Dion Hinchcliffe kicked off this weekends’ Enterprise 2.0 meme with a well articulated post on determining ROI. The central theme of the article suggests that its challenging to identify where and when E2.0 ROI returns will be realized and why.
Dion goes on to say that IT managers are mainly taking a wait and see approach for the following reasons:
1. One is an broad wariness of a new horizontal information technology approach that purports to solve so many problems and will overlap with existing solutions….
2. A second set of issues is related to corporate culture and its fundamentally hierarchical nature, which seems anathema to the flattened, highly social nature of Web 2.0 in the enterprise.
3. Accurate predicting of the return on investment of an IT solution.
Dion’s post follows a series of somewhat realistic (or negative, depending on your view) articles that we recently saw from the likes of Susan Scrupski, Gil Yehuda and to some extent Venkat Rao. Venkat was focused on why culture doesn’t matter but if you look at his reasons (e.g. The Churn argument which states – Radical ideas “get adopted because the nay-sayers retire or die out and get replaced by others.”), it’s bordering on wrist-slitting, depressing outcomes, required to make Enterprise 2.0 a reality.
In a 2008, Gartner Research defines the Hype Cycle of Emerging Technologies as:
- Technology Trigger
- Peak of Inflated Expectations
- Trough of Disillusionment
- Slope of Enlightenment
- Plateau of Productivity
In his post labeled, “Enterprise 2.0 and the Trough of Disillusionment“, Hutch Carpenter creates a good summary post that explains that Enterprise 2.0 has graduated into the “trough of disillusionment” implying much needed hope that the “Slope of Enlightenment” will soon be upon vendors and customers alike.
I was thrilled to see Dennis Howlett chime in on this topic this morning with his post titled “Enterprise 2.0 promise is years off…if it materializes.” Some key quotes for me:
“Marketers would do far better to concentrate on a sliver of functionality that has meaning to the C-suite rather than grand statements, laced with competitive FUD.”
“The problem comes down to the individual perception of IP value and how that might be threatened”
“For instance, I’d be far happier to see cases where there is an identified pain point and then build out from there rather than dangling cascading network effects further down the line.”
The last quote above, my favorite by a mile, really got me thinking about how all this breaks out. Can we rest easy, realizing that we must feel the pain of natural transitioning through the “Trough of Disillusionment”? Will vendors and customers have the stamina to work through the cascading process in Dion’s diagram that will eventually show real return at the point of “3rd order cause and effect”.
Frankly, I’m nervous about both approaches. I don’t believe that most vendors (and the innovation they bring) will be able to withstand this long a process to show real ROI. Telling VC’s that we’re in a “Trough of Disillusionment” won’t be enough to raise the next round of funding in this or any economic climate. In turn, proponents of using social computing software on the customer side will likely get shot down, were they to present a long drawn process to showing real results.
As I’ve said and illustrated earlier, (as does Hutch in his post) focus on the business activity and the pain felt and you have a solid chance of skipping some of the steps in Dions’ diagram above. Sell horizontally (customer wide or employee wide) and you better be prepared to go through each of the 1st, 2nd and 3rd order cause and effects.
My interaction with LOB executives has consistently shown that in this economic climate, the knee jerk reaction has been to pour more money into current programs. New investments are being made for sure BUT instead of experimenting with new software or programs, more money is being thrown at current programs that have historically yielded the best return. With this reality in mind, showing a cascading return that has no definite time line, emanating from a new unproven technology investment, is going to mean certain death for many promising E2.0 initiatives.
Instead, focusing on a specific business activity. Prove results in a contained fashion and illustrate more attractive cost/return when extrapolated across the business unit. This affords the best opportunity to jump the natural evolution cycle and bypass some of the earlier nebulous effects of adoption that can’t be translated into real dollars.
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- Hinchcliffe Ties Enterprise 2.0 to Economic Lift (readwriteweb.com)
- Putting Web 2.0 to Work: Social Software in the Enterprise (change-management-blog.com)
- Voices on Enterprise 2.0: Ross Dawson (readwriteweb.com)
- How I Address the Question of Enterprise 2.0 ROI (bhc3.wordpress.com)
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