Last week, Newsgator, a software company primarily known for its family of RSS feed readers, released a whitepaper on how to make a business case for enterprise social tools. The ROI question has been haunting E20 evangelists since the very beginning, but has become a real deal breaker amid these difficult economic times. The dilemma we are facing is that we are asked to quantify intangible assets. While it is difficult to do so post-implementation it seems nearly impossible doing it pre-implementation.

In its paper Newsgator presents a number of scenarios and associated benefits that can be leveraged using social tools. Some of these benefits are more easily quantifiable than others. Newsgator calls them 'hard cost take outs'. If your management focuses almost completely on $$$ in terms of return, you may want to pay close attention:

Reduce Premium Content Costs
'Given that there‟s a remarkable amount of content available via RSS, XML, and other protocols inherent to enterprise companies, the cost of implementing social computing solutions can often be justified by a reduced reliance on premium external content subscriptions. As an example, one enterprise company did an analysis of news articles from its premium content provider compared to freely available RSS-delivered news. After analyzing 500 news articles, they determined that 80-90% of the content they required was available via RSS from public, free sources.'

On back of it you could also make the case that your highly inefficient process of gathering, repurposing and disseminating information inside your firm using a native format like email, could be replaced by RSS. For example, a law firm could publish its content with feeds, which could subsequently be tagged, filtered, or commented. Content would be much more timely and relevant to consumers and producers would not have to deal with updating email subscription lists.   


Lower Printing Budgets
'Sharing, editing, and reviewing documents through a social computing solution, [...] can not only enhance employees‟ productivity by driving consumption of, and interaction/engagement with content, but also reduce fixed costs. One financial service company concluded that it would cut its printing and toner budget by nearly two-thirds by adopting social computing simply because employees could view content from their start pages instead of having to drill down into disparate systems to find and print out other documents.'
 

Reduce Email Volume & Associated Support Costs
'One of the obvious benefits of Web 2.0 technologies is you can get people to interact around content and with each other outside of sending emails (with attachments) back and forth which can be cumbersome and time consuming. Implementing social computing solutions can help to reduce email overwhelm since the beauty of a social computing platform in that it can subscribe relevant people to relevant information at relevant locations/devices. There are significant costs associated with storing e-mail and even a small reduction in the overall volume of email can deliver substantial savings. (Indeed, the fully loaded cost to store 1 GB of email can reach $500 a year.).'

Newsgator points to a Fortune 100 manufacturing company that calculated cost savings for reduced email volumes. Maybe it is just me, but the numbers given don't seem to be very realistic. Nevertheless, email volume is certainly an interesting cost driver to look at.


Reduce Other Enterprise Application Integration Seats
'Generally speaking, the cost for an additional incremental seat for specialized solutions like business intelligence and talent management can be quite expensive. Rather than a dedicated application for innovation management, whose function historically might be considered narrower in focus and relatively expensive on a per seat basis, by instead setting up a community space that‟s easy for everyone to participate and collaborate in, through a social computing platform, enterprises can reduce other more specialized enterprise seats and save money.'


Trim Travel Budgets
[...] it is predicted that the average cost of a domestic trip will increase by almost 3% this year compared to 2008 and that the average cost of an international trip will increase by over 4% compared to last year.
Companies are increasingly discovering that the ability to socially network relevant people through appropriate channels and media is, indeed, a very good substitute for in person engagements.

Well, this is kind of a no-brainer. SAP recently ran a virtual event with a global attendance of 10,000+, which replaced a physical event. 


Increase Talent Management ROI
'[...] over 90% questioned stated that "newer, innovative technologies in the workplace would make them more likely to consider a potential job opportunity." Finally, evidence suggests that social computing platforms can reduce the cost of on-boarding new hires. For example, if a new employee can come into a position and already have rich content and connections to other employees in place - and all connectivity is dynamic (i.e., due to collaboration, "tomorrow‟s experience is richer than today‟s") - then training costs to get them up to speed can be reduced dramatically.'


Decrease Enterprise Application Integration Costs
[...] a well-deployed social computing platform enables inexpensive delivery of information, alerts, and special events (even to end-points such as mobile devices), in a way that‟s much more cost-effective than relying on continued upkeep of legacy platforms for these same types of activities.

The whitepaper also contains a number of so-called 'soft cost take-outs', which I won't list here. In case you are interested, here is the link again.

At the end of the paper the Newsgator folks make a very valid observation. You do not select a tool and ask which problems it can solve. Instead, you should ask what yours or your firm's short and midterm objectives are, how those can be met with existing technology and how they stand up against social tools. Chances are, that wherever two or more people need to communicate, collaborate or connect with each other, there may be more effective and cost-efficient ways to do so than using traditional enterprise software.