Enterprise 2.0
Return on investment


     Whitepaper
    A. Hoitingh BsC
G
                                                                            oogle’s market capitalization, what
        ...
W
             hat   defines collaboration?

             There are many different ways to look at
             collaborat...
L
      et’s start at the beginning

      what is return on investment? Wikipedia (our main source of quotations these da...
B
         enefits of social collaboration

         Let us look at some other benefits which are more related to the use ...
All benefits combined


Innovation                                         Engagement

   Fostering creativity           ...
C
            an these benefits be combined?

            Or, in other words, can I use social collaboration to enhance my...
SonyPedia                                             Sharing files, Presence, IM and virtual meetings

Letting the employ...
F
       orrester

       In a study done by Forrester in 2009 , the research company focused on the business to
      com...
S
       ome other examples

        Let us look at another company. This time round, it’s an IT
        integrator. Altho...
S
        ocial Computing at Accenture (Newsgator study)

        Accenture is a global management consulting, technology ...
Oh, and yes, about the Google quote; this just
                                                                 goes to sh...
A         lbert Hoitingh (BsC)



                                                            I work for Sogeti Netherland...
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Enterprise 2.0 return on investment whitepaper

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Everyone is talking about social collaboration, but is it possible to calculate a return on investment?

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Enterprise 2.0 return on investment whitepaper

