How to show ROI of online collaboration

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productivity gainsYesterday I wrote about the growth in online collaboration in organisations.  There remain real concerns however about proving the return on investment of such initiatives.  After all, Stanford research earlier in the week found that many senior managers are still not convinced by social technologies, with the difficulties in proving ROI a main reason for that reticence.

So how can you prove ROI of online collaboration?  For a start we need to accept that it isn’t easy, whether it’s for online collaboration or collaboration in general.  By its very nature, collaboration is an input, it’s something we do to make us better at producing the things we need in order for our organisations to survive.  Therefore it’s important that we tie collaboration to the outputs that define our business.

Lets look at a few things that are common selling points for online collaboration.

Measuring the productivity gains from online collaboration

Making us more productive is one of the core selling points of online collaboration.  If you can’t measure those productivity gains however it’s impossible to verify this claim.  Whilst manufacturing has methodologies like lean and six sigma to provide statistical measures to productivity, in knowledge work it’s not quite so easy.

measuring productivity

Productivity is a simple measure of outputs / inputs, so your online collaboration will be looking to either produce more from a given level of inputs, or reduce the inputs required to produce a given level of output.  This is going to be different for each business, but if you understand this core level of productivity measurement then you can determine the ROI of your tools.

Everything else really boils down to this simple measure, whether it’s reducing your fixed costs, generating more sales or whatever, if you can become more productive as a result of your collaboration tools, then you can show the ROI and the direct impact it has on your bottom line.  The nice thing is that many organisations don’t boil things down to this level, so having to prove the worth of a tool does force one to rethink exactly how you operate.

If you want to get started though, here are some steps to help you measure your productivity.

4 steps towards measuring productivity

  1. Establish your baseline – If you want to measure improvements, you first need to establish where you currently are.  This could be as simple as averaging your output over a single day and dividing it by the number of employees you have.
  2. Identify what limits you -Next you want to look for things that get in the way of people doing their jobs well.  When you find redundancies, eliminate them.
  3. Measure productivity – Once you have both a baseline and some streamlined processes, you can start to track how employees perform against this.  You’ll begin to see who your stars and laggards are.
  4. Evaluate and improve – This isn’t a fixed process.  You’ll want to make improvements, establish new baselines and adopt the Japanese philosophy of kaizan, or continuous improvement.

Once you start approaching things from this angle it should be much easier to see how online collaboration can both fit into these productivity improvements, and then how the gains can be measured to prove ROI.

3 thoughts on “How to show ROI of online collaboration

  1. The closer we can get to measuring the ROI of online collaboration, social media, content marketing…all of these fast emerging trends….the better. However, I'm not convinced Adi that your measure is altogether reliable. There are so many other variables that impact 'productivity', though I agree that establishing a baseline is a good first step.

    • Yes it's a tricky one. I don't think you can (or indeed should) attempt to measure collaboration on its own because it's simply an input so on its own is not much use. Things like productivity can be measured, but again there isn't a whole lot of widely agreed methodologies for measuring productivity. Whilst in manufacturing environments they have lean or six sigma, there isn't really so much in service environments.

      As you say though, it needs doing in order to prove the ROI of social technologies.

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