Return on Investment (ROI) of Social Technology Implementations

IBM logoIn one of my previous blog posts, I described how the technology giant IBM utilised Enterprise 2.0 technologies to foster innovation, discover novel ideas and find ways on how to commercialise existing technologies. Although the blog post contained several useful bits of information about the process IBM had invented to make this online collaboration happen, the article did not contain any figures on the actual Return on Investment (ROI) statistics on IBM’s social media endeavour.

ForresterTo be able to accurately gauge the success of a project, the Return on Investment (ROI) numbers need to be established as accurately as possible. Without knowing these figures, one can only guess the effectiveness of a given project. Needless to say, gathering the right kind of data for such calculations is far from being an easy task. This is exactly the reason why IBM commissioned Forrester Consulting in 2009 to establish the ROI enterprises may realise when using IBM’s Social Collaboration tools. The results of the study have been publicised by IBM, as presenting these statistics on the potential benefits of adopting these social media tools can be very strong incentives for IBM’s prospective business partners.

Forrester gathered the data used used in their research from existing statistical data on IBM’s tools and by conducting interviews with IBM’s sales personel and one large organisation currently using these tools. The data was fed into a financial impact model built by Forrester, which resulted in the following three main benefits being identified:

  • Revenues of incremental new products
  • Improved Time-to-market
  • Revenues of incremental sales
  • Staff productivity savings

Let’s calculate the ROI figures based on the numbers published in the study. Based on a 20,000-seat enterprise implementation, the initial implementation and roll out of adopting IBM’s tools would cost roughly 1.5 million dollars in the first year. The ongoing maintenance after the first year would incur about $313,000 a year. Thus the cost of investment for a 3 year period would be $2,126,000 in total.

roiProviding that the company has a total revenue of $20 billion a year, the revenues of incremental new products is estimated to be in the $420,000 to $8,400,000 range, with a likely estimate of $2,100,000 revenue per year. The other three areas would result in significantly more modest incremental yearly revenues ($336,000, $150,000 and $455,813 likely yearly figures, respectively). By adding up the low, likely and high values in all four categories we get the following estimates for the profits:

Profits (1 year)

  • Low – $1,045,500
  • Likely – $3,041,813
  • High – $10,556,813

Profits (3 years)

  • Low – $3,136,500
  • Likely – $9,125,439
  • High – $31,670,439

By plugging the numbers into the ROI formula, we get the following 3-year ROI figures for implementing IBM’s tools:

ROI Low = 47,53%
ROI Likely = 329,23%
ROI High = 1389,67%

The ROI figures above are very strong indicators on the financial success of adopting IBM’s social media solutions. Such studies can act as an extremely effective marketing tool to prospective clients who are on the verge of buying into a long-term social media strategy.

References

Use of Enterprise 2.0 in the Professional Services Sector
IBM
Total Economic Impact Of IBM Social Collaboration Tools
Forrester Consulting
Wikipedia – Return on investment

Social Networks and Social Monitoring

Queensland PoliceThe Queensland Police Service (QPS) is a government organisation responsible for law enforcement in Queensland, Australia. As most government organisations in the western world today, QPS maintains a strong web and social media presence to inform and educate the public. A quick Google search revealed the following Queensland Police Service related websites:

socialbakersSocialbakers is a social media analytics platform that allows companies to monitor their social media usage statistics, including Facebook, Twitter, Google+, LinkedIn and YouTube. This is an invaluable tool for measuring the success of a social media campaign and for optimising a company’s social media activities to achieve the best possible results. The page allows the viewing of a few basic statistics for free, but the whole range of data is only available to paying users subscribed to the Analytics PRO account.

The service is extremely easy to use; after entering the URL of the Queensland Police YouTube channel in a Google-like search box, a page appeared summarising the viewing statistics of the uploaded videos. It turned out that as of 20 September 2013, the Queensland Police Channel had 1905 subscribers and 508 uploaded videos in total. The total number of all video viewings was 1,608,696, which is an impressive number compared to the 4.5 million population of Queensland. The free version of the search displayed two very informative timelines about the number of subscribers and uploaded video views in the last six months. These graphs are very useful in spotting general trends and they are an excellent marketing and monitoring tool:

Queensland Police YouTube Channel Subscribers

Queensland Police YouTube Channel Subscribers

Another very useful platform for monitoring social media presence is Socialmention. The service operates in a very similar to way Socialbakers, the user only needs to enter the name of an organisation and the service does the rest. Entering “Queensland Police Service” into the search field gained the following interesting results, however the experience is not nearly as polished as Socialbakers’. This is very likely due to the fact that while the former is a free service, the primary goal of the latter is to gain paying customers, so the bar is obviously set to a higher standard.

socialmention

Both online monitoring services mentioned above provided some interesting insights into the online presence of QPS. It must be noted, however, that the availability of publicly accessible datasets was quite limited in both cases. In the case of Socialbakers, for instance, the owner of a particular Facebook, YouTube or Twitter channel can sign up a paid account to be able to retrieve extensive analytics that is simply not available for unregistered users.

