Week 8: ROI Case Study--CISCO

After a few weeks’ broad investigation of implementing Enterprise 2.0 in organizations, it is a good opportunity to look inside – Return on Investment (ROI) of the organization embracing Enterprise 2.0.

Before going to details, first, we need to understand what ROI is. According to INVESTOPEDIA, ROI is a performance measure to evaluate the efficiency of an investment or a number of investments. The return on investment formula is:

It is simple to use this formula to justify if the company achieve expected benefits or not by comparing the results. For example, if the ROI which is calculated after implementing Enterprise 2.0 is higher than previous ROI which is calculated before it, then we can conclude that the company achieves benefits (tangible and intangible) through implementing Enterprise 2.0. 

Case study of CISCO Enterprise 2.0 Project

Second, let’s look at CISCO, one of the biggest IT companies in the world, providing IT solutions and equipment to enterprise, small business and home. 

Like other technology companies, cisco was well aware of the importance of managing its social media presence. However, there was no consistent and flexible solution for them to manage plenty of information on social media such as Facebook, Twitter or LinkedIn. In 2012, CISCO decided to standardize its social listening on Salesforce Radian6, a social-listening application which allows users to quickly and efficiently track, monitor and manage social interactions.

From NUCLEUS’s Financial Analysis Report, we can see there are two kinds of benefits which are direct and indirect. Those benefits can be summarized as followed:

Direct benefits

• Focused use of outside creative agencies. By implementing Salesforce Radian6 that manages social mention in one, it enables CISCO to well monitor the marketing influences made through outside creative agencies.

• Increased staff productivity. Salesforce Radian6 also provides staff mobile application that ensures them to respond social mentions in a timely manner and no matter where he/she is. 

Indirect benefits

• Increased customer insights. From the application, staff can analyze social mentions from different social media in a more meaningful way, which will help marketing group find the most efficient way to achieve expected outcomes.

• Improved partner management. CISCO is building more reliable partner relationships with partners by providing a more cost-effective way to increase their engagement.  

The following figure displays three years financial analysis of CISCO. 

The annual ROI can be calculated as:

ROI=[(1697625+1697625+1980750-587125)-(587125+478125+478125+195000)]/(587125+478125+478125+195000)≈281%

From the ROI calculated above, it is easy to get tangible cost such as software, hardware, consulting etc., but when it comes to intangible benefits, this method barely figures out specific intangible benefits could achieve though implementing Radian6 application. For instance, from increased customer insights, staff might save time on market research. But how this benefit can be figured out and measured in a quantitive way compared with traditional market research. At least, from this report, I cannot find any specific criteria to calculate intangible benefits.