Why We Struggle With Social Software ROI

money_bag_with_dollar_signOne of the prominent themes in any discussion of social software in the enterprise is Return on Investment (ROI). I opined in a previous post that all too often ROI is a hurdle put in place by opponents of a project to prevent it from happening or succeeding. I also said that organizations that have collaboration hardwired into their culture understand and accept the value of social software without a demonstration of ROI. Conversely, even a reasonable, positive ROI projection isn’t likely to get a proposed social software project approved in an organization that doesn’t “get” collaboration. I stand by those statements and have another observation to add:

The primary reason organizations are struggling with ROI in social software is because they have little or no idea what they want to accomplish by using it. There’s no link to business strategy and tactics.

To calculate ROI, one must define specific, measurable metrics, for which annual financial benefits can be projected out over 3-5 years. The rub is in developing the metrics. Defining appropriate metrics requires knowing what the organization wants to accomplish by making an investment. We all know this. Yet too many seem to forget this basic principle of ROI when contemplating an initial social software project. They get caught up in the hype of the newest fad and forget that technology must be deployed in support of a well-defined strategic goal or objective. They focus on the “soft” benefits of social software use that are widely communicated today instead of on how using social software in support of a specific business strategy or tactic can lead to revenue increases and cost reductions in the business.

Before you and your organization get too enamored with the shiny new toys presented by social software, or get caught up in the hype cycle, take a step back and ask questions like:

  • What specific strategic imperative(s) could be enabled by social software?
  • Where could social software help us increase revenue and/or reduce operating costs?
  • Why are some of our employees using social software despite our reservations about it?
  • Who might we be able to create new and valuable business relationships with by using social software?
  • What differentiation for our company and it’s offering(s) could be built using social software?
  • How could social software be used to increase trust inside and outside of our organization?

The answers provided by asking these kinds of questions will provide the purpose behind your social software project and investment. Knowing the purpose will make it possible to define metrics that can be quantified in dollars (or whatever currency your organization operates in) and demonstrate potential ROI.

Are you having trouble defining questions that reveal your organization’s purpose for investing in social software? Please contact me so we can discuss ways that I can help.

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2 responses to “Why We Struggle With Social Software ROI

  1. Yes please. I will contact you so you can help. Dell is all over Social Media and having some hits and misses. But the economic downturn is looking to detach several of us from the mothership because our projects are not critical to the bottom line, not revenue generating, and the evil ROI.

    Nice post, I’d like to brainstorm it with you…

  2. @JMacofEarth: Thanks! I’m aware of some of Dell’s social software projects as they have gotten some attention in the IT press and in social spaces themselves. I’d love to speak with you sometime next week. I’ll e-mail you my contact information.

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