Posts Tagged ‘#ROI’

How ROI can be calculated for enterprise 2.0 projects..?


During the semester, we have discussed the benefits of adopting Web 2.0 tools in to the Enterprise. Also these benefits are quite challenging. So need to measure the Return of Investment is more important because of major increasing in the use of web 2.o tools.  The important clue is to understand that Return of Investment come from ” the activity and actual collaboration” and it’s not from technologies.

So what is Return of Investment means…..?

Return of Investments measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. Following the picture gives you a rough idea that how to calculate.

 

 

Following formulas can calculate and measure the different aspects of investment.

1. ROI =  ( Gain from Investment – Cost of Investment ) / Cost of Investment

The Return of the Investment is divided by the cost of the investment and result is expresses as percentage.

 

2. ROI = ( Revenue – Investment ) + Targeted Engagement / Investment * 100

This could be used as a measuring conventional advertisement campaigns.

 

3. ROI = ( Revenue – Investment ) + Employee Retention / Investment * 100

The impact of using this was highly involved employees, profitability and productivity will be increase.

 

Although, from business side, companies gaines with costs and it relates to money. So social business people gains with following areas:

# Call Center Operation

# Brand Protection

# Customer Insights

# Sales Revenue

# Lead Generation

So People and Technologies are the costs. Because people need to run the projects and they have to pay money for the technology such as softwares or which are host by Microsoft.  As a result of this ROI is calculated by subtracting the costs from the gains.

 

The Enterprise 2.0 success could be measured by following areas:

 

1. Employee engagement : From employment engagement they can get work experience, improving their knowledge and also employees are able to get real time feedback, gratification and visibility. Most of the companies conducting annual surveys for work engagement, so measure aggregate engagement that you have to have at least one rating per employee. However combining this data with employees usage in enterprise social software and other data points which can be impact of engagement such as promotion opportunities.

 

2. Turnover : Company need to obtain data concerning about the employee usage of the community as well as other data points which could be an impact on turnover rates such as promotional opportunities, tenure, salary market conditions.  However the company’s employment records have to identify employees which are turned over since you launched your network.

 

3. Sales : Using enterprise social software is one way to measure the sales because its focus on results of the sales team. Even though it is acquire the same data and make sure that you account for other factors which might be impact on sales. Moreover using regression analysis is an impact of enterprise social software.

There are few benefits for using Enterprise 2.o. Which are,

Customer Satisfaction : Customer ideas and suggestion were helpful to improve the companies products and ideas. Also with an eye toward higher satisfaction and lower churn.

 

Saving time : As implementation of web 2.0 tools could help companies to save time. So saving time will be measuring according to the previous product development and it leads to cost saving through reducing advertise time frames.

Cost savings : There were several ways to save money such as loyalty cards or using social media and public forums to advertise instead of using printing media. Therefore  cost is measured in monetary terms by comparing overhead.

 

Employee satisfaction : The ability to find the correct person to help with an idea or project.

 

Cross-organisation collaboration : This improving incomes as a diversity of knowledge and perspective are brought to bear.

 

 

 

The Maslow’s pyramid gives you a brief explanation about how increased Enterprise 2.0.  Regression analysis is a mathematical tool which used to calculate between variables on large sets of data. Preparing data for analysis will be the more time consuming activity and taking more time to analysis the data will help to prevent mistakes.

However companies can tailor their own Enterprise 2.0 ROI model that suitable for their organisation.  Also companies can create ROI model in line with their own requirements. So that can achieve and successfully measure ROI as a result of implementation of Enterprise 2.0.

 

Reference :

Maslow Hierarchy for Enterprise 2.0

What is ROI

How to calculate ROI

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