Measuring the Value on Investment

More thoughts in the aftermath of the Gartner Symposium in Cannes and the Exeter Likeminds Event.

I had heard the term Value on Investment (VOI) sometime ago, but it never really held much ground in my thinking, Although i’m surprised as it is something that is complimentary to Social Software projects and Knowledge Management Projects.

For those of you who haven’t come across VOI before i’ll try and explain the difference between VOI and ROI (return on investment). Return on Investment is based on return, which is generated by tangible outcomes, such as increases in productivity, increased revenues, cost reductions or entering new markets. VOI however focused on intangible benefits, in particular those related to technology based initiatives and for the purpose of this post consider Social Media/Social Software as key areas to focus on.

Gartner describe VOI using 5 measurable elements or outcomes. Value building initiatives change organisation dynamics by encouraging: (Hint: spot how many can be facilitated by social media and social software)

• business process reinvention and innovation
• cultivation, management and leveraging of knowledge assets
• collaboration and increased capabilities to learn and develop communities
• individual and organisational competencies
• new kinds and levels of leadership

Don’t know about you but i’d tick all for social media and social software.

There is something you need to accept, however when measuring VOI. The more strategic the project the more value you will see in return.

When considering the current economic climate and situation, we should and must consider the VOI aspect as well as the ROI to achieve the level of organisational change that will future proof organisations for when we return to a growth scenario.

It also encourages greater alignment of IT and the Business, As the business needs to take the strategic advantage of the technology. IT alone offer no advantage to the business. To extract the value, the business would have to transform processes and practices, enhance knowledge sharing, establish communities of practice, develop competencies and provide tools for new leadership.

The strategic impact of social software will come over time with the cumulative effect of small projects impacting on the business and initiating change along the way.

My take on this really is that to succeed in the long term and to demonstrate the real value of social media and social software, it will take time, so be patient.  It will develop as each new project delivers results and value along the way.

This exact approach is how i realised the value. I started with twitter, then a blog, then started social bookmarking, then started sharing photos and so on. The cumulative effect of all of these choices have transformed the way i work, collaborate and engage with people.

So focus more on the Value and less on the Return – But ensure you measure both along the way.

Advertisement

The Three Business Opportunities of Social Media/Software

I’ve been attending the Gartner Symposium Event in Cannes this week and my brain has been bombarded with so much information on so many topics and I won’t be using this post to share all I learnt but instead i’ll share some snippets around social media and in particular the Business Use of Social Media/Software.

It wasn’t a surprise to me to hear so much about the benefits of social media at a technology event, but what did surprise me was that there wasn’t many people there who actually used it.  There was a symposium tweet-up arranged via twitter for the Wednesday and only 6 people attended  –  yes i was one of them, so a lot of work to do in terms of awareness and understanding if anyone thinks this stuff will impact the business model. You can follow or catch up on the tweets from the Gartner Symposium events on twitter.

So on that note i thought it would be a good idea to start to bring the issue of business use into some context for people based on a number of Gartner sessions i attended and one in particular facilitated by a very good analyst Ed Thompson, who as it happened gave another excellent presentation on Customer Experience (more to follow on this one in a separate post).

Gartner highlight three separate and logical areas to guide thinking and implementation approaches to these tools and technologies within organisations.

I’m going to share my perspective on these areas:

1) Internal –  “your people, your place”
Essentially this area is about looking at the internal opportunities that are there for you. This is an area which I personally feel will deliver great benefits not just around the learning but in supporting a wide range of internal business issues.

It is important to remember that unless your organisation has articulated business issues you will struggle to get buy in or support.
Some potential business issues you might hear which you could link to these tools are as follows: NB this list is an example and is not comprehensive. It also doesn’t imply any particular approach.

– people finder or skills finder (internal staff directory)
– project spaces and business collaboration
– real-time or near real-time internal communications (yes email is an option but that isn’t always collaborative)
– learning communities and peer support groups

2) External – “your people, other people, your place”

The second area that Gartner referred to was external but a platform that was managed by the organisation. An example of this would be where you host a community function for people to discuss and or support each other like a helpdesk community support function. In local government terms this is a challenge as we need to be careful about trying to create communities that we intend to be organic. So the difference here is that we are clear and open about what we would expect such a community to do or what broad outcomes we would expect.
Again some potential business issues you might here to link to would be as follows:

–  service improvement function
– service user support community
– shared communities of practice
– project spaces and collaboration with partners and other organisations

3) Public – “your people, other people, their place”

This aspect is the area that to be honest most people focus on, it includes facebook environments, twitter, youtube etc. This is where stuff (for most social media people) get interesting. However this is also where most fear resides and organisations are low in awareness around the possibilities, case studies, return on investment figures. BUT this is where the MOST VALUE will be gained to all.

Again some possible business issues (not comprehensive) you might come across which could be linked into these solutions or approaches – however i stress and i say this all the time now. Don’t focus on a single technology, do your homework, work out what will actually deliver the value in any given circumstance.