  1. 1. Enterprise 2.0 Return on investment Whitepaper A. Hoitingh BsC
  2. 2. G oogle’s market capitalization, what investors think it’s worth, is $157 billi- on. Google’s fixed assets (cash, se- curities, receivables, plant, property, and equipment) are carried on the balance sheet at $20 billion. So where’s the missing $137 billion? Intangibles such as reputation, know- how, and customer relationships. Weblog quote R eturn on investment and Sogeti TeamPark Using the premise “a changing society, customer and employee”, Sogeti’s TeamPark provides five reasons for adapting social collaboration.  The communications mismatch;  The anyplace, anytime myth;  Limitations to classic business process improvement;  More effective use of hidden talent;  A transition to sustainability. Most organizations need additional motivation when looking into collaborative solutions and are looking towards ways of quantifying social collaboration. The term Return of Investment (ROI) pops up many a time when discussing collaborative scenarios with CIO’s and CFO’s. Do we have a real understanding of ROI when talking about (social) collaboration within the enterprise and can aspects like productivity or effectiveness be linked to –basically- money? This document goes into aspects of collaboration, social computing and the perceived benefits. It includes the results of studies by Forrester and McKinsey & Company on the subject and the case study of the Sony Corporation. “ Social computing is often very hard to quantify as a business benefit” Kevin Dana Director Social computing & collaboration Accenture
  3. 3. W hat defines collaboration? There are many different ways to look at collaboration. According to Wikipedia the term “Collaboration” can be defined as follows: Collaboration is a recursive process where two or more people or organizations work together in an intersection of common goals — for example, an intellectual endeavor[1] [2] that is creative in nature[3]—by sharing knowledge, learning and building consensus. […] We tend to look at collaboration within organizations from the internal perspective of anytime/anyplace. Allowing our employees to be more effective and to work when and how they see fit (the new world of work). Collaborative solutions focus around unified communications (instant messaging, web conferencing and VoIP for example), working in teams, sharing documentation and knowledge, working with (self-service) portals and working with social collaboration tools. Looking beyond the internal processes of the organization is collaboration with customers, partners, suppliers and other entities in the outside world. This is called business to communities (B2C) and business to business (B2B) collaboration. Most of the opportunities for B2C or B2B are in communications and working together with partners and customers. For example, B2C/B2B social collaboration is mostly used in the areas of:  Innovation, product development;  Training and education;  Marketing;  Sales;  Support. Organizations are beginning to take advantage of social collaboration aspects like communities, blogging and wikis to connect with external parties like partners, customers and local government. A survey done by McKinsey & Company showed that companies that benefit most from B2C/B2B collaboration are:  Networked organizations;  Business to business organizations;  Big companies (> $1 billion revenue);  International companies;  Decentralized organizations. Why are companies looking at collaborative scenarios and can we answer the “when will I get my money back” question? Time to look at return on investment.
  4. 4. L et’s start at the beginning what is return on investment? Wikipedia (our main source of quotations these days) has the description shown above (shortened by the author). So clearly ROI is a ratio – costs versus expected income. But in the case of collaborative environments it may not always be measurable in money. According to a survey, already quoted earlier, by McKinsey & Company (September 2009) 69% of top executives, when asked about implementing social collaboration or web 2.0, indicate to have shown these quantifiable and measurable results. Many of these results are related to the traditional benefits to collaboration, are widely accepted and can be measured. These benefits include;  More efficiency/productivity by less time needed to find information;  Reducing the information overload;  Less travel expenses;  Less office space (and expenses);  Less communication expenses (VoIP, IM vs. phone and e-mail). From: Social Collaboration @ IBM 27/10/2009 IBM & Microsoft In research done by IBM in 2009, Big Blue established firm return on investment for implementing collaborative tooling worldwide. This return on investment was mostly based on the traditional benefits, most notably the reduction in travel expenses. Microsoft’s approach uses the Impact 2.0 methodology for the new world of work. In the “business case” section of this methodology, the case for using collaborative platforms is made by using three aspects: People, Place and Technology. Benefits can be found in the reduction of office space and travel time (Place), the total cost of ownership of the workplace (Technology) and higher productivity (People). Again, these are “traditional” benefits and have been around for quite some time. They are directly related to any business case for e-collaboration or unified communications. So: sharing documents, finding information, direct communications, to name but a few. Some of these can, directly or indirectly, be determined by measuring key performance indicators. KPI's like the average time-to-market, reaction time, customer satisfaction, people leaving the company. KPI’s can ultimately be linked to money and the business case. However, the business case for social collaboration - Web 2.0 (or Enterprise 2.0) - the use of blogs, wiki’s - social networks – is a lot harder to estimate.
  5. 5. B enefits of social collaboration Let us look at some other benefits which are more related to the use of web 2.0 within the enterprise and in B2C/B2B scenarios, but are more difficult to quantify. Most of these benefits are related to the “soul” of the company and focus on: • Innovation; • Culture; • Communication; • Engagement; • Managing through change. By using internal social collaboration (like for example an internal Linked-in) a company will attract more talented and motivated people. The company will be able to show itself as an innovative place to work. It will be able to foster internal innovation and allow people to become more productive. Outside facing (B2B/B2C) Inside facing  Reputation management  Fostering creativity  Enhances recruitment of high potentials  Preventing the “Reinventing the wheel syn-  Sharing of know how drome”  Fostering relationships  Time to market  More effective marketing  More innovative products and services  Lower cost of doing business  Improve internal and external services  Higher revenues  Projects easier staffed and with better people (find people with the same interests or passion)  Better