Should ROI Be the Only Driving Factor for Enterprise 2.0? |

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Should ROI Be the Only Driving Factor for Enterprise 2.0?


Posted by on December 23, 2009

roiThis is the fifth and final post of a multi-post series covering the discussion between SOCIALtality founder and 20-year Fidelity-enterprise veteran, Wendy Troupe and myself.  The topics of our discussions were around Social Media, the emerging Enterprise 2.0 movement and the issues facing companies contemplating adoption.  Yesterday we addressed why enterprise 2.0 market predictions vary so greatly.  Today we are going to discuss the challenges companies are faced with when it comes to ROI, we’ll also take a look at a few other goals companies can start to look at it.

Question 5: Should companies let the difficulty of demonstrating short-term ROI overshadow the potential “value” of becoming an Enterprise 2.0 adopter?  What other measurable goals should Enterprise 2.0 advocates use to pitch the benefits inside they’re organization?

My response:

I think the category is still very much in the proof of concept phase for many companies.  We are still trying to define exactly what Enterprise 2.0 means and what it looks like.  There is no silver bullet and there is no one size fits all approach.  The easiest way to prove a concept to get justification and buy in from senior level managers is to show value through ROI.  But, as with the telephone and later email, companies have evolved to a point where the need emerged and radical solutions presented themselves.  Those radical solutions then become the standard and we’re going to see the same thing happen with social media.  It’s going to take another two years or so but eventually it will become a standard for many companies.

Many organization also need to look at business impact.  How are the new tools, technologies, and strategies changing how the company functions?  What facets of the business, other than ROI, benefit from adoption?  There are many.  How much time is being spent on certain functions?  How quickly a company is able to resolve customer service issues?  The relationships that are built and the ease of connection.  These things don’t always impact the bottom line but they are valid value metrics that companies should consider.  It all starts with defining the business objectives, once you have those in place, then your strategy and the tools you use need to meet those objectives.

I love this quote that I found in a presentation by Aaron Julius Kim about ROI, “If there is no “R”, then the “I” becomes a “C” and that cost is always going to be too high.”  I think ROI should always be a consideration but I don’t think it should be the only consideration.

I think the real question might not be IF there’s a ROI in Social Media and Enterprise 2.0 but WHEN will that ROI occur.

Wendy Troupe:

ROI should never be an obstacle to integration.  It is part of an evolution and each step forward must have value.  If you think of the evolution of Social Media, in the beginning people said that the value of the connections and conversation weren’t capable of being quantified, they said it’s really all about relationships.  Now we have an entire industry devoted to quantifying the value of those connections, conversations and relationships.

Part of what our tool is designed to do is quantify those social media interactions and then demonstrate their impact on the various facets of an organization.

I think you’re absolutely right, Jacob.  I think in time, it will become a non-issue.  I think at least in the short-term, the greatest ROI will be demonstrated through efficiencies and streamlined processes.  Social media, with its almost infinite volume of customer feedback and growing number of touch points will necessitate the streamlining of internal communications and collaboration.

To read the other posts in this series please see below:

Strategic Principles of Enterprise 2.0 Implementation

Enterprise 2.0: Paradigm Shift or Incremental Change?

Enterprise 2.0 Tools vs Strategies

Why do Enterprise 2.0 Market Predictions Vary so Greatly?

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  • http://twitter.com/edwardboches edwardboches

    First of all, I don't think any smart client will invest without ROI. Some will experiment, yes, and if it comes out of PR budgets, they will apply similar PR metrics: reach, sentiment, conversation, links, etc. And ideally connect links to conversion. But soon brands will effectively measure the value of a fan, what it cost to acquire, the life long value, if it's better than a non fan customer, etc. Interestingly on my blog,@benkunz did an analysis of Pepsi's new move from superbowl to social and even using old metrics of reach suggests the roi is twice as high as a SB spot. You need to master the online tools available, have a great internal analytics group and know what your objectives were to begin with. At Mullen, we measure everything. In fact we actually predict outcomes before we invest.

    • http://www.thefutureorganization.com jacobmorgan

      Hi Edward,

      thanks for stopping by here. 2010 is definitely going to be the ROI year as most CMOs have stated they are going to be expecting some sort of financial returns on their investments. The problem is that many of these same companies have started out in social media without a solid strategy and measurement framework in place, so I have a feeling that there may be some disappointment along the way. Do you have a link to that Pepsi analysis? I'd be curious to read it. I think another challenge from social media is not IF there is ROI but WHEN companies should expect to see it, that is also going to depend on execution.

      The topic here though is mainly around E2.0 which is basically trying to get companies to be more efficient and collaborate internally. The challenge in this space is that how do you quantify ROI from a non-tangible asset such as knowledge and information. Many E2.0 experts are arguing that instead of looking at ROI we need to be looking at the impact to the business. I think we should be looking at both whenever we can.

      Hope we get a chance to chat soon.

  • http://www.thefutureorganization.com jacobmorgan

    Hi Edward,

    thanks for stopping by here. 2010 is definitely going to be the ROI year as most CMOs have stated they are going to be expecting some sort of financial returns on their investments. The problem is that many of these same companies have started out in social media without a solid strategy and measurement framework in place, so I have a feeling that there may be some disappointment along the way. Do you have a link to that Pepsi analysis? I'd be curious to read it. I think another challenge from social media is not IF there is ROI but WHEN companies should expect to see it, that is also going to depend on execution.

    The topic here though is mainly around E2.0 which is basically trying to get companies to be more efficient and collaborate internally. The challenge in this space is that how do you quantify ROI from a non-tangible asset such as knowledge and information. Many E2.0 experts are arguing that instead of looking at ROI we need to be looking at the impact to the business. I think we should be looking at both whenever we can.

    Hope we get a chance to chat soon.


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