As I look at the passion and debate created by the passage of the recent stimulus package in Washington, I can see two lessons that apply to the private sector as well: Spending is necessary to maintain business and economic momentum, but any investment must be carefully examined to ensure it is targeted and impactful.

In today’s economy, enterprises are scrutinizing budgets very closely and are only making those investments that provide a clear return. How, then, do you measure success for enterprise social networking? How do you translate its value into a business case that will pass muster with technology steering committees and cost containment policies?

Enterprise social networking provides a wide range of benefits: it accelerates innovation, improves productivity, and facilitates learning. Most of us intuitively recognize these as important benefits, but few people know how to effectively measure or place value on them. IBM studied its own use of social software and came up with an estimate of $4.6 million in cost savings from tagging alone. But not all organizations can measure time saved as effectively as IBM did or quantify it as easily.

Here are a few ways to approach building a business case involving strategic benefits:

1. Tie the benefits of enterprise social networking to your organization’s top strategic initiatives. For example, if your organization has strategic goals to maintain the top customer service ratings in its industry, to consolidate a key operations function in two locations, or simply to increase follow-on revenues from existing customers, enterprise social networking can bring in the missing ingredient for success.
2. Take a deep look at a few key roles that enterprise social networking will play for specific groups of people in your organization and then translate the strategic benefits into tangible value drivers, such as: an increase in revenues per sales rep; average time to respond to customer issues; time-to-productivity;  or industry benchmarks, such as number of research staff per new product in the pipeline.
3. Consider the effect on HR-focused metrics, such as: the percent of performance goals attained, employee retention rates/turnover, increases in employee satisfaction ratings, or an increase in onboarding effectiveness as measured by manager surveys.
4. Look at learning-focused metrics, such as an increase in knowledge gained from key learning programs as measured by Kirkpatrick Level 2, 3, and 4 evaluations or similar.
5. Finally — and this is especially important in today’s economy — look at the opportunity to drive down costs in particular business functions. In the training organization, look at the potential cost savings that can be gained by reducing instructor/classroom hours and new course development as employees find expertise more readily. Another important area of cost avoidance to consider: decreased email storage costs achieved by eliminating those ubiquitous attachments.

I believe that the most successful business cases for enterprise social networking platforms will take all of these approaches. Properly considered, cost savings can justify the investment in social networking by themselves, enabling the organization to look more deeply at the strategic benefits.

Furthermore, every business case for enterprise social networking solutions today should also include a risk mitigation component: What would be the result of waiting to invest in this technology? From what we have seen here at Saba, it is clear that organizations that wait to act may find that their people will do it for them.

Today’s economy may be frightening, but it is more important than ever to make sure that your people have the tools they need to do more with less. Do your homework, use some of the concepts I have described to build the right business case for your organization, and put programs in place to track results. I’m looking forward to hearing about them.

Tags: business case, enterprise social networking, ROI, social software