What is ROI? It basically means return on investment. The formula is as below.
To calculate ROI, in its simplest terms, means that companies must have more money coming in than money being spent on something. ROI compares gains with costs and it relates very specifically to money.
Social Business can be gained in the following areas:
- Sales Revenue
- Customer Insights
- Brand Protection
- Lead Generation
- Call Center Operations
and the likely cost as follows:
These costs are straightforward as people are needed to run the projects, cost of software and hosting from Microsoft, Jive and etc. The ROI is therefore calculated by subtracting the costs from the gains.
Enterprise 2.0 success can also be measured by:
1) Employee engagement.
Employees are more engaged because they become part of something larger than themselves and their immediate departments. Knowledge and work become more transparent and employees are able to get real-time feedback, visibility, and gratification. Most companies already conduct annual surveys to gauge the level of workforce engagement. To measure, aggregate engagement ratings so that you have one rating per employee. Combine this data with not only data about the employee’s usage of the enterprise social software, but also other data points that can impact engagement such as compensation and promotion opportunities. Now, through the use of regression analysis (a mathematical way to model relationships), calculate what impact an employee level of activity in the network (the independent variables) has on his engagement score (the dependent variable).
2) Turnover
Using your company’s employment records, identify the employees that have turned over since you launched your network. Again, you will need to obtain data concerning the employee usage of the your community as well as other data points that could have an impact on turnover rates like tenure, salary, market conditions and promotional opportunities. Since the dependent variable is binary (0 denoting currently with the company, 1 denoting that someone has left the company) a logistic regression will need to be used. Be careful, as coefficients in logistic regressions can be more difficult to interpret.
3) Sales
One way to measure the impact enterprise social software has on sales is to just focus on the results of your sales team. Much like the other analyses, you will need to acquire the same data and make sure that you account for other factors that might impact sales. Again, use regression analysis to model the impacts that enterprise social software has on sales results.
Benefits of enterprise 2.0
Saving time: as implementation of Web 2.0 tools can help companies save time. Time savings can be measured according to past product developments, and can also lead to cost savings through wages and reduced advertising time frames.
Cost Savings: This benefit is usually the easiest to see and to measure. Money could be saved in a number of ways, such as utilizing Facebook ‘check-in’s for return business instead of paying for printed cardboard VIP or loyalty cards or by using social media and public forums to advertise, therefore saving the cost of advertising via print media. This can be measured in monetary terms by comparing overhead and advertising costs before and after Enterprise 2.0 implementation.
Customer Satisfaction: Having customers suggest their ideas is a valuable approach to improving products and ideas. With an eye toward higher satisfaction and lower churn.
Employee Satisfaction: The ability to make a more substantive impact. The ability to find that right person to help with an idea or project.
Cross-Organization Collaboration: It improves outcomes as a diversity of knowledge and perspectives are brought to bear.
Conclusion
As you can see from the Maslow’s pyramid, when you go from the bottom to the top, you can see the increasing impact on the enterprise 2.0 success . You can see the increasing benefits as you go from the top to the bottom. Regression analysis is a mathematical tool used to calculate the relationship between variables on large sets of data. Preparing the data for the analysis will be the most time consuming activity, however the time invested will help prevent mistakes. Companies can tailor their own Enterprise 2.0 ROI model which is suitable to their organisation. Companies can also be sure that by creating a ROI model in line with their own requirements and with the measurable metrics they hope to achieve, they can successfully measure the results of their Enterprise 2.0 implementation.
Reference:
How to calculate the roi of social business projects
ROI
Maslow hierarchy of enterprise 2.0
Read Full Post »