Business metrics and social software

by Lee Hopkins on June 14, 2011 · 0 comments

in customer service,internal communications,marketing,pr,revenue models,strategy,tools

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CHIEFEXECUTIVE.NET have published a great read on why social software often fails to excite the C-suite and what can be done to get their support and encouragement of social initiatives within and throughout the organisation.

Appropriately deployed, social software can yield significant and quantifiable operating performance improvement. It has unique capabilities to address current operating challenges and improve operating metrics. Two early adopters demonstrate that business performance improvements are possible. OSIsoft realized a 22 percent improvement in average time to issue resolution through the customer support team’s use of Socialtext wikis. Alcoa Fastening Systems reduced compliance activities by 61 percent using an internal collaborative platform provided by Traction Software. Both companies believe these improvements would have been impossible without their respective social software tools.

Citing three social software deployment patterns (bottom up, ad-hoc top down, and top-down, enterprise-wide) article authors John Hagel and John Seely Brown note:

All three of the prevailing approaches to social software deployment suffer a common drawback: the performance impact is likely to be severely limited. In many cases, performance impact is not even explicitly specified or measured. Where performance impact is achieved, it tends to be fragmented and random, rather than focused on the highest impact areas of the business. In the worst case, the potential for backlash mounts as investments grow and performance benefits fail to materialize.

Later on in this excellent article they look at a couple of examples, including a call centre, and comment:

This approach offers a significant advantage relative to more conventional practices that seek to quantify return on investment of social software deployment. Such efforts are fraught with difficulty. Even with the best of intentions, the connection between financial metrics and operating metrics is difficult to quantify. And we all know that whoever controls the assumptions on a spreadsheet can deliver a very attractive ROI. Often assumption inflation is encouraged by the fact that companies rarely go back after the fact and assess whether the ROI was achieved. Once the business case is approved, people move on and don’t look back.

By focusing on operating metrics, something remarkably different happens. These operating metrics can and should be monitored so that progress (or lack of it) can be quantified. Not only does this provide assurance that the desired operating metrics are improving, but it also builds a compelling case for broader deployment of social software in other areas of the enterprise. When tangible and quantifiable operating performance results are achieved, word of mouth spreads rapidly and others are motivated to achieve comparable results. At the same time, the skeptics and opponents for deployment of this new technology are undermined in the face of clear evidence that the metrics that matter the most are being materially improved.

In a clear call-to-action for the CEO, they say:

Stepping back from all of this, it becomes clear why CEOs are natural and necessary leaders for these software deployment initiatives. Effectively targeting metrics that matter requires a broad overview of the economics of the business and an ability to drill down quickly into whatever part of the operating processes that might be most helpful in driving key financial metrics. Once these areas have been identified and the tie to key operating metrics made explicit, the CEO can delegate down to appropriate middle managers to shape the specific deployment initiatives at the front line of the organization. The role of the CEO at that point is to provide overall leadership to ensure that front line performance metrics and relevant operating metrics are regularly monitored and that the initiative is continually refined to reflect the feedback received through these metrics. As operating metrics begin to improve, the CEO becomes the catalyst to showcase the results achieved and to drive further waves of deployment, again shaped by a systematic assessment of the areas where social software is most likely to move the needle for the overall enterprise.

A fabulous read and bravo to the authors for tackling a difficult topic (‘CEO and ROI and social media’) head-on in language a CEO would understand.

An article, perhaps, to point your CEO to…

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