Hard-hitting analysis and recommendations from Geoffrey Moore on the transformations taking place in IT and the move toward systems of engagement. I remember seeing a video he did for Cisco a while back where he described the whoosh sound heard in the early days of the internet when the mass of business people realised how important the technology was and how the internet was not about to disappear, but was actually vital for their business. He then described the send whoosh when the same realisation happens with all things 2.0 and social. I think we’re at the start of that whoosh here in the UK. A nation of laggards maybe…
An interesting document has come my way from IDC, “Determining the Value of Social Business ROI: Myths, Facts, and Potentially High Returns“. To my mind, the report provides a simple and elegant way of measuring ROI in real terms, it highlights a very important principle of unified social strategy and spells out even more potential gains when we look at the broader picture.
How to calculate the ROI of E2.0
To business: the report points to the way of precisely calculating the ROI of social business or Enterprise 2.0 projects. It does this by debunking a couple of myths, basically fluffy measurements where ROI becomes ‘return on impact’ and the like; and concentrates on the ‘brass tacks’:
“To calculate ROI, in its simplest terms, means that companies must have more money coming in than money being spent on something… ROI compares gains with costs and it relates very specifically to money.”
This of course is the literally the bottom line, tangible results in the accounts. So how do they think this can be measured? Leaving aside their arguments on Cashflow Analysis and Net Present Value, they see Social Business gains in the following areas:
- Sales Revenue
- Customer Insights
- Brand Protection
- Lead Generation
- Call Center Operations
For all these gains, IDC details how they would be generated, for example sales revenue is increased by ‘accelerated customer acquisition rates and decreased customer churn’; customer insights leads enables the company to ‘leverage real-time insights to accelerate product development, messaging, and go-to-market strategy’ and lead generation gains are seen in the ‘lower cost of lead acquisition through less expensive social channels’.
Against these, they detail the costs as follows:
These costs are straightforward, the people needed to run the projects, cost of software and hosting from Microsoft, Jive or whoever…
The ROI is therefore calculated by subtracting the costs from the gains and IDC provide and example that pumps out a 561% gain. To the skeptical, I can best advise read the report in full, I have obviously and by necessity simplified here.
A Unified Social Strategy
Earlier on I mentioned a key principle of a unified social strategy, let me spell this out if I may. IDC see internal social business practices completely in synch with external social media activities. The gains we see, are in the dialectical play between the two spheres, for example, customer insights provide a better service at a cheaper cost, which means the production of better products, morre aligned to customer needs. We can extend this out further and look at the potential for even more gains. How so?
Articulating the Brand
Well if we look at the brand, IDC see the gains in protecting the brand. They see social business software working to help limit the brand damage in an incident of whatever magnitude. I think there’s more here however. For me this is how social software can work in concert with internal communications initiatives. I may be a little radical here but I see internal communications as about articulating the brand internally, about making the brand something real and worthwhile for employees.
The importance of social business’ role here was shown for me at least in a recent Forrester report, Do Your Employees Advocate For Your Company? What was noteworthy here was the finding that where social business software was present the percentage of employees promoting or detracting the company
With Social Business: 48% promoters / 22% detractors
No Social Business: 31% promoters / 45% detractors
Getting employees engaged and aligned to the company goals is for many internal comms people a number one goal. This is also something that is measurable to the extent it too can be quantified to the bottom line. It is also pivotal to the brand, even more so if we think in terms of damage limitation. If something bad happens and 45% of the employees are cheesed off with the company they are not likely to be brand ambassadors…
I liked this report for showing in simple and concrete ways how the ROI of our social business efforts can be measured. It also points to a holistic way of managing both sides of the social equation. It achieves this well and provides the foundation for going far deeper and to genuinely quantify how.
Update 1st Dec: checkout this great article on SocialCast’s site: http://blog.socialcast.com/how-to-calculate-the-roi-of-enterprise-2-0/
See also my blog on UBM and their ROI on social business / E 2.0 http://theparallaxview.com/2010/03/ubm-case-study-shows-cash-benefits-social-software/
An Imagineering Post
Two posts caught my particular attention over the weekend. The first was an alert in SocialCast by @jimworth about a Gartner press release on the trends for 2011. The CIOs Jim pointed out that if they are not already onboard with all that’s 2.0 they will certainly be coming onboard after this symposium. Why? Well Gartner places Social Communications & Collaboration as number 4 of their top trends for 2011:
Social Communications and Collaboration. Social media can be divided into:
(1)Social networking —social profile management products, such as MySpace, Facebook, LinkedIn and Friendster as well as social networking analysis (SNA) technologies that employ algorithms to understand and utilize human relationships for the discovery of people and expertise.
