Web 2.0 is everywhere, and social business software is quickly moving into the enterprise, but is there real value? What’s the ROI for a manufacturing company whose product development team is pumping out new product innovations every day?
Social Product Development is about improving product development by allowing engineers access to communities and experts – improving the sharing of information, exploration of ideas and innovation, and allowing for better insight into R&D activities and shortened feedback cycles. At its core, it is about product development organizations deriving value by better connecting PEOPLE around product development activities.
With such promise, how do you get everyone at your company onboard?
The benefits of Social Product Development are both qualitatively and quantitatively. From a qualitative perspective, Social Product Development improves collaboration and encourages a positive culture within the organization. Quantitatively, you can improve efficiency and build more innovative products.
Here are some questions to consider when evaluating the qualitative benefits you might gain from Social Product Development technology:
- Can executives take the “pulse” the organization easily?
- Can managers get quick feedback on an important program, project, or concept?
- Can the company be made to feel small again by better connecting a distributed workforce?
- Can a company better recruit and retain employees with modern tools in work place?
- Does a better informed workforce provide efficiencies?
- Are employees helping each other by pointing out valuable content or answering questions?
- Is there duplication of effort?
And here are some quantitative benefits/metrics to consider:
- Time saved looking for information and experts
- Time saved for on-boarding people
- Improved responsiveness to customers , first call resolution, and client satisfaction ratings
- Reduced email storage expenses
- Decreased recruiting and retention costs
- Lower IT and help desk support expenses
- Decreased premium content subscription fees (i.e. disseminating professional info)
- Increased ideas generated within the company
- Fewer meetings and lower travel costs
- Improved problem solving and troubleshooting with experts, and quicker feedback cycles
- Better products and better reuse of parts, designs, and information
- Better quality from improved problem solving and troubleshooting with experts
Supporting industry data:
A recent study by McKinsey The Rise of the Networked Enterprise: Web 2.0 Finds Its Payday looks at the impact of Web 2.0 technologies on how organizations collaborate internally and externally. It found that fully networked enterprises are more likely to be market leaders or to be gaining market share and have higher operating margins than companies who do not use Web 2.0. The survey results showed that of the organizations deploying Web 2.0:
- 77% are seeing faster access to knowledge;
- 60% are reducing communication costs;
- 52% are seeing faster access to internal experts;
- 41% are seeing increased employee satisfaction
In the whitepaper EMC|ONE: A Journey in Social Media, EMC expresses the benefits of social computing within its company this way: “When looking for information on a topic, it’s far easier to scan the social platform for information – and individuals – that are relevant, rather than “asking around”… As an example of a “back of the napkin” calculation, imagine 1,000 knowledge workers who deem themselves 10% more efficient through use of a social platform. At $100k per knowledge worker – that’s $10M.”
Other findings from International Data Corporation (IDC), an international market research firm, indicate that there is an 11-30% time savings for employees who use social software. Its surveying found that one of the key benefits noted by end users is: “It makes me more productive.”
To demonstrate the value of Social Product Development we can use a theoretical company of 500 engineers using Social Product Development software inside R&D.
- Total Revenue $1.5B
- Number of total employees 5000
- Number of engineers/PLM users 500
- Revenue from New Products 15%
- Average FTE expense (engineering) $75,000/year ($37.5/hour)
|Area of Improvement||Assumption(s)||Calculation||Benefit|
|Top Down Approach:|
|Improved Productivity||10% more efficient – finding info, getting feedback, problem solving, fewer meetings…(see EMC, IDC data)||10% * $75K * 500 engineers||$3.75M annually|
|More Innovative New Products in the Market||46% of product development resources are spent on products that fail (Cooper, Product Development Institute)5% improvement in creating successful new products with better ideation (less failures)||5% *46% *75K*500 engineers||$863K savings in man power lost on failed products|
|Bottom Up Approach:|
|Less Time in Meetings||1 hour less per week||1 * $37.5/hr *500||$19K|
|Less Travel||5% of engineers travel at average cost of $2K||5% * 500 *$2K||$50K|
|Help Desk Savings||1 less FTE supporting software help desk at company (e.g. CAD)||1 * $75K||$75K|
|Time Savings Getting Answers||15 minutes savings per issue with better problem solving using a network,3 problems per week||15min *3 * $37.5/hr * 500 engineers||$14K|
|…continue identifying line items of savings and/or value to build ROI(see “quantitative” examples above)|
This is a simple theoretical example…. your actual mileage may vary, but even if the assumptions are off, the resulting benefits can be substantial.
Do you see ways in which Social Product Development may help improve your workflow? Has it done so already?