Enterprise 2.0 collaboration communities: measurement and metrics

Enterprise 2.0 collaboration communities: measurement and metrics

Summary: Many participants in the collaboration / Enterprise 2.0 world offer Kumbaya-style enthusiasm without showing concrete evidence of business value. Forrester analyst, Natalie Petouhoff, has the ROI antidote.

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Many participants in the collaboration / Enterprise 2.0 world offer Kumbaya-style enthusiasm without showing concrete evidence of business value. As an antidote to this substance-free clamoring, Forrester analyst Natalie Petouhoff developed a data-driven framework that systematically measures business-oriented ROI in collaboration communities.

Natalie's report, The ROI of Online Customer Service Communities, presents an ROI model, discusses the business value and benefits, offers concrete examples, and raises a host of implementation obstacles and success factors.

In contrast to less substantive Enterprise 2.0 discussions, where creating good feelings is the dominant theme, this research adopts a more structured and analytical approach. Although Petouhoff focuses narrowly on customer service communities, many of her conclusions are easily adaptable to other Enterprise 2.0 collaboration deployments.

Organizations generally measure ROI by adopting a model that includes specific metrics and applies value to particular results. The best models consider realistic costs based on deep understanding of  the problem, solutions, and risks.

Accomplishing these goals is particularly difficult for Enterprise 2.0, because the benefits of collaboration are inherently difficult to measure. In large part, these difficulties are precisely why so many Enterprise 2.0 adherents discuss good feelings and Kumbaya rather than quantified business value.

The report overcomes these obstacles because the conclusions derive from analytical research into large, mature customer service organizations that have adopted community as part of their offerings. In this case, data overcomes conjecture.

Following an explanation of the Forrester ROI model, the report summarizes several key benefits of online customer service communities:

Next, the report summarizes the costs associated with building these communities. The report categorizes costs as follows:

  • Technology startup costs
  • People startup costs
  • Process management startup costs
  • Recurring technology costs
  • Recurring people costs
  • Recurring process management costs

Grouping costs this way aligns the framework with typical IT project lifecycles. Gaining accurate understanding of any IT-related ROI requires examining costs and risks associated with technology, people, and process.

This chart summarizes the primary costs:

Beyond costs and risks, the report describes a detailed set of analytic assumptions around investment horizons, project size, and deployment best practices.

THE PROJECT FAILURES ANALYSIS

Few observers have yet articulated a framework of failure for Enterprise 2.0 projects, reflecting the relative immaturity of Enterprise 2.0 projects and processes. Exploring Enterprise 2.0 failure is high on my priority list for future blog posts.

Although Natalie's research is strictly on customer service communities, it identifies five critical success factors that are generally applicable to many Enterprise 2.0 projects:

  • Paradigms shift; so must you. Customer service professionals must find innovative ways to engage with “social customers” via emerging social media technologies.
  • Identify the five worst fears early in the process. Categorize the uncertainties into buckets of costs, benefits, and risks and learn from best practices that most social media fears are unfounded.
  • Focus on improving the customer experience. The most critical step is designing customer experiences first, and then making the subsequent technology choices to enhance the customer experience, not destroy it.
  • Strategize, strategize, strategize. Determine what you want to accomplish with the community and stay on point.
  • Choose a vendor wisely. Make sure to interview both the vendor and its client list. And don’t limit your interviews only to the reference-able customers the vendor provides.

I asked Natalie to summarize what she learned in the course of conducting the research:

One of the biggest issues with social media and corporate America is whether there is an ROI. That's why I decided to spend the time to investigate whether or not there is an ROI. For those of us who are actively participating in social media, there is an intuitive sense that there is. But intuition doesn't go that far when dealing with corporate executives. I looked at the traditional issues customer service faces and whether adding an online community could lower those costs and/or increase revenue, margins and profit.

My intuition was right. Not only does social media provide the necessary information to transform customer service, it is the first tool/application that I've seen in all my years of being in the business world that -instantly melts away the resistance, the politics and the lack of interdepartmental collaboration required to transform the whole company. Not only do I see social media as a major business transformation tool, but it brings out the very best in human nature.

