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10/25/2006
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Irwin Lazar
Irwin Lazar
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Building a Business Case for Collaboration

In my conversations with IT executives, I’ve heard a lot of concerns about how to justify spending on collaboration tools and/or services.  The business case for deployment of new applications such as blogs, wikis, instant messaging and web conferencing isn’t as easy to create as it is for a replacement of an existing system (e.g. transitioning to VoIP).  I’ve found that enterprises are struggling with how to build ROI models for collaboration that can be used to justify making an investment.

When I talk to IT executives about how they justify their investments in collaboration tools and services the typical response is as follows: “we believe that by deploying collaboration tools we make our employees more productive, thus improving the bottom line (e.g. either making more money or saving more money).”

But these arguments are hard to sell to the bean counters.

Typically IT projects aren’t funded on the basis of “we think it will make us more efficient”, rather the organization has to be able to provide some solid justification based on a verifiable and measurable return on investment and payback period to receive funding approval.  In the world of collaboration, these benefits are often difficult to quantify, but not impossible.  Vendors of collaboration products and/or services know this challenge well.

The obvious first place people start when developing a collaboration ROI is with travel.  The idea being that the use of tools such as web conferencing and video conferencing can reduce the need for travel.  This is true in some cases, but reducing travel alone doesn’t provide much of a justification for enterprise-wide adoption of collaboration tools.

Instead, what is needed are specific business cases.  One such case that we’ve developed at Nemertes is the “Just-in-Time-Fetch-The-Expert” model that demonstrates how the use of collaboration tools such as presence and unified communications can shorten sales cycles or speed completion of customer service requests.  Some of our clients have taken an approach whereby they develop metrics to gauge meeting effectiveness, either measuring the length of meetings both with and without collaboration tools such as web conferencing services, or using polls of meeting attendees.

When it comes to non-real-time applications such as blogs, wikis, and RSS it gets even trickier.  Again tools such as sampling and observation can be useful.  For example, how long does it take people to find a document in a shared set of folders versus access it via a well structured wiki?  Can the use of a project wiki shorten project times?  Can the use of a blog shorten the search for internal information?  Can the use of RSS save people time that they would spend searching for information?

Developing a business case for the use of collaboration tools will continue to be a challenge, until such time enterprises view collaboration tools as being as necessary as a telephone or e-mail. (When was the last time anyone had to build an ROI model to justify deploying phones to employees?)  And business cases will vary greatly based on the organization and the nature of the industry.  Still, with a little hard work there are ways of assigning quantifiable metrics to the use of collaboration tools.

As a side note, Nemertes Research is currently seeking out enterprise IT executives to interview for an upcoming benchmark on the use of collaboration tools and services.  If you are interesting in being interviewed, please contact me at irwin.lazar@nemertes.com.  Interviewees will receive a copy of the benchmark.

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