As social media tools are increasingly embraced inside corporations, the vaunted Enterprise 2.0 model is gaining momentum. Yet, if senior executives remain nervous about the downside risk of Web 2.0, their fears are frequently stoked by valid arguments: security breaches, confidentiality issues, legal liabilities, even simple “time wasting” on social networks like Facebook. These concerns, even if alarmist (and sometimes motivated by the prospect of security software sales), cannot be casually dismissed.
The best counter-argument to alleviate these anxieties is the famous “ROI” case. If Web 2.0 tools can enhance value and produce measurable results, what intelligent CEO would not champion them?
True, there are some exceptional cases where specific Web 2.0 campaigns -- usually in marketing -- have boosted sales. Dell Inc. , for example, sold more products thanks to a Twitter marketing campaign. For most Web 2.0 strategies, however, the metrics remain vexingly soft. It’s difficult to put a hard measure on how wikis, social networks, RSS feeds, blogs, and other Web 2.0 tools add to the bottom line.
Web 2.0 evangelists argue that “ROI” is the wrong issue. Who called for hard ROI proof when the telephone and email first appeared as office tools?
Perhaps the best question is based on an alternative ROI test: return on information. The virtue of the Google-friendly return-on-information question is that it shifts focus from hard measures of profitability toward equally important goals of efficiency and effectiveness.
An excellent return-on-information case study can be found, ironically, in the rigid world of government bureaucracy -- in particular, armed forces and intelligence agencies.
A few years ago, when Web 2.0 social networks like Facebook and MySpace first exploded onto the scene, governments were among the first to ban them outright. This reaction was not surprising: The vertical logic of bureaucratic hierarchies was fundamentally opposed to the horizontal social architecture of online social networks.
And yet, today, many government agencies are actively embracing Web 2.0.
Governments, admittedly, don’t face the same return-on-investment pressures as corporations. But that’s the point. It’s precisely because governments are primarily under pressure to increase efficiency and improve effectiveness that they are seizing on Web 2.0 tools to harness their upside return-on-information benefits.
The secrecy-obsessed Central Intelligence Agency does not seem, at first blush, to be an ideal candidate for a Web 2.0 project. But when you think about it, the CIA’s effectiveness depends on the efficiency of its information-gathering operations. This fact was not lost inside the CIA itself. The famed intelligence agency was, in fact, an early Web 2.0 adopter when it launched its Intellipedia wiki in 2005.
Intellipedia is a collaborative information-sharing wiki with three levels of security: “unclassified,” “secret,” and “top secret.” By most accounts, it’s both efficient and effective, boasting more than 100,000 user accounts, nearly 1 million pages, and as many as 5,000 page edits a day. The “top secret” network is the most used, with nearly 60,000 user accounts and some 450,000 wiki pages. We may never know just how vital Intellipedia is to global security.
The U.S. defense forces, too, are actively deploying Web 2.0 tools, though official positions are conflicted depending on where you look. In August, the U.S. Marine Corps imposed a 12-month ban on Twitter, Facebook, MySpace, and other social media, citing concerns about security leaks. Yet the Marines have their own Facebook page and operate social networks for internal use. The U.S. Army, by contrast, has ordered Facebook access to all personnel, and even top generals are blogging.
Web 2.0 tools, meanwhile, have been enthusiastically embraced at the highest ranks of the Pentagon. Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, is an outspoken advocate of Web 2.0 tools who not only tweets, but also has his own Facebook page.
Fittingly, the Website for the U.S. Department of Defense features all the Web 2.0 bells and whistles. And like armed forces in many countries, the agency understands that Facebook and other Web 2.0 networks are invaluable recruitment tools.
This advantage has not escaped many executives in the private sector. Paradoxically, the same HR departments that ban Web 2.0 networks at the office are frequently those that actively mine networks like Facebook during recruitment initiatives. If companies are indeed only as valuable as the people they employ, it can logically be concluded that the bottom-line value of good information produces material benefits.
In short, there clearly is a return-on-information ROI factor.
It may be counter-intuitive, but as the debate about Web 2.0 in corporations continues to be fraught with fears about downside risks, perhaps CEOs and senior managers should start by asking the right ROI question first.
— Matthew Fraser is a Web 2.0 strategist, an adjunct professor at the American University of Paris, and senior fellow at INSEAD.