How To Calculate The ROI of Enterprise Social Software?

According to Gartner, many companies are making buying decisions about enterprise social software based on intangible value rather than the traditional tangible value of accounting based ROI calculations. While it can be tempting to rely on instinct and intuition, when it comes to business it is essential to keep the ROI in mind. Everything in an organization that provides value offers a certain ROI. When we understand that value, we are able to make smarter and more informed business choices. But calculating the ROI of enterprise social software isn’t always as simple as it might seem.

enterprise social software

How To Calculate the ROI of Enterprise Social Software

When it comes to enterprise social software, ROI isn’t always as clear cut as it seems. Typically the easiest way to calculate ROI is through increased employee engagement, improve productivity, or in saving communication costs. No one knows exactly upfront how much money enterprise social software will save, but demos, trials and refelction months or even years later will give you an opportunity to reflect on these experiences and gain a clear view on the benefits.  Though, it is certain that social technologies are going to be adopted in some way, shape or form no matter what company or market you are working in and will be in every enterprise in the upcoming 5 years.

Ultimately, the ROI of enterprise social software is whatever you want it to be. It’s like the old saying, you get out of it what you put in. To be successful with enterprise social software you have to determine why you are doing it. What strategic goals and objectives are you trying to reach? Enterprise social software often fails not because the software was ineffective, but because businesses had not decided ahead of time what their goals would be or how to align the software with their business goals with the initiatives. The metrics you need to evaluate the success of enterprise social software are specific to your organization. Each organization has specific, measurable goals and objectives they have to hit. Typical examples of business goals are to:

  • Increase employee engagement
  • Increase productivity
  • Increase sales
  • Increase ideas generated in the company
  • Increase collaboration with partners & customers
  • Reduce e-mails
  • Decrease new employee onboarding time
  • Decrease duplicated tasks
  • Decrease software tools & support cost
  • Create faster access to knowledge
  • Create faster access to internal experts
  • Reduce communication costs
  • Reduce travel costs

You can apply the SMART Methodology (Specific, Measurable, Actionable, Realistic, & Timed) to your enterprise social software goals.

Discovering The Hidden Treasure 

With the industry costs averaging $5 to $15 per user per month, and with no hardware & low management costs, even small increases in key performance indicators driven by enterprise social software platforms produce significant ROI. Harvard Business Review stated that “If implementing enterprise social software can increase employee engagement by as little as 0.1%, based on Best Buy’s correlation between engagement & operating income that would result in an ROI of greater than 800%” A recent result of a study performed by McKinsey also provides some interesting insights for organizations who’ve implemented such software:

  •          77% gained faster access to information
  •          60% reduced their communication costs
  •          52% gained enhanced access to internal experts
  •          44% cut their travel costs
  •          41% experienced increased employee satisfaction