– connecting and engaging with communities
– civic debate and discussion
– trend spotting, listening to the social web community or as Gartner refer to it “the collective” can provide insights into what might be the next big opportunity or next big issue developing.
– people to people connections
– building relationships

All of the above requires a different viewpoint on the traditional way of looking at things. The social space is ALL about the relationships between people and the benefits that spin-off from those interactions. We are now moving into a more focused look at people to people relationships (P2P) – In these difficult times, the potential to interact with people becomes even more important, for all of the issues i have given as examples.

What is interesting about this is that it has always been about P2P but dressed up and disguised as business to business or business to consumer – what drives those agenda = People.

The challenge for anyone wanting to explore the world of social media and social software is to learn more about how people interact and the connections and networks people have. I for one am very excited by this prospect and look forward to learning more over the coming months and years.

DeJa Vu – A lesson for social media

A colleague and friend of mine Martin Howitt has just started blogging outside the comfort of our team blog, where he was the most active blogger. I should blog more over there and will do in the coming weeks about IT/Business Alignment and the benefits of Enterprise Business Architecture in reducing the “lost in translation” effect that often happens when business folk talk to IT and vice versa. I am current fascinated by this issue as it can also help explain some of the issues and negative perceptions that people have about social media.

Anyway, Martin has provided an excellent post on the ROI potential of Social Media and had provided some great seeds for others to hopefully expand  and build on.

Martin states:

it’s probably time someone tried to start mapping out the benefits of SM right across the piece so that a full business case can be made by those who are trying to make the change in their own organisations.

via The social media ROI braindump « Martin Howitt’s blog.

This is the DeJa Vu aspect of the post – haven’t we been here before, with email and council websites and online services?

What we need to remember here though in all this conversation around Social Media ROI is that it wasn’t that long ago, that some councils didn’t even have websites and that officers within councils had to construct a business case for email (yes really a business case for email) – but don’t we all have one ( or even more) now and don’t we all believe even the doubters of social media that email, is a tool that if switched off would have a detrimental effect on how businesses run and function.

The shift and progress around local council websites was helped by the now infamous eGovernment agenda, but credit also needs to go to Socitm who year on year publish Better Connected (whether you like it or not, it provides a snapshot of what is happening) – eGov also did many good things but in my humble opinion failed to address the real issues in technology innovation – again a topic which i will touch on in my IT/Business Alignment post. But we also need to remember that a number of councils had websites before this and were doing some great innovative work on them including online services.

My council (Devon County Council) has had a website (as well as a basic intranet) since around 1998 and it grew organically much like other websites, starting with a strong tourism and visitor information presence into other council services and information resources. I wasn’t involved in the web at that time but i can imagine the type of discussions that were had about developing a County Council website, were quite similar to what people are saying now about social media sites. What is the benefit, how many people will use it, it won’t and doesn’t reach everyone yet….and so on. The key message is, you HAVE to start somewhere and you HAVE to be patient, even more so with social media as we are dealing with relationships and connections with real people, not transaction or visitor statistics.

We (local government) were given targets and timescales to get our websites up to date and up to speed with a set of basic requirements plus a sprinkle of transactions. The ROI that is being used and promoted is that the cost of interacting with people over the web is cheaper and more cost-effective, well it can be if your services are connected to your back office and people are not having to intervene in the process.

BUT where eGovernment failed in my opinion is that instead of focusing on developing online transactions that people actually wanted to use and demonstrated a high volume potential (based on local need and preference) we were mandated to deliver all of them in one way or another. So for most people eGovernment became one very large technology project and it lost the support of people in the business due to the amount of time available.  Plus with so many services developed, the marketing message became diluted with so many services that not many people used. We could be in danger of doing this again unless we start to connect people in the business to the opportunities and technologies out there, whether this is social media tools or not.

OK, so this is where Martin’s post for me gets really interesting. It starts to connect business terms with outputs and opportunities of Social media   – Martin picks out 9 areas, here are a three of them:

Infrastructure (administrative management of eg buildings) -> need maintenance and planning (and even strategy) -> SM can streamline maintenance processes, alerts, and educate people in how to get the best out of their investments.

technology -> Social media can reduce email, provide mashups, enhance remote, mobile and flexible working. This is a big topic in itself.

HR management -> social media tools can be used to provide early warnings of things that are bothering the workforce, ways to access employee resources (like workplace counselling or learning and development); conversely the blocking of social media sites can be demotivating for employees

What WE and i mean everyone who is currently able to work on this stuff proactively, needs to start looking at the metrics and agreeing some consistent ways in which we can demonstrate effectiveness and cost savings. We also need to really start looking at the business issues which our employers have and be flexible enough in our approaches to accept that social media won’t work everywhere.

I think we need to start with opportunities where there is a desire and opportunity to demonstrate value. It sounds obvious but i often here people talking just about twitter or facebook without linking that to a specific business objective. It seems to be more about demonstrating twitter and facebook can work instead of demonstrating that we can improve business outcomes by using a new set of technologies and tools. It is only then we will actually start seeing the ROI of these tools, but it will always become complicated because it will in nearly all cases be part of a wider provision including face to face, telephone, web etc.

For me, all of the tools provide exciting opportunities but that is all they are until i can connect them to a business problem in my council. The new skill for social media people won’t be about the tools but will be about understanding business (people) problems. Which is afterall one of the key features of anything “social”.