collaboration within the company, and an improved ability to manage its online reputation. Executives also tend to invest in new technologies and processes because they hold out the promise of either increasing competitive advantage or reducing costs.

Much of the value of an Enterprise 2.0 deployment is incremental and "soft" in nature, and as a result, clear business value measurement remains elusive. In addition, most firms continue to use traditional value measurement techniques like ROI and total cost of ownership (TCO) when evaluating Enterprise 2.0 deployments. For marketers, this means a dual challenge of accommodating corporate value measurement expectations while helping them onto the right track for incremental and softer value realisation.

The reality is that the Enterprise 2.0 story still has a long way to go. The results will not be clearly quantified until the tools get into most workers’ hands and organisations understand the key elements of success with Enterprise 2.0.

Comments

[Mohan]

Christian,
Interesting post. This sort of echoes my musing on whether some of the techniques behind 'web 2.0' are a bit of the same old wine in a new bottle…

[mediamutt]

I think finding ways to prove the value of Enterprise 2.0 (or Web 2.0, or whatever) is always critical to get business buy-in. At some point you have to show that what you're doing makes business sense and that it can be communicated in a language the rest of the business understands: revenue growth, profit margin improvements, cost savings, ROI, productivity increases, etc. We're still early here but I think the softer metrics are starting to give way to harder ones. My employer, IBM, has been looking at this; we wouldn't be doing this if we didn't think it brought real value to our clients (we ARE a conservative company still, in many ways, and that's one of them). We've been doing it internally for years and we find value in it. You can find more information here: http://www-306.ibm.com/software/lotus/products/connections/?pgel=wspace

[Jaco]

what's wrong with using ROI for Enterprise 2.0? or TCO for that matter.

Of course, there will be new innovative applications where the investment is more strategic, trying to obtain an advantage over competitors and the ROI is hard to calculate. But, for many situations ROI is still the way to go. Have you checked the examples from a book like groundswell for instance?

In my opinion too many organization move to technology too quickly, without having a clear view on and knowledge of their audiences/customers, and without a clear business objective for their initiative. Without these two it will indeed be hard to do 'old-fashioned' ROIs and TCOs.