Thursday, November 5, 2009

Eureka! Now I know how to calculate the ROI of Enterprise 2.0



Sorry to disappoint you, but I actually don't know how to calculate the ROI of Enterprise 2.0. But I will at least tell you why I don't know that.

The debate about where the Enterprise 2.0 use cases are hiding, and whether or not you can calculate the ROI from Enterprise 2.0 is quite interesting. It is especially interesting if you consider that the debate is based on the wrong assumption: that we can apply the same approaches, methods and metrics that we have used to improve transformational and transactional business processes in order to improve knowledge work. Obviously, this won't work.

I personally find it quite easy to reason about and communicate the value that Enterprise 2.0 can bring to a business. This can be done by telling stories, such as telling the story about a team of people that tries to collaborate on a document by sending it back and forth via email, and then contrasting it with a story of a team that collaborates using a wiki.

But somehow, these stories are not enough to convince some people that they need to start looking at how to improve knowledge work, and that they need to start exploring the possibilities of new tools and technologies - the same kind of tools and technologies which are already being used successfully on the social web for tasks which are very similar to the tasks we perform at work. Talk about opportunity!

When it comes to Enterprise 2.0 use cases, there is definately not a shortage of use cases. It is just something that the sceptics say because it sounds good to them. Rather, from my experience it is the other way around – there are almost too many of them. Just by watching how my collegues use Yammer, I have identified well over 30 use cases that micro-blogging supports and which are very hard to carry out with other tools and technologies. And new use cases are being identified all the time.

Some of the use cases, such as crowdsourcing ideas for PR activities, wasn't possible before, at least not feasible from a cost and management perspective. It is either that, that we couldn’t afford to perform the use cases, or we didn't bother to make the effort to define the value they generate or to measure this value.

Do you know of any organisation that has tried to and succeeded in measuring how it performs at building market intelligence? Or that has succeeded in measuring how efficient and effective the communication within a project team is? For example, do they measure how much communication it takes and how long time it takes to delegate a task to a team member? Do they measure the effectiveness of this communication - if the right decision was made or the right task was carried out in the right time?

I'm all ears.

As knowledge work is becoming a much bigger and more business-critical part of most businesses, they obviously have to do something to get better at it. A business that succeeds in improving knowledge work and leveraging its social capital will most likely become smarter, faster and more innovative than the competitors that don't. THAT is the business case for Enterprise 2.0. A business that rather passively waits until there is a book to buy that will tell exactly how define and measure the value of knowledge work won't have a very bright future. In fact, I am pretty sure it won't have a future at all.

To sum up, let me make a few things clear.

First of all, it is possible to define the value of knowledge work, such as problem solving and collaboration.

Secondly, it is also possible to measure this value.

But the problem is that we haven't yet come up with exactly how to do that yet.

What obviously doesn’t work is to apply the same approaches, methods and measurements as we have used before when trying to improve transactional business processes. So, we have to come up with new and improved ones. But how do we do that?

I suggest that we start exploring the new and improved use cases and learn to do this as we go. I am pretty sure that this is how most businesses are started and how most improvements are being identified and initiatied. You have an idea, you see an opportunity and you decide to seize it. The people who are just interested in maths will maybe make great accountants or managers (good at sustaining status quo), but not great entrepreneurs or business leaders.

3 comments:

  1. Hello Oscar,

    I made a very serious attempt to bridge the perspectives on measuring value in my blog post entitled "Is Enterprise 2.0 a Savior or a Charlatan? How Strategy-Driven Execution can pave the path to proving legitimate business performance" located here: http://bit.ly/3n325o .

    I would certainly welcome your feedback and look forward to a continued dialogue around the topic.

    Best Regards,

    Nenshad

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  2. Hi Nenshad,

    you have written a great article that very much corresponds to my own view of Enterprise 2.0 and associated challenges. I have published a new post that recommends others to read it and also added a comment about the challenges with developing business cases and measure ROI of Enterprise 2.0.

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  3. Great post, Oscar. Case studies are so valuable. At the Enterprise 2.0 Conf in San Francisco this week, companies presenting their examples were the most compelling. We published a case study about Cal Poly Pomona. You can check it out here: http://wikisunleashed.blogspot.com/2009/08/success-story-at-cal-poly-pomona.html

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