How to make Enterprise 2.0 concrete and to define result expectations, to justify the necessary investments?

May 22, 2008 — 11 Comments

In the last months I have been trying to understand the possibilities of Enterprise 2.0 concepts and found out that it’s quite simple; it’s all about using new technologies to get people to work more together across existing business structures. So why all the fuss about it? Why don’t people just do it more instead of talking so much about it?

Eventually Roan, my team mate who is in charge of our Ukrainian units, told to me the speakers at the Heliview Enterprise 2.0 don’t really have concrete ideas about results and ROI’s. But as always these are needed to have the Enterprise invest into it. The event by the way was mainly driven by sales for Microsoft and IBM and the hosts, I’m not sure if those companies are the right examples to talk about Enterprise 2.0 when you hear stories about how rigid these companies are.

It’s logical – hard to talk about concrete results when you lack experience
I guess it’s logical that many consultants have problems quantifying it, as they themselves don’t really do or experience it. And maybe some of them do, but do they personally work in an environment where they can put it to practice and understand the impacts? And if they have the organization that does it, how diverse and complex is their network really? Do they also work with people in different locations, with different languages and cultures? Or do they just do it internally in a single office location and still travel a lot to clients and satellite locations?

I guess what I’m trying to say is that we can’t expect a Peugeot mechanic to tell us what will happen when you we put a Volkswagen motor in our Audi right? No, if we want to have that answered, we go to an experienced Audi garage who has a mechanic who has worked with Audi and Volkswagen a lot. So when you talk a Enterprise 2.0 consultant or expert, make sure you understand what he/she is doing to really experience it. Are they blogging themselves? How high are they in the ranking of the ‘Best wiki user’ list?

At Componence we really needed it, believe it and develop it
Personally I believe it is possible, as Componence is the proof of it. At Componence our strategy forced us to learn how to work well with people in different countries, with different backgrounds and cultures. In 2001 phonecalls and flights to Ukraine or India were still very expensive, so working with online tools was the only way. Then there were simple tools like IRC and some self made issuetracking system, evolving to ICQ and Bugzilla and now we have Jira issue tracking, Confluence wiki, Salesforce CRM and Skype. And we’re not stopping there, we also want online project management, resource planning, personal development planning, portfolio management. And to have it all in one and to have it all personalized we have chosen to develop our own portal. It’s an ongoing process, that’s why our people can easily adopt it.

So the fact that we chose to work with offshoring IT units very early made it very necessary for us to use Web 2.0 tools. And as we are technically driven, there is always a strive to develop something new and to use better tools. I guess in

Time for proof – how concrete are our results?
So what are the concrete results then of Componence? Can I quantify them into hard cold financial benefits? What are the soft results? I’ll make an educated guess at both.

Strategic level

  • Human Resources, as we still grow every year in every unit. The necessity for people can be fulfilled by units that have good possibilities to find those people. The unwanted exit within our staff is less than 10%, even with the unit sizes between 10 – 30 people;
  • Enterprise clients, as we offer a cost effective alternative for the high IT prices that giants of the industry ask for portal development. Depending on the needs, the coordination structure and the commitment our tarifs are still 30 – 70% under normal market prices;
  • Portletsuite, a portal product for BEA WLP customers, as we could never have made such investments possible if we had to count on normal Dutch personnel costs, that are 5 – 10 times higher than in our Ukrainian and Indian units.
  • Space for R&D, to fund our investments in product development we continuously scout for the next team that is still cheap enough for us to invest and has people who really want the chance to develop themselves as professionals badly. At Componence we try to make 15-20% of our budget free for Product development.
  • Enough space for market expansion, as our current offshoring units are actually in countries that have yearly economic growth percentages > 8%. In 5 -10 years I’m quite sure they will generate more than 50% of our turnover.

