Companies apply ROI to Web 2.0

Enterprises are aiming to apply traditional ROI and business benefit measures to Web 2.0 tools despite the difficulties in measuring the “softer” returns, such as the improved productivity and communication that wikis, blogs and RSS bring to a company, a new survey has found.

There are tangible business benefits, such as a drop in support center calls because of rich Internet applications or a database system replaced by a corporate wiki, according to the Forrester Research study released this week, but they remain elusive for most IT decision-makers. Instead, most companies point to softer benefits, such as business efficiency and competitive advantage as the true value from Web 2.0 technology, the report.

“The most interesting finding here was the notion that IT would at least attempt to measure these Web 2.0 tools like anything else,” said Oliver Young, the Forrester analyst who wrote the report, which included a survey of 275 IT managers in May and June.

“The benefit of Web 2.0 tools within the enterprise is very squishy, very soft. It is all about productivity, communication and worker efficiency, which are notoriously difficult to measure,” Young said.

In fact, 63 percent of those surveyed that they use total cost of ownership, ROI or internal rate of return to measure the value of Web 2.0 tools, the report found. In industries like manufacturing, retail and wholesale, that number increased to 73 percent.

While a company’s chief marketing officer may be well-versed in some of the softer Web 2.0 benefits, trying to get IT departments that are stretched thin with competing priorities to pay attention to Web 2.0 tools can be a challenge, Young added.

“The IT approval process is very much business-value driven,” he said. If you can’t sit down and compare [Web 2.0] to other initiatives and other resource demands, it becomes very difficult to get something approved.”

The study also found that 14 percent of companies have not attempted to measure the value of Web 2.0 tools. Forrester said anecdotal evidence suggests that respondents may be underreporting this area because of the difficulty in measuring the softer business benefits.

In addition, the report found that the perceived business value of different Web 2.0 tools varies widely, with instant messaging and RSS noted as being the most valuable for organizations while blogging is at the bottom of the list. Only 11 percent of those surveyed said blogging had substantial benefits, while 48 percent said blogging had moderate benefits to the company.

Nearly one in four of those surveyed said RSS is the highest value technology, Young added. Most frequently, RSS is used for corporate communication or content aggregation, the report said. It also allows many other Web 2.0 technologies to work more efficiently with its publish and subscribe mechanism, Young added.

The report also noted that companies with more Web 2.0 technology in place get a higher business value than those using fewer tools. Those enterprises with blogs, podcasts, wikis, RSS and social networks in place get the most ROI, the report noted.

However, those surveyed noted there is no “killer combination” of the tools, although RSS was most strongly correlated with high-value combinations.

The best way for companies to get Web 2.0 tools into place effectively, Young suggested, is to tap the most concise measurements possible to show the value of the technology. For example, with an external facing blog, factors such as the boost to a company’s profile are difficult to measure, he noted.

“You can calculate how many impressions you got on your particular Web site and your particular message and what type of spending you would have to do … to advertise to accomplish the same thing,” he said. “These sort of measures are a little bit convoluted, but it at least gets you closer to a concrete business value. It really ends up setting the right culture in place, [providing] the right incentives and doing this holistically, not just throwing some tools out there and expecting people to use them.”

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Jim Love, Chief Content Officer, IT World Canada

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