Tag Archives: Enterprise 2.0

Enterprise 2.0 ROI: A Sticky Discussion

10 Sep

Enterprise 2.0 returns are hard to evaluate

Implementing an Enterprise 2.0 strategy has many benefits. Fostered collaboration, increased productivity, and improved brand image are examples of positive returns Enterprise 2.0 tools provide to businesses that deploy them.

However because these assets are highly intangible it is hard to actually measure their impact on financial outcomes. It is even harder to know which one is truly responsible for the increase in revenues or profits. Is it the organizational improvement? The smoother exchange of information? Or a combination of both of them?

The long cause-and-effects chains that comes with IT implementation tends to blur this relationship even more. Let’s say that a new Web 2.0 tool enables employees to better share knowledge within the company, this knowledge could help employees better address their customers requests which may lead to an increase in customers loyalty and therefore an increase in sales. With another fixed asset, such as a new machine tool, the cause-and-effect chain is much shorter. A new machine tool leads to an increase in production capacity and to an increase in sales, which is easier to measure.

How do we measure ROI of an Enterprise 2.0 strategy then?

Increasing expenditure on technological resources is risky if you don’t know the financial benefits you can derive from it. Being able to measure a return on investment is therefore critical to make decision about wether or not to implement a new IT tool.

First of all you need to define your different variables, i.e. your expected returns (R) and your initial investment (I).

Investments: Using social media or any other Web 2.0 tools is not free. It requires people, technology and time. These resources can be defined in terms of monetary costs (e.g. cost of a new software, cost of  maintenance of the software), and in terms of time value (e.g. IT implementation, staff training and staff learning how to use the technology).

Returns: To measure your returns, you must first express your goals as a numeric value. They can be expressed as a reduction in internal email exchange (%), an increase in customers communication (number of comments, number of likes…), a decrease in search times for information (minutes)…

However the achievement of these goals only express a non-financial impact. Non-financial impacts such as word-of-mouth, comments, fans and followers, clicks-through or retweets are critical but doesn’t translate in ROI yet. A proof must be established that these impacts are actually translating into increased sales and profits.

The data collected must therefore be interpreted and  correlated with your financial performance. Questions such as “Does my increase in likes correlates with my increase in sales of the product advertised?” must be answered. This can be done through the use of tools for measuring web traffic such as Hootsuite or Mycommetrics that help you keep track of your customers’ clicks and see if they go to the ecommerce section of your website.

One thing to remember: the key in measuring ROI is to find trends (e.g. increase in sales of product X) and discover where they come from (e.g. we distributed coupons in conjunction with a twitter campaign. We can calculate how many coupons were used to determine the effectiveness of the campaign).

Socialnomics’ following video showcases companies that have thrown themselves into social media and gives examples of social media ROI on campaigns:

This video also shows that the Whopper sacrifice campaign (if you remember one of my previous post) generated $400,000 of media value against $50,000 investment. This clearly shows the limitation of ROI measurement since it doesn’t take into account the damage on the brand image. What do you think of this paradox? I’d like to hear your thoughts about it.

Building Enterprise 2.0: Benefits and Risks

20 Aug

In my last post I talked about how web 2.0 tools could help ME be more efficient and productive. What about companies? Businesses are always driven by the need to save time, cut costs, build a good brand image, communicate effectively internally but also with their customers or their other branches throughout the world and so on… Integrating Web 2.0 into the office environment could help them achieve these objectives and this is called Enterprise 2.0.

What benefits can companies reap from this technology and what risks will they have to handle if they want to protect the firm and its assets?

The benefits of enterprise 2.0

  • Fostering collaboration: Web 2.0 tools can help create a bridge between different large groups of people making it easier for them to communicate and therefore collaborate. This connection helps disseminate information among employees and could lead to increased knowledge sharing. Another positive aspect of a better collaboration is that it helps employees build teamwork skills allowing each of them to work together and prevent duplication of already produced output.
  • Increasing productivity:  IDC Research found that “…knowledge workers spend 15-30% of their time seeking specific information and these searches are successful less than 50% of the time.” Through quick and easy access to resources and information, employees can save time, cut costs of fruitless searches and make better informed decision rapidly which is really important in today’s more and more knowledge-based work environment. 
  • Improving brand image: Social media are key to build your reputation and strong relationships with your customers. Interacting with your customers through social media helps them get a feel for what your business is and for who the people hiding behind the keyboard are which lead the customers to trust your company and even sometimes turn them into ambassadors of your brand that share your latest updates and retweet whatever news your announcing.

Uniqlo, a japanese apparel retailer, understood these benefits really well through the implementation of a network of blogs on a Movable Type platform to gather information about customers feedback from over 700 stores around the world. Uniqlo managed to process problems raised by their customers in real time by making information available to its employees all over the world immediately, allowing them to comment, find a solution and share it with the entire company only by using their mobile phones.

Toyota uses social media to actually involve the customers in their product development process. By organizing a vote to name the new Prius, Toyota customers or followers have the feeling that their opinion is valued and that the company care about their real needs and desires.

The risks of enterprise 2.0

  • Security: One of the greatest risks of implementing enterprise 2.0 is that confidential information could leak and spread to thousands of people within an hour, making it hard to delete it and easy for competitors to retrieve.
  •  Loss of control: Because of enterprise 2.0’s unstructured way of communication, managers sense that they are loosing control of the flow of information within their company and in the outside world. They can’t possibly stand behind each employees, not to talk about customers, to see whether they are sharing negative or misleading comments that may harm the firm reputation.
  • Reputation: A misuse of social media through inappropriate campaign or lack of responsiveness to customers interaction could hamper your customers trust and affection towards your brand.

The latter risk can be illustrated by Burger King Facebook campaign “The Whopper sacrifice”. This campaign encouraged Facebook users to unfriend 10 people to earn a free hamburger, with a notification sent to the sacrificed friends to let them know your allegiance to Burger King. Here comes a problem of value that the brand is willing to share. As appealing as a free burger sounds would you turn your back to friendship? Only 23 000 hungry and “amoral” Facebookers participated in the campaign that was disabled by Facebook after 10 days claiming that users privacy was violated through the sending of a notification to sacrificed friends.

To get the most out of enterprise 2.0 and prevent the previous risks from happening, companies must create an implementing strategy  that consists of 4 steps: Understand the business drivers of the implementation, set a framework with practical policies, establish initiatives and seed pilot projects, iterate and refine to reach an ongoing culture of enterprise 2.0.

If you want to know more about Enterprise 2.0 benefits and risks here are some other posts that I found interesting:

Enterprise 2.0 – a double edged sword

Enterprise 2.0 – Doing it right and wrong

Web 2.0 Applications

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