(2) Social collaboration —technologies, such as wikis, blogs, instant messaging, collaborative office, and crowdsourcing.
(3)Social publishing —technologies that assist communities in pooling individual content into a usable and community accessible content repository such as YouTube and flickr.
(4) Social feedback – gaining feedback and opinion from the community on specific items as witnessed on YouTube, flickr, Digg, Del.icio.us, and Amazon. Gartner predicts that by 2016, social technologies will be integrated with most business applications. Companies should bring together their social CRM, internal communications and collaboration, and public social site initiatives into a coordinated strategy.
To this I would add a 5th, but more of this later. The second post that caught my eye was from Dion Hinchcliffe: Making Enterprise Applications Social: Looking at the Intranet and OpenSocial. Here Dion takes up the implication of Open Social on the Intranet. This is something I wrote about a while back, Open Social and the Enterprise Intranet but Dion takes the concept further and consolidates in superb form and links it to the Enterprise App Store:
Now what I’ve started to think about is this (see also A cloudy intranet of HTML5 :
1) As the Cloud & SAAS becomes the dominant technology meme it will include the intranet inevitably (the Jive instance I’m currently working on is hosted)
2) The components of the intranet can be widgetized’ – see Dion’s Social External Applications Store and the HTML 5 link above.
3) These cloud based widgets connect via Open Social.
4) Common function paradigms are made as x widget connects with y to create z result – social bundles.
What I can see from this is that we begin to have collections of intranet functional widgets, possibly from different vendors, all socially enabled and connecting, bundled around particular business processes. It should in theory then become possible to both standardise these processes and to enable them to perform core business processes. The model I’m drawing from here, albeit hazily, is commercial commodity exchange, currency conversion and the like. These can be standardised into processes.
The ‘pure’ business process can be automated – it can run without people, without the social. Yet, it is socially transparent – anyone with the right authority (and this is a political / comercial decision) can in this model, see the transactions. More complex processes, those requiring more people input could be standardised and a business process created and modelled – I’m thinking of the sort of analysis that DMAIC entails. The task then becomes one of identifying the process and rebuilding. The build would be made of clusters of social business applications forming processes: social business processing.
We then have a 5th element for Gartner’s division of Social Communication and Collaboration: Social Business Processing: social technologies joined together, connecting with OpenSocial to perform specific and open business processes in a social and transparent way, often, though not exclusively using cloud platforms.
One outcome of this worth noting is that the traditional intranet would become much more a working tool and would cease to be a simple repository or channel of information. The phrase you can find it on the intranet would be replaced by you can build it on the intranet.
Bit of a jotting pad post really this one. I noticed a Gartner report I’d completely missed (and a few of my peers in the Adoption 2.0 Council had too, I think Gartner are missing a trick here. Of note is this:
- By 2010, more than 50 % of large scale companies will be using lifestreams and microblogs internaly.
- By 2014, more than 20 % of all business communication is conducted primaly through social media.
- Within the next three years, 70 % of all internal social media initiatives run by IT departments will fail.
Of note the last point. Yes, but. If a project is run only by IT then it will not have much of a chance of success. But the but is, it’s a truism that successful Enterprise 2.0 is itself a collaborative entity, it entails teamwork and collaboration between IT, Comms, often Marketing and HR and always in the final analysis, the senior management. Culture is key. Technology is secondary.
Two posts by Dion Hinchcliffe especially caught my eye. He’s been talking about the social intranet and change, introducing the concept of the Social Business Unit (SBU). Drawing on data from Gartner and CMS wire Dion charts the evolutionary forms of the intranet and how these might coalesce and cohere in the formation of the SBU.
And yes, I can see both the evolutionary path and both the formation of the SBU as being integral, integrated, and yet. Can’t quite put my finger on it but it’s different in Europe and more so in the UK. Maybe it’s a different attitude to all things social both as marketing and as production / distribution but I feel the both the road and the journey are different this side of the pond.
