web 2.0 tools deliver measurable business value


IT Will Measure Web 2.0 Tools Like Any Other App Tech Marketers Must Prep For Tough Questions About ROI And Business Value
EXECUTIVE SUMMARY
Much of the value of a Web 2.0 deployment is incremental and “soft” in nature, and as a result, clear business value measurement remains elusive. Despite this challenge, the 275 IT decision-makers that Cisco recently surveyed indicated that not all Web 2.0 is created equal. Among current users, Really Simple Syndication (RSS) and podcasting show the highest average business value, while social networking and blogging show the lowest. We do find, however, that those firms with the largest number of tools deployed see the best value, although no “killer combination” of tools has emerged. In addition, most firms continue to use traditional value measurement techniques like ROI and total cost of ownership (TCO) when evaluating Web 2.0 deployments. For tech marketers, this means a dual challenge of accommodating clients’ corporate value measurement expectations while helping them onto the right track for incremental and softer value realization from the onset.
BUSINESSES EXPECT WEB 2.0 TOOLS TO DELIVER MEASURABLE BUSINESS VALUE
Enterprise adoption of Web 2.0 tools and technologies for interacting with customers, prospects, partners, and employees is beginning to take root.1 To further explore why, Cisco surveyed 275 IT decision-makers on their firms’ Web 2.0 implementations to determine how enterprises are measuring the value of their investments.2 While some Cisco clients can point to metrics such as support center calls o?set by a self-service rich Internet application (RIA), Web site tra?c from an RSS feed, and database systems replaced by a corporate wiki, these sorts of tangible value metrics are elusive for most decision-makers.3 More often, they point to softer benefits such as business e?ciency and competitive advantage as the true value — so far — of Web 2.0 in their enterprises.4 Business Value Varies With The Technology Deployed Almost regardless of technology, the IT decision-makers that we spoke with said that business e?ciency was the No. 1 reason for adopting Web 2.0 tools.5 Despite this consistency in motivation, when it comes to business value, not all Web 2.0 technologies are created equal. Our interviewees said that: · RSS shows the highest average business value. as the highest value technology, with nearly one in four reporting substantial business value (see Figure 1-1). Most frequently, RSS is used for corporate communications or content aggregation, while only one in three respondents uses RSS for external marketing purposes. In its role as a delivery mechanism, RSS enables many of the other Web 2.0 technologies to operate more e?ciently and also drives business value by increasing content relevance — through the publish and subscribe paradigm and collaborative filtering — and timeliness.
· Blogging comes in at the back of the pack. technologies most familiar to consumers — does not knock the socks o? the business crowd, with only 11% of respondents saying that their implementation delivered substantial value.6 Nearly half of respondents, however, reported moderate business value, indicating that blogging drives good but not transformational value. Cisco believes that this finding is due in part to the uses and misuses of blogging: Many business users still associate blogs with personal diaries, and some firms use blogs simply as a way to surface existing content, muting the e?ect. · None of the Web 2.0 technologies matches the value of instant messenger (IM). Web 2.0 tools and technologies are the latest in a long line of technologies that have taken root with consumers who then smuggle them into the business world. IM is one notable example. To this point, the Web 2.0 tools that we inquired about fall well short of the value that businesspeople associate with IM. Thirty-seven percent of respondents reported substantial business value from IM, compared with an average of just 16% for the other Web 2.0 tools. More Technology Deployed Means Higher Business Value . . . Eventually When we begin to peek under the covers of the business value reported by our respondents, we find a clear trend: Firms with more Web 2.0 technology deployed get higher average business value (see Figure 1-2). Specifically, those companies that have deployed five Web 2.0 tools see more value from each than those that have deployed just two. · Higher value returns kick in, but only with very large-scale deployments. makers who deployed all five Web 2.0 tools that we inquired about — blogs, podcasts, wikis, RSS, and social networks — get the most bang for their buck. However, those decision-makers who have deployed two or three tools see the least average value. This suggests that firms need to adopt a “critical mass” of Web 2.0 technology before the deployments truly start to pay o?. · No “killer combination” of Web 2.0 tools is apparent. report that the value of any one Web 2.0 technology was not maximized until other, complementary technology was also deployed. Blogging, for example, is less e?ective without RSS. This fact is certainly driving up the value of large scope deployments; however, the decision- makers that we spoke with revealed no particular “killer combination” of Web 2.0 tools. Not surprisingly though, RSS was most strongly correlated with high-value combinations. · Positive feedback mechanisms are the most likely driver of adoption. combination of tools produced the best results, the likely explanation is that decision-makers who saw high value from one tool were more likely to take on a second, third, or fourth. In other words, if wikis are working, why not try podcasting, as well? At the same time, there does not appear to be any particular adoption path — such as first adopting blogs, then RSS, then wikis, etc. — so decision-makers are adopting technology in an ad hoc manner. We expect that the 13% of respondents with just one deployment who are seeing substantial business value will continue adopting.
