What’s the ROI of collaboration?

Though targeted on the adoption of social software, the discussions at last week’s Enterprise 2.0 FORUM have always emerged to the question about the ROI of the Enterprise 2.0 strategy very quickly. Especially the talk of Dr. Frank Schönefeld turned the discussion towards the economic measures and dimensions of Enterprise 2.0 (he promised to me that an English version of his talk will soon be available on Slideshare!).

In times of budget limitations and reductions this is quite sensible – but no clear and satisfying answer can yet be given for this question. Therefore the already defined punchline “Improving Collaborative Performance” of the planned Enterprise 2.0 SUMMIT in October is more than relevant for these times of economic tension and I want to share my thoughts about the concept of this planned event with you on this weblog as well as to encourage you to give me some feedback.

So what’s the Enterprise 2.0 SUMMIT with the claim “Improving Collaborative Performance” about? The core discussion of this year’s E2.0 SUMMIT addresses the conceptional and organizational dimensions of gaining collaborative advantages and efficiency by adding social and collaborative action as well as intelligence to the company. Cutting it down – the questions to be discussed are the following:

  1. How to conceptionalize, realize and gain collaborative performance?
    => discussing the value chain of an collaborative enterprise, the economics of sharing, processes of open innovation
  2. What are the main drivers for collaborative advantage and efficiency?
    => discussing communications, processes, infrastructure as well as (self-)management
  3. What are the key values of a collaborative culture?
    => discussing the key characteristics as open, transparent and decentralized as well as others – and how to realize the cultural change in a multinational environment as we have in a lot of European companies
  4. How to introduce and adopt social and collaborative approaches within the company?
    => discussing the steps of adoption especially in the context of multinational companies

As you might realize – I am very much focussing on the extracting the economic benefits of Enterprise 2.0. I have therefore invited Kjetil Kristensen from Norway who did very interesting academic work on this topic. Furthermore Dr. Frank Schönefeld of T-Systems MMS is also working on a conceptionalization of the business values of Enterprise 2.0. Who else is focussing on this topic – please contact us!

Besides the visionary talks I am also looking for straight-forward cases as the high-procentage of practice talks is one of Kongress Media’s own key value propositions – in comparison to other conferences. So I appreciate any proposal of anyone or any matter for this visionary event. We hope we will support and trigger innovative ideas before and after the event – it’s our goal to help bond the European Enterprise 2.0 community more closely together.


  • Martin Koser

    It’s always a good idea to systematize the different use cases and “arenas for social software in the enterprise” when thinking about RoIs.

    This eases the problematic situation you encounter when you try to convince people about the benefits of Enterprise 2.0. And while I’ve always been rather critical of people asking for numbers first, they’ve got a point (assuming that it isn’t just a polite way of saying ‘No, thanks’).

    I will put together some of my thoughts in a post in itself, but let me add two cents all the while:

    – calculating the RoI of Enterprise 2.0 is considerably easier in areas of known and orderly processes
    – benefits might be much higher in corporate areas where processes are neither
    – and more

  • Martin Koser

    It’s always a good idea to systematize the different use cases and “arenas for social software in the enterprise” when thinking about RoIs.

    This eases the problematic situation you encounter when you try to convince people about the benefits of Enterprise 2.0. And while I’ve always been rather critical of people asking for numbers first, they’ve got a point (assuming that it isn’t just a polite way of saying ‘No, thanks’).

    I will put together some of my thoughts in a post in itself, but let me add two cents all the while:

    – calculating the RoI of Enterprise 2.0 is considerably easier in areas of known and orderly processes
    – benefits might be much higher in corporate areas where processes are neither
    – and more

  • Jürgen Mirbach

    Excellent Post Martin,
    coincidentially I’m working on my presentation for the Intranet Management Semianars today where Intranet ROI will be covered as well. My 5 cent:
    I absolutely agree with you. Negative Business Cases are bad arguments – It doesn’t even work with kids to argue like “do this else no TV”. Maybe Management can be convinced to spend some money to develop a case and then we can say: Look, what happened – is that something? To find a 100%-bullet-proof case that show success within a reasonable short time is as well a challenge as a risk.
    I guess, we have to take a close look at processes and the resources needed to produce deliverables. That gives us numbers with measures of time, quality, Euro or some other quantities. Reads like bean-counting. It is bean-counting. How can this be shortened up?
    Recently, I re-read “The goal- A Process of Ongoing Improvement” by Eliyahu M. Goldratt, Jeff Cox, David Whitford – a novel on process management. A plant manager needs to boost productivity else the plant will be closed. They focus on bottlenecks, inventories and throughputs. Quite a bit theory of production. Now, I wonder if these concepts can help us to express utility of collaboration? Does it help us to manage bottlenecks? Where do we get more performance?
    Is that complicated, too easy, too far away?
    BTW, “The goal” is a really good read. Not a new book, though.
    Cheers,Jürgen

    This comment was originally posted on frogpond

  • Bjoern

    Hi Martin –

    nice introduction to our “problem” … yesterday I found the video of a recent talk of Umair Haque (via BWL ZWEI NULL: http://www.bwlzweinull.de/index.php/2009/02/16/umair-haque-krise/ – the post is German, but the video not!) that led me to the thought that we have to take in account that the economic value system has changed.