Tactical level

  • Our own captive offshoring units, as we now have 2 offices in Ukraine and 1 in India. We don’t depend anymore on our partners, who do a great job by the way. Offshoring units are now easily acquired by the giants in the offshoring industry. I’m not sure that’s always a good thing, as it just makes them more expensive and there is less space for you own individual identity;
  • The way we work attracts partners who can add value to our proposition. The choice for portal technology lies in the core of it, as portal is meant to connect different systems together, to make different combinations and to serve different purposes. Currently we’re talking to possible partner companies who specialize in e-commerce, project management, EHRM and search technologies to add more value to our Portlet stack;
  • The way we work attracts true professionals as they want to have space for their personal development, to have freedom in their doings, to be held accountable for their results. Many of the external consultants that came into contact either still work for us, or started a business that is linked to us or miss the time that they were working for us 😉

Operational level

  • A flat organization structure, as the headquarters from the Netherlands mainly facilitates and helps the captive units to develop their own capabilities. Decision cycles are short and mandates decentralized as much as possible to local managers as much as possible;
  • People who care about their personal growth, as we really believe that anyone can grow inside Componence. I guess it’s easier when you grow every year with 20-30% and you can find new units that can and want do the easy jobs. In my opinion the personal development factor should be a key factor in all board of directors of any company where knowledge plays a key factor;
  • The amount of digital transactions per person, counted in our stack of online tools, keeps on rising. Wiki gets more pages, comments, blogs every day. The quality of the problem, discussions and solution descriptions keeps increasing within Jira. Skype has become the common tool to have chats and phone conferences. This means that people can co-operate more without making too many physical visits to each other, saving on flight fares;
  • New units, freelancers and partners are adopted easily as our wiki contains a lot of ‘fun elements’, discussions, comments from different locations. Lately we are more working with architects from Germany and the US on Portletsuite 2.0 and wiki will surely help to get the co-operation running between our people and these new experts;
  • Our people are more self-managing as they understand that teammates really depend on them. The fact that at least of all our transactions are online makes everything more transparent. It’s not that difficult to find out who you have to contact to get something done. I dare to say that most of delays and escalations can be tracked back to inefficient communication and decisiveness between our front-office and our clients;
  • Spending less time on the roads, the traffic situation in the Netherlands is getting worse every year. Our people check the traffic jams before they get to the office and if necessary start their work from home. This mentality also applies when it’s time to go home, it depends on how much traffic there is. This way people have an effective working time between 08:30 and 18:00, while they can have office hours of 10:30 – 19:00.

What is the value of the network? And how can we measure it?
But what is the value of a network? And how can we measure the development of the network? I think it will always be hard, if not impossible, to really have metrics for it. That’s why at Componence we have chosen to look to the entities in the network, the people. We trust that if the people continuously grow as a professional, then logically the value of the network should. So we make sure that there is an active personal development program for our people, promote our Web 2.0 tools and measuring turnover per employee each year. The last one should double in a period of 3 years.

Conclusion
So the Enterprise 2.0 ideas can work, they do work for Componence. We have a professional Services unit, an Enterprise product, teams of young and ambitious people (average age <30), no real urgent resourcing problems, and a Enterprise 2.0 vision.

I think at Componence it started with the right vision (working online with people across the world) and necessity (work must be managed as efficient as possible). I was told by Sergej van Middendorp of V-work that these network theories are developed best in army context as their vision and necessity is very clear and urgent:
○ Vision: beating the enemy is all that matters
○ Necessity: keep your troops alive

But despite these facts, our management team continuously is faced with situations related to our online tools where we tend to think more structure and procedures are needed to get in control. But at the same time we remember and accept that with online tools like wiki’s and blogs things are more free and transparent, control can look like a paradox. So a manager must find new ways to put in balance. This is not an easy task as in companies eventually the metrics that count, e.g. EBIT and turnover, desire control. The function ‘controller’ says it all I guess.

And as long as the controller doesn’t have accounting and reporting rules to support these new type of metrics, it will remain hard to convince the CFO to invest into vague Enterprise 2.0 ventures …

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11 responses to How to make Enterprise 2.0 concrete and to define result expectations, to justify the necessary investments?

  1. 

    Truelly technology is bringing out the mostr in every individual…but nothing is fool-proof…there will be shortcomings in everything and to overcome which something new comes up…its just progress.

  2. 
    Biljana Pesevska May 27, 2008 at 7:33 am

    I consider Enterprise 2.0 to still be a concept, because it cannot be adopted fully and with “trust” to every business. I think that most web 2.0 tools producers are focused on adding value to their tools that they just make it worse.They overload the applications with too many unnecessary “features”, interface elements… For me, these stuff make the tools hard to use.
    Good exampes: ProjectOffice.net, Wayn…
    However, this is just my opinion…

    All the best,
    Biljana Pesevska

  3. 