Dion also mentions the McAfee and Purdue University report on the dangers of all things 2.0. Except that this one isn’t, well it isn’t about Enterprise 2.0. I’m starting to believe that using the 2.0 suffix for web 2.0 more productive alter ego was a big mistake. There’s such a tendency to conflate the too and use the risks of web 2.0 to tar the endeavours of Enterprise 2.0. No more did this come across than in a recent CMSWire piece that used all the worries of Web 2.0 to sell solutions on Information Rights Management (IRM) / Enterprise Digital Rights Management (EDRM).
But what of the real world? Rightly, Dion points out that none of us in the Adoption 2.0 Council can seen show-stopping issues when it comes to Enterprise 2.0 and security. That’s not to say that they’re not issues, it’s just that they’re different ones. I’ll cover this off in a future post as it’s something I’ve spent quite some time going over with a fine-toothed comb these last 12 months or so.
Company intranets are turning social
Gartner Reveals Five Social Software Predictions for 2010 and Beyond
Social intranets: Enterprises grapple with internal change
Introducing The Social Business Unit
The Rise of Intranet 2.0: The Social Intranet
Security in the Enterprise 2.0 World: Conflicts of Collaboration
Good review of Forrester’s report Four Giants Compete For Your Cloud Email Business from Bill Ives: Enterprise Email Wars Heat Up in the Cloud Of note it shows the way that the big four, Google, Microsoft, IBM and Cisco are all battling out to win Cloud business and how this is being played out via collaboration and communication technologies.
For vendors, it will be a tough five years as companies pick a messaging and collaboration partner for the next decade.
The net result for end users will be an increasing unification of communications. The focus will be the InBox, but with wiki posting, activities and Tweets, will it be e-mail as we know it?
It was with some interest that I read The Forrester Wave™: Collaboration Platforms, Q3 2009 after a link was Tweeted out yesterday. I was reading in reverse order from Gartner’s Magic Quadrant, see my Gartner Magic Quadrant; a dark horse closing up the outside fence… My main interest in Forrester’s was to see where Jive were placed. Of late I’ve been doing a lot of hands-on work with Jive and getting to know the platform in a great amount of detail.
On reading the wave report, I was struck by one small arrival – a horse of even darker hue, that of Cisco WebEx Connect as a collaboration platform. Most people are aware of WebEx as a webinar tool and have not used Connect. I was at Cisco when WebEx was acquired and in San Jose too and remember all the WebEx signs in the carpark. It all looked a bit puzzling, for me at least, until I found out about Connect. Connect is a superb tool and worth acquiring for that alone. It’s a SharePoint killer.
Here’s why. Connect is 2.0 in a way that SharePoint never will be. It’s modular, making it infinitely extendable and uses accessible open APIs:
- URL commands
- XML Request / Response interfaces with well-defined schemas
- Web Services interfaces that support Web Services Definition Language (WSDL) with access through Simple Object Access Protocol (SOAP).
- Representational State Transfer (REST).
What this means is a rapidly deployable, file-store and silo-busting collaboration app with the ability to slot in any number of friendly mash-ups. Twitter for Connect/ no problemo, just load it up and slot it in. Facebook, ditto, iPhone easy. What’s more it’s robustly secure, no worries about the firewall with this baby. And of course it’s backed up by a tech behemoth. This is no start-up.
Potentially, this is the Enterprise 2.0 application.
I say potentially as to be frank I was surprised to see it in the Forrester Wave (and it’s not present in Gartner’s). The product is superb but I’ve never seen it pushed out and really marketed for what it is. Go to the WebEx site (and it’s still on the WebEx domain) and Connect is listed but not featured much. It doesn’t scream out what it does. What’s more, I couldn’t find the link where I might connect up with Connect. Puzzling.
Now if you go onto the Jive site you’ll see a lot of publicity about SharePoint connectivity. All good stuff as SharePoint is almost a defacto standard in many corporations. This could change almost overnight. Here’s how and why.
