The intuitive view around the ROI of Web 2.0 tools such as blogs and wikis tends to be that using Web 2.0 on external sites grows revenue, your blog can gain you extra customers and brand loyalty. Using Web 2.0 internally saves cost by making your employees more efficient.

I have always had a slight suspiscion around the cost saving argument. If you look at the logic behind my recent post on Luis Suarez’s effort to stop using email, although you can point to the amount of time saved and translate that into cash savings, it is not that simple. Even if an individual stops using email and moves to more productive methods of communication they will have to spend some of that time communicating with the new tools. So a potential 25% saving isn’t really a 25% saving, let’s say it’s more like 10%. Now let’s say you have 5 people in a team who achieve this 10% improvement. How are you going to save money by getting rid of half a person? These ROI cases were made in the original Knowledge Management and Web Portal sales (fewer clicks to get to the app you need = cost savings) and fundamentally failed.

Let’s look at it a different way. Dell, one of SocialText’s customers uses a Wiki in their call centre, and have managed to reduce the number of clicks from 20 to 4, decreasing the average call time by 10-20%. Does this mean they can therefore save 10-20% of call centre payroll? Potentially, but more likely the call centre can handle 10-20% more calls without increasing cost, allowing Dell to sell more servers without risking customer satisfaction and increase net margin. This is an innovative way to drive revenue growth, not a defensive measure to cut costs.

As another example, one of the largest technology companies in the world uses instant messaging prolifically internally, especially at quarter end where quick conversations are required between a large number of people in a geographically distributed workforce to check whether a deal is in the books. In fact, the acceptable downtime for instant messaging is less than email! This is not done so that they can reduce the number of people manning the process, it is done so they can increase the number of deals successfully booked and revenue isn’t missed by an administrative failure.

If Web 2.0 business justifications were based on innovation and revenue growth they might just have a better chance of being accepted.

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