access to knowledge Social collaboration might also provide ways to change the ways we do business. A typical insurance company can leverage the power of social collaboration to be more effective instead of more efficient. Take the claims evaluation from storm damage. In most assurance companies these will be handled by people how are asked to do so day-in, day-out. Even if there is a lull in the number of claims to be handled, people are still available (fixed costs). After a big storm most insurance companies work overtime to handle all claims (additional costs). By introducing a social platform, let’s call it the Claims Marketplace; claims to be evaluated can be picked up by more people. Instead of having a lot of fixed costs because people need to be available all the time, the claims assessors can choose to pick up claims to be examined, rate them and give feedback. The fixed costs become variable and the staff has a more diverse workload. On the B2C/B2B side benefits can be more generic. For example: being able to “manage” the (positive) online reputation. But it also has quantifiable benefits, to name one: reducing the costs for call centers by implementing online communities. Social collaboration, in the end, has the following benefits.
  6. 6. All benefits combined Innovation Engagement  Fostering creativity  Online reputation/marketing/product de-  Preventing the “Reinventing the wheel syn- velopment; drome”  Enhancing recruitement;  Time to market  Sharing of know-how;  More innovative products and services  Fostering relationships;  Improve internal and external services  Effective marketing;  Engagement  Fostering internal employability.  Online reputation/marketing/product de- velopment;  Sharing of know-how;  Fostering relationships;  Effective marketing;  Fostering internal employability. Increase productivity Less expenses  Finding information  Less operational costs;  Product development;  Improvements in value chain;  More efficiency/productivity by less time  Less workspace/office space; needed to find information;  Less travel expenses;  Reducing the information overload;  Less customer support costs;  Better access to information and  Less communication expenses (VoIP, IM vs. knowledge; phone and e-mail).  Projects easier staffed and with better peo- ple (find people with the same interests or passion).  Improved revenue Improved revenue  Less operational costs;  Improvements in value chain;  Less operational costs;  Improvements in value chain;
  7. 7. C an these benefits be combined? Or, in other words, can I use social collaboration to enhance my online reputation and decrease my operational costs as well? In the previous sections I’ve discussed the many benefits of collaboration. Now it is time to look at some examples. Supporting business processes by implementing (social) collaboration platforms and deriving its benefits differ. Organizations differ, their processes differ and of course there people differ. For example, the processes, objectives (business model) and people of DHL are very different from the ones at Sogeti NL. The same goes for ING Wholesale Banking and Sony. Internal collaboration scenario: Sony Corporation In order to increase productivity and lowering costs Sony implemented Microsoft’s SharePoint 2010 with FAST search in 2010. In the case study Sony presents the following main benefits and business case:  Better access to information;  Better access to in-house expertise  Quicker application development. Which are basically all traditional benefits (which, by the way, Sony does quantify). But it becomes more interesting with the fourth benefit Sony identified:  Increased Innovation and Sense of Community The main goal for Sony was to shorten the time for creating new and cool products and services. It wanted to unleash the (hidden) talent of its workforce and enable its people to find information and most importantly like-minded people easy and fast. In short: share information, find people, create your own network and communicate. What did Sony do?
  8. 8. SonyPedia Sharing files, Presence, IM and virtual meetings Letting the employees of Sony share their Collaboratively write, edit, and exchange documents. knowledge and establish a single body of Ok, this is traditional stuff. knowledge, driving Sony toward a more unified company. Finally, tighter integration between SharePoint Server 2010 and Microsoft Office Communications Server 2007 has made it simpler for colleagues to communicate who are telecommuting or located in other offices. Again, this is more traditional collaboration. MySite My Site pages and people search feature to identify people who have similar innovation interests or who work on similar projects. Employees can create a social network and profile, by which they share their work skills and (personal) interest with the rest of the company. Leveraging the potential of Sony’s human resources. A very distinctive reason for Sony to enable the MySite is to allow new employees to get a feel of the company and directly start building a social network. Also, because employees are able to advertise their expertise online, they may find new job opportunities within the company. Sony’s Return on Investment The direct cost savings of Sony’s endeavor are translated into saving time, higher productivity and the reduced need to hire outside consultants to do the work of Sony’s employees. These cost savings are credited to the new ability to find information and internal experts more easily and faster. Also, project managers can use people search to proactively look across the company and find an expert for a project in its earliest stages. Another way that the solution saves time is by reducing IT costs and achieving quicker time-to-market on new projects. So, in essence, Sony’s main goal for implement social collaboration was not just to reduce costs, but to improve their product/service development. They needed to shorten the time to market and to be more innovative using their own people.
  9. 9. F orrester In a study done by Forrester in 2009 , the research company focused on the business to community scenario of customer service communities. These communities are used by companies to lighten the burden on their call centers and to provide the customer more leeway in contacting the company. The basis of this outcome – key benefits  Reduction in agent-assisted interactions  Increase in first-contact resolution  Increase in agent productivity  Reduction in agent-assisted email  Increase in product ideation  Increase in relevant web site content  Reduced search engine optimization costs  Increase in customer retention and customer lifetime value The basis of this outcome – key costs The costs are divided into initial and recurring costs on people, process and technology. Added to this is an index on the risks accorded. Which results in….. Forrester used a fictions scenario to calculate the expected return on investment for implementing the customer online community. Ironically enough, some of these benefits are directly related to the more traditional benefits of collaboration: reducing e-mail traffic and time spend replying to e-mail and increasing the productivity of customer agents. On the other hand, the most important quantifier is to be found in customer retention. Social technology can help companies retain the customer by providing additional services.