    Ha – I really like how you broke the benefits down into Strategic, Tactical and Operational benefits. You are right in that any ROI analysis around cash savings are only going to be educated guesses, but your listing of benefits does a nice job of trying to objectify them.

    To add to your points I have come up with a listing of questions for organizations to see if they would be able to gain any benefit from an Enterprise 2.0 type of technology at http://www.infotechaligned.com/?p=3. Your post definitely illustrated that you met a few of the points – and therefore were able to reap tangible benefits / cost savings.

    • 

      Hi John,

      Although I think focusing on needs is important (the more urgent & necessary the better), I feel that 2.0 technology is a matter of doing. In April 2008 I wrote this blog about how OLD 2.0 is: https://hhvo.wordpress.com/2008/04/08/enterprise-20-isnt-new-at-all/

      We humans are creature of habit and therefor find it extremely hard to change our habits, something we need to do to ‘challenge conventions’.

      As my domain is 2.0 / 3.0 I have found it still too often that people just talk about ‘modern’ web technologies / tools and have debates at seminars about why Social Media or Enterprise 2.0 does or doesn’t work.

      Many pshychology researchers (John Bargh, Tanya Chartrand, Peter Gollwitzer, John Kihlstrom and Timothy Wilson) argue that 95% of our habits is automatically and unconsciously and that only 5% of our habit is planned and conscious. Although I have been thinking about habits �” also reading the book of 7 habits of effective leadership of Stephen Covey �” I saw a Dutch researcher / speaker Ben Tiggelaar at a Health 2.0 conference talking about the theories of how we as humans have a hard time changing our habits / behavior. There is even a test http://www.solidarts.com/ddd/test to test if someone wants change, understands how to get there and understand how self-change is necessary.

      In our work, at our level, we need to have people around us who will create an innovative surrounding. At ABN AMRO they have a so called ‘Chief Dialogue Officer’, as dialogue is a basic necessity to learn and understand other perspectives / ideas. From a management perspective, the common American business culture (top-down) might be a tough environment to achieve more dialogue between the common workers, specialists and their top execs. Too often I hear consultancy agencies speak about how ’social media’ can be used to achieve a more ‘flat’ organization. Well, it’s true but the key is to have leaders who understand that they have to adjust their management / leadership habits to allow innovative thinking and to support the process of it. ABN AMRO even created a ‘Dialogue House’ for it. I guess especially within banks, they need to do a lot more to generate innovation than at IT companies. So understanding how hard it is to change habits, CEOs who are not innovative need to do more things like:
      – really create an open environment for ideas / dialgoue
      – really take part in it

      But even then activities might not generate enough results. How I push myself to be innovative:
      – Do a lot of new things, really DO them. Don’t just read reports, books, etc. Try things out for a while and understand how it works by yourself (like Twitter) and do not stop at 101s
      – Have a lot of talks / meetings / brainstorming sessions with people who can challenge your ideas
      – Give out concrete deadlines for new products / ideas and put consequences to it (less salary / no bonus / resignation)
      – And put yourself to the test, let your colleagues assess your innovation and put the consequences to it.

      IMO this is where Leadership comes into play. The majority of organizations are still top-down and have managers waiting in line to fulfill those positions to protect it, because that’s how those managers (the corporate-tigers) have learned to climb the ranks.

      And once those tigers get on top, they’re arrogant due to his / her position and might often not put such hard consequences upon him/herself. It’s easier to push others than ourselves, but it’s easier to change ourselves than others.

      Some of my personal blogs about leadership / innovation:
      – hhvo.wordpress.com/2009/01/06/2009-a-crisis-always-brings-urgency-to-unite-and-innovate/
      – hhvo.wordpress.com/2008/05/07/enterprise-20-enterprise-needs-pioneers-who-get-it/

      I believe that in the Top ranks, there are still people who write and not mail. It’s all a matter of habit and the lack of necessity to change.

      So we – the young and adaptable technocrats – have a chance to show how easy it is to get more things done with less resources. And that result will eventually proof itself to the world of corporates as they will be surprised when suddenly competition of small networks take over many of their business.

      So we should be lucky that we’re small and have this chance in time 🙂

      – Ha – @SimplyH on Twitter

  4. 

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  5. 

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