One of the big questions on social media software solutions is ROI.  The general thought is it’s hard to determine.  I disagree.

Just so we’re on the same page, by collaborative software I’m thinking of feature functionality like wikis, file sharing, and discussions.

What you want for a return on any business investment is either revenue generation or cost savings. 

 

Show me the money  

Factors like increased website visitations, more sales calls, etc. are relevant to the ROI only in so far that they lead to conversions to actual sales.  Increased website visitations could also be relevant if they lead to retaining customers.  However you slice it though, ROI is all about the money.

First, you have to determine how you’ll use collaborative software and whether it will have internal or external uses or both.  General options include:

• Internal team collaboration.
• Collaboration with customers or partners (for example, implementing a project with a client or team selling with a partner).
• Sharing information internally or externally. (such as for marketing, customer service, or corporate purposes).

The list of ROI determinants below assumes all three bulleted options above are in play so you’ll want to adjust your own list accordingly. 

• Professional time saved in collaboration across all impacted employees for being faster to solution or more efficient (be sure to consider the costs, if applicable, of wasting time on the wrong document versions).
• Reduced IT costs if using SaaS (for hardware and software infrastructure, salaries, & other professional costs).
• Reduced Support costs (call and email volumes) from customers because of ease of finding solutions in wikis, files, or discussions.
• New sales from building a collaborative culture.
• After-market sales from building a collaborative culture.
• Reduced travel.
• Sales operations improvements (for example, ensuring sales folks distributed up-to-date materials, have current price lists for quotes, etc).

Depending on the company, there may be other applicable ROI components to consider.

 

Range of ROI results

Additionally, the analyst in me likes to consider an ROI in terms of Minimum, Most Likely, and Maximum outcomes. This is particularly useful when considering some of the harder to quantify components like increased sales. For example, set the parameters for the

• Min case to have a 90% probability of occurring,
• Most Likely to have a 50% probability, and
• Max to have a 10% probability.

If you take that approach, then you can see a range of possibilities and better qualify the general opportunity and risk of the collaborative software solution.

 

Summary

If you're gun-ho to build a social business where collaboration is a central part of your culture, then you'll need the resources to support your initiatives. Gaining that support from your executive team will require a positive ROI and that means showing dollar impacts to your company's bottom line.  Higher revenues or profitability.

I showed you the factors you need to consider to make your business case.  Now scoot!

 

What would help you?

What makes determining the collaborative software ROI hard for you?   Or conversely, what would make it easier to get your hands around it?

Post your questions in the comments or drop me an email (the contact form comes to me) and I'll try to find answers to make it easier for you.

 

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If information on the business and technology side of social media is valuable to you, then be sure to sign up to receive email content from me. 

These are regular topics of discussion on Sparks (with dual posting on Intellicore Design's Community Network).  Additionally, I'm working on putting together courses focused on just those very things.

You'll want to be sure to stay in the loop.

 

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