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Innovation

Enterprise 2.0 promise is years off...if it materializes

At the risk of bringing the wrath of the Enterprise 2.0 fans crashing around this blog I'm taking a deliberately contrarian view of Dion Hinchcliffe's recent Determining the ROI of Enterprise 2.
Written by Dennis Howlett, Contributor on

At the risk of bringing the wrath of the Enterprise 2.0 fans crashing around this blog I'm taking a deliberately contrarian view of Dion Hinchcliffe's recent Determining the ROI of Enterprise 2.0. My intention is not to upend Dion's argument but to expand upon the issues. First up, Dion does a spirited job of waving the E2.0 flag. Lots of cool looking graphics (One of Dion's strengths, not one of mine) draw you into believing that the Nirvana of E2.0 is within grasp. The reality, as Dion and everyone else connected to this trend knows, is very different.

The first problem with Dion's analysis is that it extrapolates a handful of case studies into a mega trend. This is unsafe, even though Dion readily acknowledges that:

Susan Scrupski has also been exploring the ROI of Enterprise 2.0 and in her call for case studies recently highlighted that while we have a good number of them, there is still not enough ROI coverage in a wide set of industries.

What is a good number? That's anyone's guess but I keep hearing more or less the same stories with little what I would call breakthrough value discovery.

The second and most serious problem with the analysis is its reliance on 'jam tomorrow' as an inducement to feed the trend. It is all very well saying that something is emergent but that cuts little ice in the C-suite where the current focus is on cost reduction - usually of the order of 20%. Dion attempts to rationalize the problem by discussing three issues, summarized as follows:

  1. Wariness that we're looking at 'pot of gold' technology
  2. Cultural concerns
  3. Difficulty in finding ROI measures

The first two arguments are ones I frequently run up against. The first arises out of the almost incessant hand waving I see coming from marketers, convinced that E2.0 is the Next Big Thing but who fail to provide any tangible proof beyond cuddly kumbaya stories. Marketers would do far better to concentrate on a sliver of functionality that has meaning to the C-suite rather than grand statements, laced with competitive FUD.

The second is a very real problem that at times seems intractable. We've been talking collaboration for more years than I care to remember but as Oliver Marks knows only too well, getting a department on board let alone an enterprise can be a mind numbing, thankless task. I spend most of my life in the 'knowledge' industries but even there it can be like pulling hen's teeth. The problem comes down to the individual perception of IP value and how that might be threatened. In short, what we're really facing is a power struggle.

Remember the way call centers got adopted like crazy in the mid-90's? That was a power play by sales executives used to justify CRM investments. It made call center directors a power center that allowed for increased investments accompanied by more power concentration. But look where we've ended up. I can count on the fingers of less than two hands the number of companies' call centers with which I'd be happy to do business. Was it a good way to improve customer service? Is the proliferation of marketing based Twitter accounts any better? Will the power centers crumble as a result?

The third argument Dion advances is the one where broad technology offerings flounder. It's often asked: where's the ROI in email? Unlike others, I believe that IS measurable. You can't quite say the same for blogs except in retrospect. I recall having this argument in 2005. At the time, my target of choice was Hugh MacLeod aka gapingvoid. Then, as now, there was a real problem in figuring out ROI. It was something I debated endlessly but with little result. Hugh argued it was a sideshow, I saw it differently.

I've come to the conclusion that even though there may be no apparently obvious ROI, it can emerge. That's what happened with Hugh so that he now has a thriving business in limited edition prints of his best cartoons. Check this:

Though this cartoon, "Create or Die" is less than a week old, it seemed to really resonate with people, and by the time the end of last week rolled around, the number of people emailing me about this image almost equaled those who voted for Wolf v. Sheep. So, being the kind of person that hates to disappoint, I decided to damn the torpedoes and go ahead and publish it, as it seems to make lots of people happy.

How long that success lasts is an open question but the fact is it has taken Hugh some three years to get to this point and required several re-inventions. Sounds like an ERP implementation to me and I can say for certain that CIO's have almost zero appetite for this kind of investment.

Hugh is an edge case who can change his business model almost on a daily basis. His example is one in 10,000 where he was in the right place, at the right time with the right offering. No amount of blogging will help a business that is not in that position or a guarantee they can leverage the blog investment in the same way. Sadly to say, many businesses are in a no-man's land where demand is difficult to generate without instituting fundamental internal change. To me, that is the central problem inhibiting companies from understanding how to develop ROI measures. Unlike Hugh, very few businesses can turn on a dime so instigating the kinds of change that E2.0 imply becomes a daunting issue.

Hutch Carpenter makes the point that we're probably in some sort of Trough of Disillusionment, noting that:

One thing I find odd is that collaboration is touted as a benefit of social software. Collaboration is an activity. There is no ROI in collaboration itself. What enhanced collaboration produces is the benefit.

And that’s where it’s been tough in the enterprise 2.0 world. A lot of vendors offer tools with wide open use cases. They can be used for any purpose inside an organization, with an eye toward better collaboration. It makes sense, and yet it is challenging  to identify specific ROI-grounded use cases.

It's an interesting observation but one where the solutions should be self evident. In any project you've got to establish success milestones, something that seems absent from many of the case studies I've read. For instance, I'd be far happier to see cases where there is an identified pain point and then build out from there rather than dangling cascading network effects further down the line.

My overall sense is that the E2.0 problem is not about cost or ROI but about disruption. Time and again it has been shown that blogs/wikis need not require significant business investment. However, the barriers to adoption are a different matter.

Even where there is a management willing to engage, it is difficult to find examples where the organization has successfully moved beyond Nielsen's 1/9/90 law of participation inequality. Managements I speak with detest the use of 'social' in these discussions. To them it smacks of a form of socialism that connotes union control. It doesn't help that some of the most prolific commenters make no secret of their desire to see managements disrupted without offering a palatable solution. Unfortunately, we seem to be stuck with 'social' as a descriptor for anything in this area. Of course that could be indicative of new forms of business we have yet to see. But for the other 99% it will be years before the value Dion espouses becomes obvious.

Then there is the problem of IT stamping on anything of which it doesn't approve. Only last week I heard about a viral implementation of an enterprise class service that got snuffed out because IT thought it might represent a security risk. The fact it was the fastest growing adopted solution the company had ever seen was considered secondary. Is this a case of the politics of power in play? Probably. Once again, it demonstrates the need for careful explanation to appropriate stakeholders rather than the cavalier adoption curve so many think is the right way to proceed.

What we need therefore is a fresh way to explain how these models can iteratively change business without unleashing mayhem upon the business. We need dedicated programs where change is introduced by example and persuasive argument that ties into business processes people understand. Finally, we need to provide individuals with concrete examples about how the value of their work will be enhanced, not eroded, encouraging the idea of creativity as a stepping stone towards innovation.

Does that sound flabby? Perhaps. But if you can convince management that people will be happier in their work, that alone should be enough to start the ROI story. There are plenty of examples to show that happy employees are more productive, creative, inventive and valuable than those who work under sufferance. E2.0 tools hold that promise. Having said that and as noted above, there are plenty of examples that show how invention gets snuffed out if it poses a power threat.

As always, the secret to long term success depends on management's ability to maintain a sustained commitment and all that goes with it. The difficulty today is that same management is wondering where the next sale comes from or how cash will be generated. Those priorities will not be solved by E2.0 anytime soon.

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