  10. 10. S ome other examples Let us look at another company. This time round, it’s an IT integrator. Although it also provides (new) services to its customers –like Sony-, it does have a different business model and is not focused primarily on bringing new and innovative products on the market. The company does want to excel in its bids to customers and as a result acquire new customers or contracts. This is done by bringing people with different expertise together and start writing the winning bid. However, frequently the right people are not available or the time is insufficient to create a high quality bid. Social collaboration, for example using IBM Lotus Connections, brings people together. Employees worldwide can now participate in the bid process. Bid managers can “advertise” their need for specific expertise using the platform and can find this expertise within the social networks. One of the biggest car lease firms worldwide has a clear vision on the use of social collaboration, both internally and B2C/B2B. In this vision it outlines the many strategies it intends to use for social collaboration. • Launching an employee community; • Engaging in social recruitment; • Social software enabled car remarketing; • Launching fleet management communities; • Social software enabled car quotations; • Launching a driver community; • Mobile applications; • Launching a supplier community; • Conducting online reputation management. One of the first initiatives has been an internal social collaboration environment, to enable people to:  find people and expertise;  set up communities;  exchange ideas, opinions, knowledge and experiences using blogs;  share web-based resources using social bookmarking;  collaborate.
  11. 11. S ocial Computing at Accenture (Newsgator study) Accenture is a global management consulting, technology services and outsourcing company. It implemented Microsoft SharePoint 2007 in combination with Newsgator’s Social Sites technology to introduce knowledge sharing communities and social networks. For Accenture, the key challenge was to get key stakeholders aware of how social computing can solve business problems and be integrated into business processes. The business case for Accenture is based on the following metrics:  Finding people and identifying experts;  Finding information;  Reducing the need for travel;  Speed up the decision making process. In the end, Accenture did have to admit that “social computing is often very hard to quantify as a business benefit”. O ne last example Our last example involves one of many back-office processes of a large insurance company. One of these processes is replying to a question from the customer. In the normal day to day routine, getting all the information from this customer might take up to three days. Information was stored on multiple platforms and could not be easily found and retrieved. Employees did not have an up to date view of co-workers assigned to this client. Using a collaborative platform, including a central list of contact, information and document storage, and so on, the time needed to reply to the customer was reduced to a couple of minutes. Now, this is highly quantifiable. But also look at this from the customer’s point of view. He wants an answer straight away. Companies that still reply with “we will call you back in two days” will not stand a change in this changing economy.
  12. 12. Oh, and yes, about the Google quote; this just goes to show that a company’s value cannot be expressed purely in hard currency. Which is the same for return of investment…… S o…… Is there a case for return on investment? All of this information brings us, in the end, to this important question. The answer is simple: Yes there is! But to answer the CFO: can it be quantified and will I have a return on my investments in twelve months? This answer is not as simple: This depends! The question on how people work and work together, your corporate culture and communications is not something you express in figures such as ROI. In the end, the ROI depends on what you want to achieve. In enterprise 2.0 scenarios some ROI aspects can be quantified and even calculated; less travel expenses or reducing the need for offices, for example. IBM showed predicted revenue running into the millions of US Dollars, just by reducing the need for travel. Some B2C (or B2B) scenarios, like online customer communities will provide a return on investment, by reducing costs associated with call centers and introducing self-service. But most benefits will materialize over time. Being more innovative or becoming known as a company which is up to speed with current Web 2.0 trends cannot easily be translated into hard currency. It might even be fruitful to re-engineer current processes in order to achieve the desired return on investment. R eferences used  Smart Worker event: http://www.slideshare.net/arjanradder/smarter-work-event-27-oktober  http://www.microsoft.com/caseStudies/Case_Study_Detail.aspx?casestudyid=4000007074  “The ROI Of Online Customer Service Communities” | Forrester | June 30, 2009  http://www.newsgator.com/webinars/2010/accentureusecase.aspx?LeadSource=Archive
  13. 13. A lbert Hoitingh (BsC) I work for Sogeti Netherlands as a senior Information Worker consultant. I’m also proud to be the Sogeti SharePoint practice lead for social collaboration. I’ve studied information sciences at the The Haque University of applied sciences and worked as the lead architect and product manager for e- collaboration & communications at a large scale multinational firm. I’ve had the honor of presenting at the Microsoft SharePoint events in Seattle and Amsterdam. I’m a frequent speaker at the Sogeti SharePoint seminars. About Sogeti Sogeti weten?systemintegrator, specialized in the de- Meer is a IT In my daily work I’m used to moderate sessions with Wij vertellen het u graag! sign, build, implementation and management of ICT - Tel +31 (0)88 660 66 00 clients, do inspirational sessions and work with the solutions. Sogeti Nederland B.V. Fax +31 (0)88 660 67 00
 latest things Microsoft and IBM can offer. Sogeti Dreef 17
Postbus 76 the areas of Lange is marketleader in microsoft@sogeti.nl
 4130 EB Vianen
 www.sogeti.nl testing (TMap), architecture (DYA) and social collaboration (TeamPark). Sogeti has partnerships with Microsoft (Gold Partner) and IBM in order to deliver high-end solutions to our customers. We pride ourself for contribibuting to the strategic goals of our customers, by supplying them with power- full ICT solutions. Want to know more? Please get into contact. Sogeti Nederland B.V. Lange Dreef 17 P.O. Box 76 4130 EB Vianen Tel +31 (0)88 660 66 00 Fax +31 (0)88 660 67 00 DSE-Commercie@sogeti.nl www.sogeti.nl

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