The Enterprise 2.0 Conference held in Boston this summer was a great testimonial to the growing importance of the topic. True to the topic the conference also set up some discussion threads, as well as a blog, to promote the conversation beyond the physical event. One of these discussion threads was on Building the Business case for Enterprise 2.0 and it provoked a lively and extensive conversation. I want to share some of the highlights here as part of an ongoing series on enterprise 2.0 business benefits.
After Keri Pearlson started the discussion, Ralph Poole was the first to respond with questions that he would be asking if was a manager looking into enterprise 2.0:
“How will this contribute to creating new revenue with new or existing clients?
How will E 2.0 contribute to efficiencies in the work place and can you quantify the benefits?
What will stop if this new Enterprise 2.0 initiative is implemented, e.g. what are the potential cost savings, what can I stop paying for?
How involved will IT be in this new initiative, have we accounted for all the costs that might occur, like new servers, software, etc.?
I want to get cost out of our systems, will E 2.0 help or will it only overlay more complexity on our organization?”
Ralph goes on to add that he has had good luck with “diagramming critical business process and showing which process steps will be eliminated, or dramatically reduced in terms of time and cost.” This is one of the best practices for developing a business case for any new technology related initiative. There is no reason to not use it for enterprise 2.0. Ralph adds some examples across functions such as faster communication along the supply chain.
In response, Jon Mell shared a blog post, ROI of Social Software, that stressed to need to address ROI issues and not ignore them. Consistent with Ralph, he said to begin with business challenges and not the features of the social software. Business case development with enterprise 2.0 appears to follow many of the standard principles of business case development. This is good and it was a recurring theme in the discussions. Bertrand Duperrin and Rob Gray brought up the Balanced Scorecard as a method to track the broader benefits of enterprise 2.0. In this method the "People/Growth and Learning Perspective" and the "Customer Perspective", will link together and ultimately affect the Financial Perspective.
Rob pointed out the tools within enterprise 2.0 can more effectively collect the data on these benefits such as employee satisfaction, as well as provide a direct impact on the results. I think this is an excellent point. The increased transparency offered by enterprise 2.0 can give better access to the data we need to determine outcomes. Our measurement capability is increased, as well as our productivity.
Damra Muminovic offered insights from a very relevant McKinsey report, Competitive advantage from better interactions. I am familiar with this work and it stresses the increasing importance of interactions as a source of value. It states that “during the next decade, companies that make these activities—and the employees most involved in them—more productive will not only raise the top and bottom lines but also build talent-based competitive advantages that rivals will find hard to match.” It goes on to say that the “best way for executives to begin is to understand the nature of what economists call tacit interactions—the searching, coordinating, and monitoring activities required to exchange goods, services, and information.” The understanding of tacit interactions involves the social side of transactions and it is exactly where enterprise 2.0 or social software is targeted. With the increased presence of interactions within business process, there should be more fertile ground for developing enterprise 2.0 business cases.
In summary, use traditional value oriented ROI methods that focus on improvements to business processes. Start with a business challenge and not software features. This will help ensure that the implementation is aligned with business processes. The balanced scorecard can help develop more robust measures. Use the enterprise 2.0 tools, themselves, to help collect the data. Focus on making the increased interactions within key business process more effective as these interactions are the sweet spot for enterprise 2.0.
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