With the down fall of several critical industries at the end of 2008 - the insurance, banking and real estate, its time that business isn't conducted as usual. Its time the voice of the customer is incorporated into every aspect of the business and that business are held accountable to deliver on their promises. Social media does that and more. I'll be publishing a best practice research report as well as ten case studies that go into the detail of some of these phenomenon that I have witnessed. It's a really exciting time to be in business. Change is in the air.

I also asked Paul Greenberg for his opinion. Aside from being a fellow ZDNet blogger and author of CRM at the Speed of Light, Paul is respected as the "Godfather of soul CRM:"

Natalie undertook something that has been very difficult to even ascertain, much less systematize. She successfully describes an approach to social customer service - the use of communities and social media to not only improve agent based and other forms of customer service but even to figuring out how customer communities can support each other.  This is an important piece and moves forward the effort to figure out not the what of social CRM but the "how."

My take. Enterprise 2.0 technologies will continue to create opportunities for improving work processes and generating high ROI across a range of business functions. However, despite future promise, the market remains immature and needs validation through further research.

This Forrester report offers an excellent foundation for anyone interested in measuring the success of Enterprise 2.0 collaboration communities. I believe this report will quickly become a model for other research efforts in the field.

Topics: Collaboration, Banking, Enterprise Software, Software, Social Enterprise

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4 comments
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  • challenges with Enterprise 2.0 technologies.

    Michael

    Great post. It made me think of W. Edwards Deming's quote:

    "If you can't measure it, you can't manage it."

    To quote your post:

    <b>Accomplishing these goals is particularly difficult for Enterprise 2.0, because the benefits of collaboration are inherently difficult to measure.</b>

    I would add that measuring it is the second part of the challenge. I'm not sure that many organizations are even storing much of this data yet.

    Phil
    phil_simon
  • RE: Enterprise 2.0 collaboration communities: measurement and metrics

    Michael,

    Outstanding post. Natalie is truly taking on a big task with her research and I applaud you for standing behind her work.

    I can't wait to see what she comes out with next.

    Bill
    billode
  • RE: Enterprise 2.0 collaboration communities: measurement and metrics

    Great post, indeed, Michael. Natalie's report is a great leap forward as it helps reveal how any company can realize significant returns and transform customer experieinces by creating online customer communities. Just today, we had another client tell us how they had calculated a hard savings of *$50,000 per day on a single issue* (direct cost of calls that stopped going into the call centers once the customer community engaged and posted an answer to a vexing problem for other customers).

    Companies have the information they need in most cases -- they just need to plug it inot frameworks like the one Natalie provides to see just how much they can drive back to their businesses.

    Sanjay Dholakia
    Chief Marketing Officer
    Lithium Technologies
    sdholakia
  • Apples and Oranges

    Michael,

    You approach that consists in assimilating "enterprise 2.0 collaboration communities" to "Online Customer Service Communities" is common in the US, and problematic.

    Common
    I participated to a "Community 2.0" Conference in 2006 in Vegas and no matter the early hype of 2.0 it was all about customer services.

    Problematic
    Customer services are most of the time a very processed one-to-one relations between an unsatisfied customer and a company representative, usually being underpaid and working in a call center.
    The notion of community does not exist, except from the company side that uses 'community' to refer to a volume. The notion of conversation does not exist either, it's just processing requests with an attention to cost and volume of requests. As such:
    * Customer services were transformed into pools like PAs back in a 50's to rationalize and optimise costs.
    * Activities are strictly monitored, processes are standards.
    * Customer services were outsourced and offshored to reduce costs.
    * Customer services were progressively charged to consumers to move from a cost to a profit center.

    What happens is that:
    * customer services are a well-known operational activity
    * customer services are managed with a strong P&L approach.
    Result is that there is attention from management and consulting and as such there is material for making survey and research.

    So it's easy to tap into that, but you end up with Apples and Oranges.


    Olivier

    PS: another confusion that surfaces - but is not yours: knowledge management with content management and archiving.
    oamprimo