Posted by Rob Koplowitz on August 22, 2007
by Rob Koplowitz.
The question of measuring ROI of social computing is hot because it's so much a part of enterprise software acquisition. As information and knowledge management professionals move to get ahead of this emerging technology curve, they find a very consistent pattern:
- People are using this stuff! Blogs and wikis in particular are popping up everywhere. Why not? They are easy to access, often free, and they are dead simple to use. It's one of those permission / forgiveness things. We've all done it.
- If people are using these things that IT doesn't know about, there is no way of ensuring security, privacy, availability, governance, compliance, risk mitigation and all of those good things that keep the organization running and employees out of trouble (maybe even jail!).
- Most really don't want to shut it down because in many instances these are more efficient solutions than those provided by the organization. These tools are often just easier and better for generating and publishing content.
- The natural inclination in this situation would be to bring in the tradtional software vendors and see if they can support these new technology directions. Not surprisingly, a number of big vendors are ready and willing to help, including BEA, IBM/Lotus, Microsoft, Oracle and SAP.
- Sounds great. Lots of reasons to go with one of the big vendors (see bullet 2).
- How much will it cost? How much will it give back? In other words, can the acquisition be justified with a strong return on investment analysis?
OK, here comes the rub. It is very difficult to measure the ROI of more efficient communication and collaboration. Think about how email or IM came into your organization. Chances are it was being used by individuals and departments in a largely unsanctioned manner and IT was asked to reign in the chaos and establish a real enterprise strategy. No big ROI analysis because the technology had already proven itself. It did not need ROI assesment so much as sanctioning.
Now, we don't want to go down the same path with social computing, but there are lessons to be learned and opportunities that are new in evaluating this technology. The question does not need to be, if I invest a million dollars, will I get back a more than a million dollars in value? In the case of social computing that could mean measuring an awful lot very small actions across an awful lot of users. It might cost more than a million dollars to do the analysis! Instead, the process of a big bang ROI-led implementation can be turned on its head.
What allows the acquisition process to be dramatically different is the emergence of enterprise savvy vendors offering these new technologies in a software-as-a-service (SaaS) model. The process of evaluation now becomes very different. It starts with a series of questions:
- Is it secure?
- Is it reliable?
- Will it be available to our users?
- Does it integrate with our other technology, like directory, authentication, etc.?
- Can I ensure that my users will adhere to basic use policies?
- Can I get my data out of the system if I decide to go in a different direction?
All of these can be true of a service based offering. If you evaluate a vendor and the answers to these questions are yes, then you can feel confident rolling out the solution. Now, here's the good part. You aren't justifying a million dollar investment, you are justifying a per month per user investment that might look more like $25 per user. If you pilot it across an initial set of 50 users to address a very specific business requirement for six months, your total investment is $7,500. If it's not working out, pull the plug or change vendors. Hence, the concept of disposable technology. However, if it is working out, you can replicate the success in a controlled manner across more users and more business processes.
Now, none of this means that a thorough evaluation of traditional vendors should not be part of your strategy. It absolutley should, and to that end, look for my upcoming research on the offerings from the big infrastructure players. However, the new breed of pure play vendors are well worth consideration. In fact, using their technology could provide the best technology proving ground you could ever have, particularly in an area where ROI is going to be dificult to prove. Will they be part of your long-term strategy? Could well be and at the very least they may help you keep the traditional vendors on their toes, which is always a good thing.