More than a mathematical question: calculating the ROI of Enterprise 2.0

While previous posts mentioned several successful examples in Enterprise 2.0, people might wonder if these companies gain enough revenues to cover the cost of using Web 2.0 tools in their business. Therefore, this post is going to discuss how to measure the Return on Investment (ROI) of Enterprise 2.0.

Some experts claim that effective collaboration, knowledge, and information coming from Enterprise 2.0 are intangible assets and it is difficult to show the ROI of these assets because“intangible assets such as knowledge and technology seldom have a direct impact on financial outcomes such as increased revenues, lowered costs, and higher profits” ,according to Bob Kaplan and David Norton, the authors of a book called Strategy Maps: Converting Intangible Assets into Tangible Outcomes.

However, some believe that it is possible to calculate the ROI of Enterprise 2.0 by using a few metrics. Carolyn MacNeill mentioned that the return of the ROI of Web 2.0 collaboration could be showed by “number of contributors to the community”, “number of comments”, “number of ratings”, “number of documents circulated/shared”, “number of days a new employee is up and running”, “number of days a new project is completed” and “number of days/minutes a customer support issue is identified and solved”. Furthermore, Cameran Hetrick emphasized that companies could analyze the benefit of Enterprise 2.0 via several ROI measurements such as employee engagement, turnover and sales.  She pointed out that,

Employee Engagement: Most companies already conduct annual surveys to gauge the level of workforce engagement. By measuring and aggregating engagement ratings, companies have one rating per employee.

Turnover: Using companies’ employment records is a good way to identify the employees that have turned over since companies launched their network.

Sales: To focus on the results of the sales team can measure the impact of Enterprise 2.0 on sales. However, companies will need to acquire the same data and make sure that their account for other factors that might impact sales.

It is clear that calculating the ROI of Enterprise 2.0 would be the best way to persuade organisations that using Web 2.0 is beneficial to their business once the ROI has been measure by advanced analytics.

References

Enterprise web 2.0

Determining the ROI of Enterprise 2.0

Metrics for measuring enterprise 2.0 adoption and ROI

How I Address the Question of Enterprise 2.0 ROI

The ROI of Enterprise 2.0: Four Ways Wachovia Justified Wikis, Blogs and Other Social Networks

Maslow’s Hierarchy of Enterprise 2.0 ROI

Enterprise 2.0 ROI

The ROI of Enterprise 2.0 and the Value of Intangible Assets

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6 responses to “More than a mathematical question: calculating the ROI of Enterprise 2.0

  1. Interesting post Chien. I think ROI of E2 technologies is very hard to measure – in dollar terms at least. A lot of these metrics have cropped up in the past few years, but I think that to measure the impact of E2 on the bottom line you have to examine the flow-on effects over a long period of time.
    I examined a case study from Accenture in my latest blog post. They have a really comprehensive suite of 2.0 applications that they developed for their staff, and the way they measure ROI is quite interesting as well.
    Check it out:
    http://johncharlesporter.wordpress.com/2011/09/15/roi-a-sticky-subject/

  2. As John, Said even though social media can hardly be measured in dollar, however, it can easy be mesure in term of Return of Engament, collaboration, communication and so forth.

  3. It is difficult to put a dollar value for your social media ROI and that is why early adaptations of social media ROI where things like: return on engagement, return on participation etc. There are tools avaliable such as Google Analytics to capture statistics such as hits and traffic specifically during the period you went live with your E20 implementation to see if there is any increase in sales. It really depends on how you like at it. Have a look at my blog: angjer.wordpress.com

    Thanks for sharing! 🙂

  4. I remember seeing that graphic while doing some research into this topic and it’s an excellent example of how ROI can be measured. It’s not impossible, and I think it will be easier if the goals / benefits the organisation hopes to achieve is defined clearly before the Enterprise 2.0 tools are implemented.

    For the three points you listed, they were the ones Cameran Hetrick wrote as a ‘HR’ perspective right, do you think there would be many more to add to the list if it was for the ‘whole of organisation’ perspective?

  5. I agree that it is difficult in finding an exact way to measure the ROI using Enterprise 2.0 tools. However, there are a lot of companies that can be good story telling examples that show how it could be implemented. An example would be in my blog. http://akklam2011.wordpress.com/
    I still believe that if a company sets out defined goals stating why they want to use Enterprise 2.0 tools, such as increasing customer awareness towards a new product, than those companies can calculate accurately the ROI Enterprise 2.0 tools have impacted towards their company.

  6. clear points, deep view and relevant reference, it is a great post

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