In the first of this three-part series I blogged about finding benefits for social media solutions. A brief recap: the most effective benefits you want to look for are 1) opportunities to directly reduce costs, 2) opportunities to improve productivity, and 3) opportunities to increase revenue. Last week I mentioned a few obvious direct cost reduction benefits to consider. This week, I’m going to look at some of the soft cost reduction benefits and revenue increase benefits to consider. As with last week, not all these benefits may be relevant to your particular solution.
Most of the so-called “soft cost” or “indirect cost” benefits involve some type of productivity increase for internal assets, most notably employees. A benefit may make an employee’s job easier, quicker, or more accurate, enabling them to perform more work or to complete the work they already have at a higher quality. While on occasion these translate into opportunities for hard-dollar cost savings (if they, in fact, can be used to justify headcount reductions), repurposing employee time usually is considered a soft-dollar savings, no matter how much time is saved. Instead of “cutting heads,” these productivity increases often come in fractions of a Full Time Equivalent (FTE). So in effect, you’re not cutting heads so much as fingers and toes—which aside from being frowned upon won’t save the enterprise any real money: what’s left of the employee still has to come to work and get paid. Social media solutions can indeed present multiple opportunities for increasing productivity, and whenever the social media solution you are considering is primarily intended for use by employees, you should define and quantify numerous benefits in this area. Some obvious examples are things such as Improve Employee Collaboration, Improve Employee Knowledge Transfer, Improve Employee Training, and so on. Again, usually soft-dollar benefits are not as compelling as hard dollar benefits, but they can still be used to generate a decent business case.
The final category of benefits to consider is those that would result in increased revenue. In my experience, these are the hardest benefits to build a compelling case for, but it can be done. The social media solution you are considering might make customers more satisfied, resulting in Increased Customer Sales through additional up-sell and cross-sell opportunities. They might increase the time the users spend on your time, translating to Increased Revenue per Visit (and perhaps Increase Average Visits per Month). While most people will readily believe some level of revenue increases, the trick to generating believable revenue increases lies in finding numerous (and credible) metrics from similar clients. If you can find a competitor in the same space as your enterprise that has achieved measurable gains from a similar social media initiative, you are golden. If you can’t back up your benefit assertion with credible metrics, you are probably better off just presenting benefits you can justify rather than trying to throw in every possible benefit you can think of.
A former colleague of mine made an interesting statement about business cases and finding value that has stuck with me over the years: “If you are solving a real business problem, a business case is always possible.” Put another way: if you can discover a solution that eliminates a major business problem, you can always quantify the value of that solution and present a positive ROI as a part of a comprehensive business case.
No comments:
Post a Comment