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Story URL: http://www.silicon.com/research/specialreports/collaboration/0,3800003020,39121011,00.htm

Building the business case for collaboration
It all comes down to ROI...

By Anthony Plewes

Published: Tuesday 08 June 2004

Determining whether you should invest in collaboration tools, with their wide range of tools and uses, can be complex. Anthony Plewes has some ideas about how process rather than prices should dominate the ROI calculation.

Read more stories on collaboration in silicon.com's special report.

Most companies will recognise that by encouraging their staff to work together more effectively, they could be combating duplicated effort, long delays in revision processes and unleashing a good deal of creativity and problem solving nous.

The temptation, though, is to plug in the latest shared workspace or enterprise portal and expect instant collaboration to push profits up and costs down.

This approach will not reap the required dividends. Collaboration tools are extensive and diverse, each with its own use. Unless you can work out what the goals of collaborative working are, it is impossible to identify the right tools. And without either of these a business case for collaborative working cannot be built. And without a business case, there's no return on investment. No ROI, no new tools.

So how do you identify and build a business case for collaborative working?

The range of products covered by the umbrella term of 'collaboration' is very wide. It includes shared work spaces, web and video conferencing, whiteboarding or instant messaging as well as more specialist tools such as the engineering-focused product lifecycle management (PLM). Even basic communications services, such as the telephone and email are technologies that support collaboration.

Collaboration is also often rolled out as a part of bigger projects, such as supply chain support, knowledge management or notably enterprise portals. In fact, enterprise portal vendor Plumtree warns that companies that roll out portals without collaboration functionality risk creating 'empty portals' that nobody uses and consequently a zero ROI.

While ROI can be achieved from project-based collaboration solutions, says Mike Davis from the Butler Group, long term success is achieved by embedding collaborative capabilities into the organisation.

"We have done some recent research on critical factors for adoption of collaboration," says David Coleman, managing director of consultancy Collaborative Strategies. "Being able to show ROI is an issue, but it is not always the main issue. More important is the ability to tie the technology into business process or into a process-improvement initiative like Six Sigma."

However, companies need to choose their business processes very carefully. "Collaboration is like a magnifying glass," explains Coleman. "It can make ugly things seem uglier and good things better." Good business processes to choose would be high value but low complexity, to offer the best value to the company.

"A formal calculation of ROI is not as important as the ability to show value - this typically needs to be within six months," says Coleman. "It must be clear that there is a value within the collaboration solution."

Although the CFO might not be directly involved in the procurement there is no doubt he will be acting as a gatekeeper and will require some form of ROI proof. There are normally three stages of return on investment calculation. First of all is informal ROI, which is calculated early on in the sales cycle. Once the software has been bought this is followed with a formal ROI, which checks the claims of the former.

Finally ROI calculated for one department can often be informally brought to bear on the business processes in a separate department. For example if the marketing department has successfully rolled out a collaboration project, the relevant ROI metrics could be used to make a case for another department, such as sales.

It is much easier to calculate metrics in the real-time space, such as conferencing, because tangible savings can be computed simply from the amount of travelling costs saved, for example.