    Regards. Bjoern

    This comment was originally posted on frogpond

  • Martin Koser

    @Jürgen hmm, one of the adoption paths I like most is to start with a pilot project to proove some of the benefits, and to learn at the same time. One may say that it’s too dangerous to start at a “bottleneck”, while we sense that this is a good place to start. When doing something that counts, demonstrating benefits mustn’t turn out ot bean counting, some value may well be self-evident (like when adoption rates are better than expected, just because the solution is filling this pressing need that wasn’t catered for yet), others can be evaluated in a more qualitative style (like e.g. flat-out asking employees if they are satisified with this approach to the bottleneck).

    After all, some decision makers will be convinced by those successful pilot projects, others may yet need to see more general acceptance in their industry. I guess that when it’s becoming fashionable, we’ll see that the questions for ROIs and clear-cut use cases suddenly become much less important. This may happen quite soon, i.e. when the big consulting companies enter the field (I want to pen down some notes on the latest McKinsey Quarterly article on Web 2.0 in the Enterprise) or when major technology suppliers are bringing shiny Enterprise 2.0 goods to the table.

    @Björn I’ve seen this video too, and I definitely think that social software in the enterprise has a big place in organizational renewal.

    On my other blog I am dealing with this stuff since long, see e.g. http://is.gd/kgTF and some thoughts on what we need to become an “innovation powerhouse”:

    – adaptivity (”play, experiment, and create”)
    – connectivity (”space”) are essential ingredients for a (business model) innovation powerhouse

    This comment was originally posted on frogpond

  • Frank Wolf

    Hi Martin,
    Referring to your critic of a Risk of Not Investing approach I would like to turn you’re attention to the paper “The Risk of Not Investing in a Recession” from Harvard Professor Pankaj Ghemawat. He distinguishes two very different ways of thinking about investment and risk:
    1. the financial risk of investing and
    2. the competitive risk of not investing.
    “The financial risk of investing is the failure to achieve satisfactory financial returns from an investment. And the competitive risk of not investing is the failure to retain a satisfactory competitive position for lack of investment.”
    The challenge and art of strategic management is to understand and balance both types of risks. The rationale behind a RONI approach is therefore that “wise” business decision makers will not just rely on the financial (ROI) perspective but will call for a complete picture. If we try to convince people about the benefits of Enterprise 2.0 we should be able to provide the whole picture at the boardroom. This is especially true as neither the ROI (“We’ve not even scratched the surface…”) nor ideas for a RONI appear currently in a great position to do the job alone. This job is especially challenging at the current economic situation and its worth to look at Ghemawat reflections on the impact of an economic downturn to the described balance between financial and competitive risk:
    “Specifically, at the bottom of the business cycle, companies seem to overemphasize the financial risk of investing at the expense of the competitive risk of not investing. Once-in-a-cycle errors of this sort can create a lasting competitive disadvantage, which is reason enough to write (and read) an article on the risk of not investing while the economy is still weak.”

    Best Regards, Frank

    This comment was originally posted on frogpond

  • Martin Koser

    Hello Frank,

    thank you for your comment – but I think you missed my real points a little bit: Starting a discussion on various types of metrics for getting a grip on “improved collaborative performance” – and I hold that some of them are flawed but still useful when discussing things or when talking to certain people (adapt your language to the people you’re talking to, that is).

    It wasn’t my intention to rule out the RoNI idea for once and ever, it’s probably a good idea to also add this line of reasoning to the “toolset of the Enterprise 2.0 consultant”. And be assured that throughout my work in the E 2.0 field I am constantly arguing that Enterprise 2.0 is a big opportunity for gaining competitive advantage (overall, as in many functional areas and on many accounts). I’ve always said that this is not an IT topic but an area where having a solid understanding of strategic management is helpful (see e.g. http://is.gd/koyz), combined with a background in organizational management and more …

    See, I am interested in all possible ways to achieve acceptance in the boardroom. If that can be done by focussing on the Returns on Investment, fine, if it’s possible by pointing out the competitive risks of not doing so, equally fine.

    But while I find Pankaj Ghemawat general diagnosis fitting and am utterly sympathetic to his ideas on a macroeconomic scale, I am not sure if this has proven to be a good model for understanding (and influencing) C-level type of people, especially in times of crisis. For one, I am feeling an undertone of “marketing with fear” in those discussions that seem to focus on the (dreadful) things that are going on, the things that will happen in no time, the dangers that arise when making this “once-in-a-cycle error” etc. And I know that C-level type of people don’t want to be put under pressure. Thus, showing and demonstrating benefits works better than talking of the bad things that might happen … yes, people are strange.

    Taking the chances that arise in downturns (you get room and time to re-think and rewire the business and through this you can ideally lay the foundation for future growth and well-being …) isn’t easy. Doing “something new” when everybody in your industry is busy cost-cutting and downsizing needs visonary leadership and strong implementation capabilities. It’s so easy to say that we can adopt the learnings more cheaply later on, being a “fast adopter” is smart. Add to this an uncertainty as to which systems and systems integrator to choose and you see that the (well-meant) idea of arguing with an RoNI will have a hard time.

    So I am remaining hesitant to argue with the RoNI (or the economic cycle as a whole) when arguing for Enterprise 2.0.

    Probably I am naive, but I hold that seeing the benefits of improved collaboration shouldn’t be a question of crisis or boom, but should be clear just because of the plain necessity for connected knowledge-workers and their work processes …

    Kind regards,
    Martin _ frogpond

    ps. dropping out for the carnival week-end, see you all on the other side

    This comment was originally posted on frogpond

  • Anil Prajapati

    Interesting discussion gentleman, I have been reading a lot about ROI on Collaboration software and I have been of the opinion that presenting numerical values for the Return is quite difficult and the return can be valued in terms of perceived value.

    This comment was originally posted on frogpond