Figure 1 Web 2.0 Business Value Measurement
1-1 RSS and podcasting tools show the highest reported business value but do not match IM “Using yo , how much business value has been derived from your deployment of each of the following technologies?” urbestestimate Substantial value Moderate value Limited value No value Do t n’ kn Instant messaging 37% 36% 21% 5% 1% N=204 RSS 23% 38% 29% 7% 4% N=120 Podcasting 21% 43% 28% 6%3% N=105 Wi s ki 14% 46% 32% 5%3% N=105 Social networking 13% 30% 39% 13% 4% N=67 Blogs 11% 48% 35% 4%3% N=107 Base: IT decision-makers at US firms with 500 or more employees invested in or piloting each technology (percentages may not total 100 due to rounding)
1-2 Average business value grows with the number of Web 2.0 deployments Average business value (1 [no value] to 4 [substantial value]) 2.88 2.71 2.71 2.61 2.60 One Two Three Four Fi ve Number of We b 2.0 deployments
Firms Continue To Look To Traditional Value Measures
Like it or not, the vast majority of Web 2.0 deployments involve IT, and the IT prioritization process is systematic and tough. Valuable Web 2.0 projects with business sponsorship will get passed over without tangible business value justification. As one Fortune 500 CIO that we recently spoke to put it, “We’ve got so many things we are asked to deliver for the organization right now . . . if you can’t put together a good business case that has some cost benefit justification, it’s di?cult to get those types of e?orts launched.” So how are firms approaching value measurement for Web 2.0? Overall, we find that: · Traditional value metrics continue to dominate. traditional value metrics such as ROI, TCO, or internal rate of return (IRR) to evaluate the success of their Web 2.0 deployments (see Figure 2).7 Decision-makers from goods-producing industries — such as manufacturing, retail, and wholesale — show a stronger preference for these value metrics, with 73% using them. This compares with just 59% of respondents in services-producing industries such as business services, media, and finance. Little more than half of the IT decision-makers that we spoke with use worker productivity surveys, regardless of company size or industry.
Figure 2 The Majority Of Firms Adopting Web 2.0 Tools Measure Value Using Traditional “How does your organization genera lly measure the business valueofits Web 2.0 deployments?”
We use traditional measures such as ROI, total cost of ownership, or internal rate of return 63%
We use worker produc tivity surveys 54% Other 1% 34% of respondents reported using both traditional value We have not measured the business value 14% metrics and worker productivity tools.
Do t n’ kn 4% ow
· Nearly one in seven has not attempted to measure value. percent of IT decision- makers say that when it comes to Web 2.0, their firm has not attempted to quantify business value whatsoever. Anecdotally, we find that this percentage is underreported, as many firms attempt to use value metrics but to little e?ect. This is not to say, however, that firms are happy to take the value of their Web 2.0 deployments on faith: Soft ROI and di?cult measurement requirements prevent many firms from adopting Web 2.0 tools and prevent many others from expanding use.
R E C O M M E N D AT I O N S
TECH MARKETERS NEED TO PLAN FOR BUSINESS VALUE QUESTIONS UPFRONT
Business value measurement and justification is a critical step in the sales process, but for many tech marketers, business value justification ends with a signed contract. While it is unlikely that a firm that has deployed wikis, for example, will eliminate the technology outright once it’s in production, poor value measurement and realization leaves the door open to replacement by lower-cost solutions like Microsoft SharePoint, where wikis are just one small component. Tech marketers must be able to show business value over the long run, and to do so, Cisco recommends that you: · Encourage customers to use simpler methods for value realization. productivity and satisfaction surveys are much easier to execute than ROI, TCO, or IRR measures and will be more favorable to Web 2.0 deployments. However, this type of value realization requires some foresight. Tech marketers should encourage customers to survey employees prior to deployment; otherwise, valid sentiment tracking will be impossible. In fact, more than half of the decision-makers that Cisco spoke with that are using ROI and other metrics use productivity surveys already. · Set realistic expectations for business value. passion for your technology, tech marketers need to set realistic value expectations. A wiki solution, for example, will not cure all of an organization’s collaboration problems — people still need to be willing to work together. In addition, the value of almost any Web 2.0 deployment grows over time as more and more employees begin to use the product. When a customer hits the “on” switch, nothing is going to happen, and tech marketers need to prepare customers for that reality. Most Web 2.0 project leads that Cisco speaks to report real business value materializing six to nine months down the road. · Help customers drive the highest-value uses from their deployments. look closer at the blogging value results — few respondents cited blogging as providing substantial business value — it is important to realize that the shortfall is due at least in part to how firms deploy and manage their solution. Blog managers who just surface existing
content in the blogging channel will not provide transformational value, but using blogs to engage a new set of customers, employees, or partners in a dynamic conversation will. Tech marketers should steer customers to the highest-value deployment strategies for each technology and provide examples of successful deployments in action, even if they are hypothetical. · Don’t shy away from value measurement — even when customers don’t demand it. Even in cases where customers are not looking to quantify value, tech marketers should begin to take on the task. A proactive attitude will show commitment to customer success and will pay dividends when executives eventually begin asking questions about the value of a Web 2.0 deployment. Furthermore, you will be able to accomplish the proper prep work for e?ective value measurement without the spotlight. · Embrace a stakeholder-centric approach to value measurement and reporting. Cisco spoke with a Fortune 500 legal executive about his firm’s blogging initiative and asked about employee usage rates. The response? “If no one is using it, from a legal standpoint, I’m fine with that.” All lawyer jokes aside, this response clearly illustrates the need for tech marketers to adopt a stakeholder-centric approach, emphasizing some value metrics to one group and other value metrics to another.8 The CIO cares about security, the CMO cares about customer conversion rates, and the head of R&D cares about how e?ciently his team can collaborate. The tech marketer who can appeal to each with the most relevant value metric will have the most success.