References

Queensland Police Service (QPS)
Queensland Police Service YouTube Channel
Queensland Police Service Twitter Channel
Queensland Police Service Pinterest Page
Queensland Police Service FaceBook Page
Socialbakers
Socialbakers – queenslandpolice YouTube channel statistics
Wikipedia – Queensland
Socialmention
Socialmention – “Queensland Police Service” search results

Use of Enterprise 2.0 in the Professional Services Sector

IBM logo

IBM logo

It would be probably hard to find anyone in the developed world who is not familiar with the name IBM. It is less well-known that the multinational technology giant owns the world’s largest corporate research organisation, IBM Research, which has eight labs in six countries, employing over 3000 researchers in total.

IBM Innovation Jam

IBM Innovation Jam

Since 2001, IBM has been using various online “jams” to involve their workforce all over the world (more than 300,000 employees) to collaborate on various topics and to solve problems. The largest jam event titled Innovation Jam took place in 2006, where IBM set up a jam to discover novel ideas of using existing technology and find ways for commercialising them. With more than 150,00 participants, the event could be considered the largest brainstorming event ever held in the world to date, which resulted in 46,000 ideas in total. These ideas that had been subsequently analysed by senior management for weeks to extract the ones suitable for commercialisation. This is an excellent example of the Collect Information and Insights value lever. As of now, IBM’s crowd sourcing efforts have resulted in more than US$700 profit.

In 2007, IBM made the online platform available to other organisations outside of IBM to foster innovations through online collaboration. Just to illustrate the enormous success of the platform, the following major jam events have taken place in 2010 alone:

SecurityJam
A five-day long security jam involving more than 4000 security experts from all over the world, including military officials and government leaders, that resulted in thousands of ideas, some of which were presented to the NATO and the European Union.

CovJam
Coventry City Council in Coventry, England, invited residents to participate in a brainstorming session to discuss a 20-year plan on the modernisation of the city.

ServiceJam
600 organisations, including government agencies, non-profit institutions and corporations jammed to come up with novel ideas in regards to volunteering and public service.

The example of IBM illustrates that Enterprise 2.0 ideas and concepts can be utilised with great commercial success if the company fully stands behind adapting these novel technologies. It is for almost certain that more and more companies will follow IBM’s example in the coming years and implement similar solutions to foster new innovations and maximise their profit in turn.

References

IBM
IBM Jam events
A Global Innovation Jam – Cultural Impacts
An Inside View of IBM’s ‘Innovation Jam’
A Global Innovation Jam – Transforming the World
The social economy: Unlocking value and productivity through social technologies

Use of Enterprise 2.0 in Non-Profit Institutions

American Red Cross

American Red Cross

The American Red Cross is a non-profit organisation that provide humanitarian services for those in need, including community services, emergency assistance, disaster relief, educational services and health and development related programs in the United States. The organisation is governed by its volunteers and is mainly supported by community donations and the income from their blood products.

Dell Logo

Dell Logo

In March 2012, American Red Cross launched their new Digital Operations Center that was backed by a generous $500,000 donation from Dell, the world-famous American multinational computer technology corporation. The idea for the new center came from Dell itself, who opened a similar facility in 2010 called Social Media Listening Command Center, which the company used to monitor the impact and the social media reactions of their operations on a world-wide scale.

It is worthwhile to point out that this initiative is the first social media monitoring platform whose primary aim is humanitarian relief. Red Cross believes that the new center will aid them in reaching out to communities that need help in the event of a natural disaster situation. By utilising Facebook and Twitter monitoring, they are able to get first-hand real-time information from the people affected by the event sometimes even before it would be reported by traditional media channels. This enables the organisation to respond faster to the situation and also to establish real-time communication with individuals who need help.

In addition to engaging with the public when a natural disaster occurs, the center continuously sources and aggregates data obtained from Facebook and Twitter comments to spot trends and better anticipate public needs. This is an excellent example of the Collect Information and Insights value lever, where by aggregating information and reports and turning this data into easily digestible information (e.g. heat maps), the organisation is able to prioritise their resource use strategy in order to maximise the help they can provide. On the other hand, Red Cross can also broadcast fundraising and other type of messages asking for help through social media channels (for example asking for blood donations in case of a major crisis), which is a good example of the Mobilize resources lever.

To sum up, the case of Red Cross is an excellent example on taking a successful enterprise-level social media program (Dell’s Social Media Listening Command Center) and adapting it to the particular needs and requirements of a non-profit organisation.

References

American Red Cross
Wikipedia — American Red Cross
American Red Cross Opens a Social Media Operations Center
Dell
Red Cross Launches Social Media Disaster Response Center
The American Red Cross and Dell Launch First-Of-Its-Kind Social Media Digital Operations Center for Humanitarian Relief
Superstorm Sandy and the Red Cross Digital Operations Center
The social economy: Unlocking value and productivity through social technologies