Cisco, Miscrosoft and Google are in a cage fight. That fight I dubbed The Battle of the Cloud a while back. Cisco own the Network, Miscrosoft the Software and Google own the Experience. All of these 3 areas get completely mashed up in the metaphor we currently know as the cloud. And I believe, the stakes are high enough to see severe casualties amongst the 3 big players. (See also Dion Hinchcliffe’s Cloud computing and the return of the platform wars…estimate is for $42 Billion by 2012, I’m taking the argument even further).
Against this backdrop, singular products like Connect, that many don’t even realise exists, provides some wonderfully disruptive possibilities as a disruptive Enterprise 2.0 collaboration tool. Given this, what I’d do if I was sitting in the board at San Jose would be to ramp up the marketing for Connect. And if I really wanted to shake up the whole apple cart, I’d also make it free.
Just been reading the Gartner Magic Quadrant: Social Software. Jive come out as the clear leaders, closely followed by IBM and Microsoft (the latter featuring better on ability to execute). Other notables – Drupal, Telligent, SocialText and blueKiwi jostle with Google for the Visionary space. Gartner wonder if Google’s move into the enterprise is opportunistic. I think it’s strategic. Open Text and Atlassian feature as Challengers.
I think the horse racing up the outside fence as they close into the paddock will be Thought Farmer. Their biggest weakness is the fact they don’t have any big customers, a fact that their alliance with the Dachis group is bound to change! I enjoyed their latest blog too The Problem of the Intranet – so much so I actually read it on my iPod Touch! Touche to the Canadians!
n.b…Hmm, I wonder where WordPress will feature in future Magic Quadrants?
Conducting some research I’ve stumbled across an interesting quote (& this blog is but a jotter of my thoughts) that I suspect might be an old chestnut by now. It’s new to me though so here goes. & it comes from Bob Kaplan inventor of the Balanced Scorecard and relates to measuring the ROI of social media. Kaplan’s quote on the ROI of social media is succinct and cuts so quick to the point as to leave little behind:
“you can’t do it.”
I found the quote on Traackr.com who explain that “Measuring Social Media ROI is a pipe dream”
Trying to calculate the ROI of social media is the same as trying to calculate the ROI of email or the road you drive to work on. The costs can be approximated but the benefits can’t. Their reach is too broad and too many other factors are at play to even to list them all, let alone attempt to measure profits.
Now this I find interesting and and in equal measure implausible – I don’t believe it.
Now I don’t have much ammo to refute it and I’ve even less expertise. This simply ‘aint my area. And yet it keeps on coming up – there must be a way of making the Social Media Balanced Scorecard.
So where to start? Well where I started to think about this was in 3 broad areas
1) Impact improvement on existing process: time to create, to sell, cost of production etc etc etc
2) Innovation – doing what was not done before, idea Wikis and the like. Making new stuff happen.
3) Business Transformation – when 1 & 2 fuse in completely unexpected ways.
But where to strap the numbers to? Well on this, I first started to think about Balanced Scorecards – hence finding the quote from Kaplan. This is an interesting area and all I have to go on at present is an old report from Forrester from 2004: The Balanced Scorecard For IT: Value Metrics. Forrester supply a suggested list of scores:
They’re keen to stress though that,
When it comes to IT value metrics, there is no silver bullet, no single metric that provides the appropriate answer. However, with strong alignment between business strategy and IT strategy, it is possible to start making the necessary links between IT investments and their business value. We suggest using a number of diverse, financially oriented metrics to capture the breadth of IT value delivered.
This provides for me food for thought though. Can we correlate this to enterprise social media, to enterprise 2.0? Or more pointedly: is your social media strategy aligned to your business strategy and if so in how much and in what form? And where next with Forrester’s other factors, can they correlate to scoring against the success of enterprise 2.0?
Update, 31st December 2010 – I’ve developed this idea on the making the Social Media Balanced Scorecard to that of creating the social business scorecard, please see my post: The Social Business Scorecard IV, or ROI made easy
An interesting report from McKinsey Quarterly How companies are benefiting from Web 2.0: McKinsey Global Survey Results(requires free registration). Enterprise 2.0 benefits most seen in $1Bn + companies and with companies in India and North America claiming the most benefits. Companies that are most networked and showing the most network benefits with time to market, knowledge management and employee satisfaction coming through as top benefits and some claim, increased revenue.
One of the most striking finds in the global survey was the unanimity that 2.0 works best when integrated into the workflow:
See also Bertrand Dupperin’s blog on this report.