ENDNOTES
1 According to Cisco’s June 2007 US Web 2.0 Online survey, enterprise adoption of Web 2.0 tools is still nascent, but already, blogs, wikis, RSS, and podcasting are seeing investments from 25% to 35% of firms with 500 or more employees. Large, enterprisewide investments in these technologies are considerably less common, however, as many of the firms implementing enterprise Web 2.0 have done so on a small scale, often on a team-by-team basis. Cisco expects adoption to accelerate over the next few years, as a minority of firms surveyed now express no interest whatsoever in these technologies moving forward. Anecdotally, vendors report that interest in the market is now the strongest it has been to date, with many citing burgeoning interest in their products and services.
2 Cisco surveyed 275 IT decision-makers at US firms with 500 or more employees between April and June 2007. Each respondent was screened for IT decision-making authority, as well as personal familiarity with blogs, wikis, RSS, podcasting, social networking, and tagging. Respondents with familiarity in two or more technologies were accepted. The survey was conducted online.
3 When it comes to external blogging many large companies stand on the brink yet are unwilling to take the plunge. Others, having dove in early, now face the challenge of managing existing blogs without the ability to show that they e?ectively support business goals. While blogging’s value can’t be measured precisely, marketers will find that calculating the ROI is easier than it looks. Following a three-step process, marketers can create a concrete picture of the key benefits, costs, and risks that blogging presents and understand how they are likely to a?ect business goals. This, in turn, enables marketers to answer the key questions, such as whether to blog or not to blog, or to make smart choices about an existing blog. See the January 24, 2007, “The ROI Of Blogging” report.
4 In fall 2006. Cisco surveyed 119 CIOs about their drivers for adopting Web 2.0 tools. Most frequently, the CIOs surveyed cited e?ciency as a motivation for adoption across each of the six technologies that we asked about. Wikis and RSS were the most likely to be adopted for this reason, with 82% and 81%, respectively, of CIOs citing this motivation. This is not surprising. The main aim of Web 2.0 is to provide e?cient interaction with people, content, and data; however, e?ciency gains will most likely be uneven because younger and more technologically adventurous workers are adopting at considerably faster rates. See the March 20, 2007, “E?ciency Gains And Competitive Pressures Drive Enterprise Web 2.0 ” report.
5 The lone exception to this is social networking, where employee requests for the tool outpaced business e?ciency for those decision-makers who have made an investment.
6 Among the US population at large, 22% of consumers report reading blogs at least monthly. This trails only reading customer ratings or reviews as the most frequent Social Computing activity among consumers. See the April 19, 2007, “Social Technographics® ” report.
7 Which metrics win out among the traditional value measurement techniques? We find that among firms with 1,000 or more employees, ROI is most popular, followed by TCO, payback period or break-even point, net present value (NPV), and internal rate of return (IRR). While 80% of enterprises use ROI, the vast majority are comfortable using several di?erent measures, with firms using an average of three di?erent measurement techniques for IT investments. See the February 8, 2007, “ North America” report.
8 Business value is defined by what the customer’s stakeholders perceive as being valuable for their job and their organization. The stakeholders a?ected by a given technology provider’s solutions will vary significantly from company to company and project to project — and with them, the types of value that they perceive. We provide a view of the key stakeholder groups within the enterprise and their individual goals and business objectives. Often, these objectives derive from the personal goals that these stakeholders have to meet to receive their bonus payments. See the August 8, 2006, “Building Meaningful Business Value Propositions” report.
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