Getting Past the ROI Question: Social Networking in Business

Getting Past the ROI Question: Social Networking in Business

Whenever I’m asked "What's the ROI of social networking?" I reply with a question: What's the ROI of email?

You never hear supply chain executives ask that question, yet they use the return on investment question as a way to delay or block the deployment of social networking technologies at their companies.

Email, as you probably know from your own experience, is arguably the number one productivity killer in the workplace (I actually have my email app closed as I write this so I won't get distracted). If you do an online search for "email productivity killer," you get at least a million more hits than for "social media productivity killer." And according to a survey of more than 600 small business owners, freelancers, and professionals conducted by OfficeTime.net, email was ranked as the #1 time killer at work; social networking was ranked #8, behind bigger time killers such as Internet surfing, meetings, and non-business related conversations (see infographic here).

Simply put, nobody ever asks what is the ROI of email, the telephone, and meetings — the three most common ways we currently communicate and collaborate with each other at work — so why the double standard with social networking? If we’re willing to accept the limits and drawbacks of our current communication tools and processes, why not give social networking a try, especially because it addresses many of those limits and drawbacks?

Over the past few years, I've written extensively about the potential role and benefits of social networking in supply chain management (see, for example, A Pulse on Social Networking for Supply Chain Management). But don't just take my word for it. Last year, for example, I interviewed Angel Mendez, SVP at Cisco and I asked him about his perspective and experience using social networking solutions at Cisco. Watch this short video clip for his great insights on how social networking helps with demand management, enables faster problem resolution, and allows companies to do more with less.

And last week, IBM and Twitter announced "a landmark partnership that will help transform how businesses and institutions understand their customers, markets and trends – and inform every business decision." Here are some details from the press release:

IBM plans to offer Twitter data as part of select cloud-based services, including IBM Watson Analytics, a new cognitive service in the palm of your hand that brings intuitive visualization and predictive capabilities to business users; and a cloud-based data refinery service that enables application developers to embed data services in applications.
IBM and Twitter will deliver a set of enterprise applications to help improve business decisions across industries and professions…With the development of new solutions to improve business decisions across industries and professions, IBM and Twitter will be able to enrich existing enterprise data streams to improve business decisions. For example, the integration of social data with enterprise data can help accelerate product development by predicting long-term trends or drive real-time demand forecasting based on real-time situations like weather patterns.

Another example: social networking can play an important role in supply chain risk management. It can provide companies with more timely and insightful insights about emerging risks and events, enabling them to take corrective action sooner and thus prevent (or minimize the impact of) a supply chain disruption.

According to a Wall Street Journal article ("Decoding Our Chatter," Robert Lee Hotz, October 1, 2011), "When Virginia’s magnitude 5.8 earthquake hit [in August 2011], the first Twitter reports sent from people at the epicenter began almost instantly at 1:51 p.m.—and reached New York about 40 seconds ahead of the quake's first shock waves…The first terse tweets also outpaced the U.S. Geological Survey's conventional seismometers, which normally can take from two to 20 minutes to generate an alert." The article also highlights how researchers and firms are mining Twitter messages "to monitor political activity and employee morale, track outbreaks of flu and food poisoning, map fluctuations in moods around the world, predict box-office receipts for new movies, and get a jump on changes in the stock market."

The bottom line: Stop wasting time trying to figure out the ROI of social networking. You're wasting enough time already with email, meetings, and watercooler conversations. If you really want to know the ROI of social networking, you won't find it in a spreadsheet or blog post. You just need to start using it. It's what Cisco and other companies like GE are doing. So, stop asking the ROI question and start taking action.

For related commentary, see HP’s New Style of IT: The Social Supply Chain and Justifying Social Networking for Supply Chain Management.

Photo: Nimages DR, Flikr

Michał Sala

Project Manager at Generali

10y

Hi, interesting read, but I believe that there are a few things mixed up in it. First: why doesn't one ask about ROI of e-mail? Well... you can't do business nowadays without it. That's why. On the other hand, if You need to have a no-expense e-mail: there's plenty of 'free' stuff out there. All depends on what You want. And ROI question when planning to set up an Exchange server is valid - it can be calculated (though I believe it's rarely done, as 'qualitative' argumentation usually does the trick anyway). Second: it's unclear what You mean by social networks in the article: do You think stuff such as Facebook? Used how? As marketing platform, collaboration platform, data analytics tool? Those are totaly diffrent things, require different investments and offer different gains. Examples You mentioned don't make it clear. It would be nice if You mean ESNs, Facebook, Twitter or whay. Also note, e-mail is standard stuff that works regardless if You go for IBM, Microsoft, Google or whatever to do the job. That's far from true with social networks. Especially when You consider ESNs. So while asking plain ROI question might be a bit shallow, there's nothing wrong with asking question for business justification of throwing one's resources into that pipe. You can't gain on social networks before You identify what are You supposed to gain.

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Jorge Nunez

Christian Missionary at Christian Light Ministries.

10y

...... . :~) ... ROI Is easy to disregard when the investment monies are not yours! The bottom line is "Word Of Mouth" Is unbeatable..... :~)

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Carla Dawson

Solar Panel Cleaning Technologies & Safety - Advisor at SPCFonline.com, ASTM, ASSP, SEIA, ANSI

10y

Well said Adrian.

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Maurice Fernandez

Client Relations | Account Management | Fluent in English & Spanish

10y

Great, extraordinary article!

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Greg Riemer

Driving Digital Marketing Innovation for C.H. Robinson

10y

Social media needs to be integrated within all elements of business. We need to stop wondering when it will impact business and look at ways we can leverage social media to help with communication, customer service, security and innovation. Social media isn’t the answer to everything but it can be part of many solutions within business.

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