Erin Traudt, research director, Enterprise Collaboration and Social Solutions at IDC, said, "To determine social business ROI, organizations must consider why their customers and/or employees are using social software and understand the cost/benefit impact related to people, process, and technology."
According to IDC experts, when conducting ROI analysis on social business initiatives, the rules of business apply, whether in customer service, marketing, public relations, product innovation, employee collaboration or other functional areas of the organization. IDC believes business executives need to understand not only the traditional metrics and value calculations of ROI, but also the impact that social business initiatives have on these computations and their interrelatedness.
IDC explains that determining social business ROI requires knowledge of social business transformation (which takes marketing, sales and customer service essentials into consideration) and sound economic analysis fundamentals.
"Social business ROI is particularly elusive, but for broader adoption to occur, executives will need to conduct ROI analysis to justify expenditures in this category," said Traudt.
Given the opportunity to achieve high margins with social programs, IDC points out, it is well worth the exercise to determine the potential by "coupling defendable assumptions with appropriate risk for an economic analysis."
Other recent coverage of social media can be read here.
Valerie Valentine is senior editor for Information Management. You can follow her on Twitter at @va1va1entine or via email at valerie.valentine@sourcemedia.com.
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