Collaboration: Measuring the Benefits of Collaboration

Can the ROI be measured for the use of Collaboration, Web 2.0 and Social Media tools in the enterprise?  A report from the McKinsey Global Institute says ‘Yes’ and they try to back up their claim with data.  Companies that adopt web technology tools are market leaders and have a bigger market share and higher product margins.  McKinsey is calling this new breed of company the Networked Enterprise.  It is a company that intensively uses technology to enable collaboration between employees, customers, partners and suppliers.

To support their claims, McKinsey has been polling organizations with surveys over the last four years as to how they use technology for communication and collaboration and what those companies perceive as the benefits of those tools.  McKinsey’s findings are very consistent with other reports and many people’s suspicions about the benefits of collaborative tools.  The report talks of ‘measurable benefits’ and enumerates many of those cited by respondents to their survey.

McKinsey categorizes the list of potential and perceived benefits into those that benefit the internal workings of the organization, those that are useful for interacting with customers, and those benefits that can result through collaboration with external partners and suppliers.  But measuring the actual ROI of using Collaboration and Web 2.0 technologies still remains elusive.  While McKinsey’s list of benefits is a good one, there is no direct attempt to quantitatively measure any of the benefits.

For example, the report cites 1598 respondents identifying the following benefits:

• 77 percent Increased Access to Knowledge
• 60 percent Reduced Communication Costs
• 52 percent Increased Speed of Access to Internal Experts
• 44 percent Decreased Travel Costs
• 41 percent Increased Employee Satisfaction
• 40 percent Reduced Operational Costs
• 29 percent Reduced Time to Market for Products
• 28 percent Increased Innovation
• 18 percent Increased Revenue

It’s very difficult to measure the extent of the contribution of collaborative tools to achieving any these benefits, although users perceive a benefit.

McKinsey attempts to quantify the benefits by correlating the heavy use of collaborative tools with self-reported corporate performance metrics.  For example, the report found a strong correlation between companies categorized as ‘networked organizations’ and those which also reported high market share gains.