Hi fellow bloggers! How are you all today? It’s been a wonderful couple of weeks with perfect weather for the beach, but a tad bit too cold. In this week’s blog post, I will be discussing the return on investment, but in particular the ROI of the application of Enterprise 2.0. I will use the Joction case study to best describe what ROI is, and go in depth in other aspects of ROI. Please feel free to comment or discuss your thoughts because I will get back to you, I promise! 🙂

What is return on investment?

According to Investopedia, return on investment is a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage.

Most individuals and organizations perceive return on investment as the monetary net profit. Although monetary profit is the ultimate goal from implementing strategies and web 2.0 tools, other important contributing factors must not be forgotten. These factors are also different depending on the nature of the organization. I would like to repeat that return on investment is NOT JUST ALL about monetary profit, it could also be factors such as customer satisfaction, efficiency and effectiveness of email system / telephone system, staff satisfaction and retention, customer experience and the list goes on. Every single one of those above factors are equally important and contribute dearly to the overall success and profit an organization makes. As I have mentioned, every company will have different contributing factors.

Let me show you what I mean by using an example. Please read the case study below!

Joction is a company with twenty offices the United States. The company has approximately 9,000 customers, many of them Fortune 500 companies and primarily involved in financial services. Joction’s business consists mainly of helping these companies with network security systems. The company has doubled in size over the last two years and its employees have started to complain of email fatigue, due to a growing barrage of emails received every day. Additionally, employees have found it increasingly difficult to find specific pieces of information on the company’s network because the company’s servers now contain over 800,000 documents and spreadsheets. Many of these are multiple versions of the same documents, updated throughout the years by different employees making it difficult to locate the most up-to-date version. As the Joction team has expanded across the country, employees have been unable to keep up with the skill sets of new employees entering the organization. Each branch has become insular, communicating and sharing only with employees in their specific office. Management is worried that many extremely talented individuals working across the company are not being utilized efficiently and that the branches are not working cooperatively. Joction fears this is all leading to lower quality and less innovation on each project.

The nature of the organization has more focus on the emailing system and finding documents on the company database. There are many factors that are at risk, as follows:

  • Staff satisfaction, retention, loyalty
  • Customer experience, satisfaction, retention
  • Efficient communication and co-ordination between different platforms and departments within the organization
  • The sharing of knowledge (tacit and explicit) throughout the organization

Identifying the actual problems

From the case study, it is apparent that Joction is a successful company, it has doubled in size in the last 2 years and offers superior I.T solutions for some of the world’s most profitable organizations. With time, the organization grew and evolved, but new policies and management did not. The problem arose when employees started to complain about email fatigue. This was due to the increasing number of emails per day, and the lack of an effective system to manage these emails. This problem created an impact on the factors contributing to the success of the organization discussed above, such as the staff satisfaction, retention and loyalty.

 

 

 

 

 

 

 

Before I finish off this post, I just wanted to summarize everything! Return on investment is one of the most common tools used by organizations  to assess its performance and areas for improvement. However, many organizations oversee the many hidden factors contributing to the overall result managers get from ROI tools. In this post, I discussed what ROI is and pointed out that most organizations look at the monetary profit as the primary ROI, and that organizations should focus on the foundation of the problem by digging deeper to the roots of what is causing the problems.

 

Thank you again for reading my post, I hope you have all enjoyed it and please feel free to comment or follow ! ^^

 

Calvin

Advertisements

About calditz
My name is Cal, I'm here to share my views, opinions and stories that may interest you.

8 Responses to

  1. Good post Calvin.
    I believe what makes the calculation of ROI for E2.0 even harder, is the fact that we need to deal with abstract concepts such as collaboration and knowledge sharing. I’ve explored these points in my blog this week, when you have chance have a look (http://charlestontelles.wordpress.com).
    Keep posting.
    Charles

    • calvinpang0831 says:

      Thanks for the comment Charles, yes I agree as well, gone are the days when you could measure something accurately. The world we live in is becoming increasingly difficult!

      I will have a look at your blog, thanks Charles.

      Calvin

  2. Yvonne Tan says:

    Hi Calvin,

    that was a great read!
    I strongly agree with you that the ROI is not all about the monetary profits. Many a times, organisations make that mistake.

    ROI can also be measured in other non-tangible methods, like staff performance, productivity, etc.
    I guess the organisations need to start employing people who have expertise in this ROI for social media area, so that they can truly see if they are reaping what they are sowing.

    Great blog, btw!

    • calvinpang0831 says:

      Hi Yvonne,

      Thank you for your comment, I’m glad you enjoyed my blog! I had a look at your blog as well and I really enjoyed it, keep up the good work!

      Calvin.

  3. aureliequt says:

    Hi Calvin,
    Wel written post. It is funny how our vision of ROI differ. I think that ROI must be expressed in financial terms. I do agree with you on that staff and customers satisfaction or efficient communication are positive returns enterprise 2.0 can provide. However these positive benefits needs to be translated into monetary terms to calculate an ROI. For exemple you must correlate your customer satisfaction with your increase in sales to really determine the impact of enterprise 2.0 implementation. Have a look at my blog to see my point of view about the subject.

    See you 😉

  4. Marayka says:

    Hi Calvin!
    Great post! I agree that ROI is not only measured by monetary profits but also things like customer satisfaction and even employee productivity. I guess it is the intangible factors that make it hard to calculate ROI, getting the right numbers is very difficult and only a few companies are calculating ROI successfully.
    check out my blog when you get a chance – http://marayka.wordpress.com/
    look forward to your next post 🙂

  5. paulbrouard says:

    Hey Calvin,

    Interesting post and I definitely agree that ROI must be calculated by considering many factors not only the income! I believe Web2.0 ROI for an enterprise is particularly hard to measure. Not only because its tools are quite new but also because the factors we want to consider are very hard to measure. Can we give an clear description of the ROI caused by Coca-Cola fan page on facebook? I guess it is so hard to get even close to it. Maybe Siri on the Iphone5 could tell us what do you think 😛
    I’m not talking about Apple in my latest post but you might be interested as I talk about how hard it is to implement Web2.0 for an enterprise. 😉
    Looking forward to read more from you !

    Bye,

    Paul

    • calvinpang0831 says:

      Hi Paul,

      Thanks for your comment, I definitely agree with what you say about Coca-Cola fan page on face book! I had a look at your blog as well, great work!

      Keep up the great work!

      Calvin

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

ahmedalghamdi6

Smile! You’re at the best WordPress.com site ever

Enterprise 2.0 Blog

A series of blog posts explaining Enterprise 2.0 and how to implement it

adamhijazi

It's a web 2.0 world.

mbeshayer

A great WordPress.com site

mattblakey

A topnotch WordPress.com site

Bhavin

Enterprise 2.0 and Web 2.0 Technologies

Ash Perkins

The place for your Enterprise 2.0 class information!

To the 'clouds'

Enterprise 2.0 news and research

roggasblog

Hi there! My name is Andrew and this is my blog.

Enterprise 2.0

By Alyse O'Shea

Abdulrahman Alarifi

Professional Doctorate Candidate, QUT , http://study-erp.org/

Thadreina Abady

Exploring the digital environment of Enterprise 2.0

Calvin Pang

I aim to entertain, inform, and educate. Mostly entertain :)

The WordPress.com Blog

The latest news on WordPress.com and the WordPress community.

%d bloggers like this: