Enterprise 2.0

Return on investment

Whitepaper

A. Hoitingh BsC

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

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

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.

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.

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.

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.

Outside facing (B2B/B2C)

Reputation management

Enhances recruitment of high potentials

Sharing of know how

Fostering relationships

More effective marketing

Lower cost of doing business

Higher revenues

Inside facing

Fostering creativity

Preventing the “Reinventing the wheel syn-

drome”

Time to market

More innovative products and services

Improve internal and external services

Projects easier staffed and with better people

(find people with the same interests or passion)

Better access to knowledge

All benefits combined

Innovation

Fostering creativity

Preventing the “Reinventing the wheel syn-

drome”

Time to market

More innovative products and services

Improve internal and external services

Engagement

Online reputation/marketing/product de-

velopment;

Sharing of know-how;

Fostering relationships;

Effective marketing;

Fostering internal employability.

Engagement

Online reputation/marketing/product de-

velopment;

Enhancing recruitement;

Sharing of know-how;

Fostering relationships;

Effective marketing;

Fostering internal employability.

Increase productivity

Finding information

Product development;

More efficiency/productivity by less time

needed to find information;

Reducing the information overload;

Better access to information and

knowledge;

Projects easier staffed and with better peo-

ple (find people with the same interests or

passion).

Less expenses

Less operational costs;

Improvements in value chain;

Less workspace/office space;

Less travel expenses;

Less customer support costs;

Less communication expenses (VoIP, IM vs.

phone and e-mail).

Improved revenue

Less operational costs;

Improvements in value chain;

Improved revenue

Less operational costs;

Improvements in value chain;

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?

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.

Sharing files, Presence, IM and virtual meetings

Collaboratively write, edit, and exchange documents.

Ok, this is traditional stuff.

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.

SonyPedia

Letting the employees of Sony share their

knowledge and establish a single body of

knowledge, driving Sony toward a more

unified company.

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.

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.

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.

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

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……

Meer weten?

Wij vertellen het u graag!

Sogeti Nederland B.V.

Lange Dreef 17Postbus 76

4130 EB Vianen

Tel +31 (0)88 660 66 00

Fax +31 (0)88 660 67 00

microsoft@sogeti.nl

www.sogeti.nl

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.

In my daily work I’m used to moderate sessions with

clients, do inspirational sessions and work with the

latest things Microsoft and IBM can offer.

About Sogeti

Sogeti is a IT systemintegrator, specialized in the de-

sign, build, implementation and management of ICT-

solutions.

Sogeti is marketleader in the areas of

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