Criteria For Validating Enterprise Social Software Investment

One of the top challenges associated with implementing enterprise social software is measuring the impact on business goals. A new International Data Corporation (IDC) study, Determining the Value of Social Business ROI: Myths, Facts, and Potentially High Returns, explores the criteria for validating enterprise social software purchases and social business transformation through return-on-investment (ROI) measurement by debunking social business ROI myths and defining social business ROI gains and costs.

IDC’s Social Business Survey reveals that enterprise social software adoption still has room to grow, with 41% of respondents indicating that they have already implemented an enterprise social software solution – leaving 59% who have yet to implement a solution. With this much adoption anticipated, IDC forecasts the emerging social platforms market will generate revenues of nearly $2 billion by 2014, experiencing a compound annual growth rate (CAGR) of 38.2% over the 2009-2014 forecast period.

“Widespread industry adoption of enterprise social software is relatively immature and executives want a clearer understanding of the potential gains, costs, and return on investment that social business initiatives can have on a company’s bottom line,” said Erin Traudt, Research Director, Enterprise Collaboration and Social Solutions, IDC. “To determine social business ROI, organisations must consider why their customers and/or employees are using social software and understand the cost/benefit impact related to people, process, and technology.”

When conducting ROI on social business initiatives, the rules of business still apply, regardless if a company deploys social business initiatives to assist customer service, marketing, public relations, product innovation, employee collaboration, or other functional areas of the organisation. IDC believes business executives need to understand not only the traditional metrics and value calculations of ROI, but also the impact that social business initiatives have on these computations and their interrelatedness.

“ROI is another industry buzzword that many are quick to demand but have difficulty calculating and tracking,” continued Traudt. “Social business ROI is particularly elusive, but for broader adoption to occur, executives will need to conduct ROI analysis to justify expenditures in this category.”
As enterprises are driven to make fundamental changes in the way they interact with customers, employees, suppliers and partners, businesses will need to understand and adopt radically different cultures, processes and technologies to facilitate this transition.