William Hayes is working on a pilot project that he hopes will eventually bring wikis, blogs and RSS technologies to employees throughout pharmaceutical company Biogen Idec Inc.
But Hayes, Biogen Idec’s associate director of library and literature informatics, knows that proving the worth of such Web 2.0 tools to senior management will be difficult using traditional return on investment metrics.
The ROI “is going to be qualitative for us,” Hayes said. “If it improves interactivity and we’re getting usage of the tools and there is better communications in the company, then we will consider it a success.”
As part of the pilot project, Hayes and his team are creating a wiki to house content generated from research requests, along with feedback on that research. The plan also calls for using NewsGator Technologies Inc.’s RSS server to provide Biogen Idec’s researchers with feeds anytime new information about a particular drug is posted online, Hayes said.
He noted that the group is eschewing some traditional paths of gaining management approval for the project – for example, it has opted not to require formal sign-offs from executives in each unit that is expected to use the new tools.
Typically, technologies move forward “only if there is a huge driver, or an executive vice president or better who really wants something to happen,” Hayes said. But, he added, “we can essentially do [Web 2.0 projects] in somewhat stealth mode as pilots and prototypes. It’s a lot easier to roll things out in a small fashion and allow them to grow in a grass-roots way.”
Oliver Young, an analyst at Forrester Research Inc., contended that the difficulty of proving the financial worth of Web 2.0 tools to top executives is the biggest roadblock to corporate use of the technology.
“You are immediately stacked up against everything else IT has to deal with,” he said. “Suddenly, all these other initiatives that generally do have good ROI models associated with them become the benchmark.”
According to a report released in June, 63 per cent of 275 IT managers surveyed by Forrester were still using traditional ROI benchmarks, such as total cost of ownership, to measure the value of Web 2.0 tools to their companies.
Another 14 per cent of the respondents said they had not yet attempted to assess the value of Web 2.0 tools at all, though Forrester analysts believe that a considerably higher percentage of companies are failing in their efforts to evaluate the technology’s ROI.
Young suggested that companies tie Web 2.0 investments to existing business problems and use techniques such as employee productivity surveys to measure the value of the tools.
TradeKing, an online brokerage, set up social networking features on its Web site last August to enable users to discuss investment strategies and stock trades.
Don Montanaro, the company’s president and CEO, said TradeKing has used Web 2.0 tools since its inception in 2005 because its founders viewed the technology as a key component of their plan to build a “next-generation” online brokerage. That top-level support has eased the process of proving the ROI of the tools, he added.
“Do we think that we have a stickier relationship with our clients and that we’re having lower attrition over time? Yes, we believe that,” he said.
For example, Montanaro said that the 2,500 people who participate in TradeKing’s online social network – five per cent of its total customer base of 50,000 – generate 10 per cent of the company’s revenue. The users of the social network are also more likely to refer friends to the company, which helps cut the cost of acquiring new clients, he said.
In addition, TradeKing can measure the number of trades made by members of its community more accurately than it can measure those of nonmembers – a benefit that proves social networking “has grown up,” Montanaro said.
In the U.K., Euan Semple, former head of knowledge management at London-based British Broadcasting Corp., once managed a Web 2.0 project there that involved 23,000 employees using an internal bulletin board, 5,000 using a wiki and several hundred blogging.
“In terms of ROI, I knew that it would be a tough one, as the sorts of things that Web 2.0 delivers are to do with better transfer of knowledge and are difficult to quantify,” said Semple, who is now an independent consultant.
In its traditional forms, “ROI is a blunt instrument and not designed to measure real value,” he added. “It appeals to bean counters but doesn’t measure the intangibles in a business.”
To prove the value of the Web 2.0 tools to BBC executives, Semple collected the e-mail addresses of satisfied bulletin board users by searching for the word “thanks” in their posted comments. He then asked each of those people about their use of the system.
The technology allowed BBC employees to canvass colleagues for help on projects or to poll workers about major initiatives, Semple said. “Even if all that gets answered are small day-to-day questions, such as where to find things, how to do things or who to talk to, the cumulative effect is huge,” he added.
The Los Angeles Fire Department has adopted several Web 2.0 technologies, including blogging and podcasting tools, and established a social networking presence on Web sites such as MySpace and Facebook.
And over the past few months, the department has generated a buzz in the blogosphere through its use of Twitter Inc.’s microblogging site to send short notes about fires and car accidents to the computers or mobile devices of people who sign up for the service.
Brian Humphrey, a public information officer at the LAFD, said officials at the fire department use four attributes to measure the success of the Web 2.0 tools: their benefits, desirability, justifiability and sustainability.
“We can no longer afford to work at the [slow] speed of government,” he said. “We have responsibilities to the public to move the information as quickly as possible … so that they can make key decisions.”
Humphrey, one of two firefighters who maintain the Twitter blog 24 hours a day, said the project came about as part of the department’s move to intensify its Web 2.0 efforts after the devastation that Hurricane Katrina caused along the Gulf Coast in 2005.
Hurricane victims who sought refuge at the Louisiana Superdome in New Orleans “were dying a little bit at a time from a lack of information,” he noted. “They thought they were on their own Gilligan’s Island.”
Forrester’s Young also advises companies to consider using Web 2.0 tools offered under a software-as-a-service model to help calculate ROI.
That is the tactic Northwestern Mutual Life Insurance Co. has taken with an internal blogging and RSS project, said Andrea Austin, the insurer’s assistant director of corporate relations.
The company began using hosted blog and RSS technology from Awareness Inc. in June 2006 because it didn’t have the resources to implement the technologies internally, Austin said.
Currently, about 100 employees at Northwestern Mutual operate blogs that generate more than 12,000 page views per day, according to Austin. She noted that the software-as-a-service approach also would have allowed the insurer to easily abandon the technology if it didn’t work as hoped.
