ROI of Social Software

A lot of social software evangelists hate the ROI argument. We like to compare it to the ROI of email and phones and complain that no-one ever asks an ROI proof for those technologies. We like cartoons like these:

Yet the fact of the matter is that the people signing the cheques tend to be 1.0 thinkers. Those of us who want people to get people to buy this stuff have to be able to talk their language. And that’s “Value” and “ROI”.

I think most ROI discussions fail because people go straight to the ROI of their favourite social software platform in terms of the features and functions it offers, rather than deal with the underlying principles. At the heart of any social software ROI argument is the belief that your personal network is a powerful and valuable that helps you deliver more value to your company. More specifically in internal social software deployments we’re talking about your network inside your organisation. Forget software, forget IT, I’m just talking about your little black book of internal contacts, and that it adds value to your employer. If this point is not agreed, there is no way that a social software ROI case can be made. This has to be agreed upon before you go anywhere near software.

If this is agreed, then the question then becomes “how much”? Social software is simply an IT tool which helps you maintain business relationships which may otherwise lapse, and increase the number of relationships available to you. If you have already agreed that a personal network is a good thing it becomes easier (although not easy) to quantify the benefits of a tool to make the network “better” – namely social software.

“Social” software can get a bad press from line of business because work is not meant to be “social”. We have had conversations with clients who say “I don’t want to hear about social software, I want to know how an engineer in Argentina can find an engineer in Slough who can help with a customer situation”.

So move away from the ROI of “Social Software”, and instead when involved in ROI discussions you have to find out what the real problem is. Is it that they think that an employee’s network is not valuable, or do they need help in finding out just how valuable it is? They are two very different arguments and many ROI cases are not convincing as they fail to understand which they are supposed to be addressing.

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12 Responses to ROI of Social Software

  1. Bertrand Duperrin says:

    I fully agree…too many people forget that, especially within companies, have to be considered as tools before as social.

  2. Bertrand Duperrin says:

    Sorry… I forgot a part of my sentence, I meant to say “social tools” are tools before being social.

  3. Jon Mell says:

    Aha – that makes more sense! Many thanks Bertrand, I completely agree. Talking about the ROI of social software only makes sense when applied to a business problem. Then it is a question of social software affecting the ROI of a previously identified issue. It’s like asking what the ROI of a hammer is. If you desperately need to hit a nail, then it’s good. If you don’t, it’s pretty worthless.

  4. Tubbydev says:

    In this kind of problems, may be it’s more efficient to think about “non ROI” .. or NOI (negativereturnoninvestement) 😉

  5. Jon Mell says:

    @tubbydev – do you mean in terms of what happens if you don’t get involved?

  6. Samuel says:

    Thanks for all your posts on ROI, I like them. Richard Dennison of BT recently had a different take on ROI and social media, relating more to your first 2 sentences. The difficulty with many IT projects is defining a hard business case (- or maybe the hard stuff is easy and we forget about the soft part like productivity improvement). My boss says – and I like that: with IT projects it’s about the good idea first, numbers will come later. Anyway, your posts help the social media evangelists by giving them example calculations and I’m thankful for that.

  7. jonmell says:

    Samuel – many thanks for your kind words. I’m intrigued by your boss’s comments, does he sit in ‘Business’ or ‘IT’?

  8. Phil Warner says:

    One way we’ve found to demonstrate ROI is to pick a small process that isn’t working very well as the entry point for a social software solution, and then improve it with the application of social tools (tagging for example). Get enough of these in place and you could be sitting on a fait accompli.

  9. jonmell says:

    Thanks Phil – I definitely believe that’s the way forward!

  10. Samuel says:

    He’s in IT.

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