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Measuring the Business Value of Enterprise 2.0, Using Enterprise 2.0

by Joe McKendrick

December 9, 2009 at 12:38 pm · Filed under 2.0 Design Thinking, Enterprise 2.0, Enterprise Software, Social Computing, Social Media, Web 2.0

Enterprises are working with a lot of new promising technologies and methodologies, everything from cloud computing to user-driven mashups to social networking and service oriented architecture. The question is, how can managers effectively measure the benefits they’re getting from new deployments?

Measurement can be straightforward in many cases — however, in a complex enterprise, it’s anything but straightforward. The problem is getting various groups across the enterprise to agree on common goals and metrics that will provide the big picture. How can organizations see this big picture when everyone has their own take on what’s important to their domain? In any organization, everyone has their own ideas of what should be measured; everyone has their own take on project “success.”

This was the topic of discussion in Dana Gardner’s latest BriefingsDirect analyst panel, which I had the opportunity to join, that explored return on investment (ROI) aspects of services. (Audio available here, transcript available here.)

Joining the panel were Michael Krigsman, president and CEO of Asuret, as well as Dion Hinchcliffe, founder and chief technology officer at Hinchcliffe & Co. to explain how their methodology to measuring the ROI and business value of enterprise services, Pragmatic Enterprise 2.0, works.

We talked about the requirement for collaborative project management to move new technologies and methodologies on the road to business value. Enterprise 2.0 itself, which emphasizes collaboration, may help in this process. But by not being able to effectively measure a technology’s benefits in a collaborative way, we’re missing out on many of the potential benefits, Dion said. “This is the classic technology problem. Technology improves and gets better exponentially, but we, as organizations and as people, improve incrementally. So, there is a growing gap between what’s possible and what the technology can do, and what we are ready to do as organizations.”

Mismatched expectations are another challenge. People tend to blame software and IT for project failures, but the real failure may be in communications, Michael added. “If we look a little bit deeper, we often find the underlying drivers of the project that is not achieving its results,” he explained. “The underlying drivers tend to be things like mismatched expectations between different groups or organizations. For example, the IT organization has a particular set of goals, objectives, restrictions, and so forth, through which they view the project. The line of business, on the other hand, has its own set of business objectives. Very often, even the language between these two groups is simply not the same.”

How do you measure this human element? That’s the challenge. “The difficulty is how you measure, examine, and pull out of a project these expectations around the table,” Michael said. “Different groups have different key performance indicators (KPIs), different measures of success, and so forth, which create these various expectations.” The challenge is to surface this information so that it can be shared between decision makers in various parts of the enterprise.

This certainly can have a huge impact on the way large enterprise systems — such as ERP or financial applications — get deployed and are used. But Enterprise 2.0 efforts also fall into this category as well. A lot of people are passionate about Enterprise 2.0, but, as Dion pointed out, there needs to be a “dispassionate measurement process up front to understand what people’s expectations are, what their needs are, and what their concerns are.”

Enterprise 2.0 methodologies — be it wikis, blogs, or social network sites — provide a way for various groups to better align their expectations for the results of new deployments. And, signifcantly, it makes it easy for members of these groups to do something they usually haven’t done before — to actually communicate with one another.

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Steve ChristensenDecember 10th, 2009 at 12:33 am

To measure value of Enterprise 2.0 in business you have to measure it in terms relevant to business. There is no dissension in a business about the important metrics: revenue and profit. With one you can create the other. The struggle with measuring E2.0 success is because the current topic of E2.0 are social applications. I won’t argue the value of institutionalizing communication and the impact it could have on improved performance. What I do argue is that the intangible nature of that value falls short of what an Enterprise demands.

McAfee today, in the Financial Times, identifies three fundamental properties for E2.0. I would add one more: E2.0 solutions must demonstrably increase revenue and/or profit before roll out investment is required. McAfee also deemphasized the use of the term social. The Enterprise market differs dramatically from the consumer market. Not only does social sound like wasting time to business but they aren’t lacking for people to talk about problems. There must still be water coolers or break rooms.

E2.0 solutions work in three “categories” for business: communication, operation, customer. E2.0 solutions are built for business to meet the needs of the Enterprise. The Enterprise is operating in a highly interdependent network of vendors, employees and customers. E2.0 solutions operate in this network and require no replacement of E1.0 solutions (McAfee’s frictionless). Being able to demonstrate increases in revenue and/or profit before investment answers the question of value with the business’ own business.

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