ROI of Social Technology Implementations in Government.


erik roi

Erik Qualman YouTube video 

In this blog I will attempt to calculated return on investment for a medium to small sized government agency to request funding to implement Social Media technologies. The costs associated to Social Media implementation is difficult to quantify and there are more intangible benefits than there are tangible.

The current mandates in place in both the Federal and State Governments are to transverse towards a more open government based culture, and allow better access to government information. To encourage and enable the public sector to engage in more forms of collaborations with the non-government groups and other government groups. Also to use and engage in social media, crowd sourcing and online collaboration projects.

The vision is all about informing and engaging and participating with the private sector and Australian citizens to open government communication channels and create transparency and open information to the general public.

Staffing requirements

Listed below is a list of the staffing required to monitor, mediate and support the new social media technologies for the government agency.

sallery table1

These figures have been collated from the Payscale website and are based at the top of the scale in pay rates to ensure the returns on investment figures are achievable.

Training Requirements

The training component is based on one person in the organization, possibly the Social media analysis being professionally trained then providing in house business training to the organization.

training table 1

To calculate training cost I discovered a training company based in Australia to provide online training to the Social media Analysis.

Setup Costs

The setup costs are calculated from Silver Web solutions for Word press, Twitter and YouTube setup cost. These can be formulated through the social media team and the marketing and graphic design teams.

setup cost table

The cost also includes prices for Yammer and is calculated on number only, Microsoft discounts and combining existing SharePoint licences has not been included in this ROI. The table below shows the continual server costs associated with setting up Word press, virtual server costs and an estimated annual increase in capacity of 10% per annum.

server costs

Monitoring tools

Monitoring and mediating the comments is a critical aspect of social media, Socialbakers Analytic tool has been included in this ROI based on my finding in my previous blog.

tools cost table

Tangible Cost Savings

Cost savings can be achieved in the reduction of emails and more effective collaboration methods. From Atlassian info-graphic and EmailStatCenter.com, a centralized repository of statistics and research specific to the email marketing industry states the average office worker receives 304 weekly business emails on average and will checks their emails 36 times every hour.

With online collaboration through social media tools, can build a culture of online innovation within Government, and promote collaboration across agencies.

ST collab

Image from The Business Case for Enterprise Collaboration – Oracle

The figures below have been collated form “The Business Case for Enterprise Collaboration – Oracle“ and the “Social economy” report – McKinsey & Company  which discusses the Benefits of Enterprise Collaboration. The graph below taken from the McKinsey report shows the possible improvement in communication and collaboration with Social media and how it could raise productivity by 20 to 25 precent.

mckinsey table

Image from “Social economy” report – McKinsey & Company

Also a similar study in The Business Case for Enterprise Collaboration – Oracle shows the average worker will waste 20 hours a week through poor collaboration processes.

orac

Image from The Business Case for Enterprise Collaboration – Oracle

From these findings I have incorporated these figures into the ROI, the savings of 20 hours per week have been calculated over a 5 year period as I do not believe that these results will be seen instantaneously and are more likely to be achieved over time.

time saving

To calculate the ROI certain assumptions were made to derive at the ROI, these assumptions are listed in the table below and online form the state budgets government documents were access to ascertain employee costs.

asumptions

To calculate the return on investment, I also investigated this return over a 5 year period as the initial outlay would be in the first year and the maximum benefits will not been seen until approximately five years’ time.

ROI

Apart from the tangible areas that can be quantified in this ROI, there are some intangible results achieved. Listed below is an extract from the Government 2.0 Taskforce called “Engage

Getting on with Government 2.0

Make government policies and services more responsive to people’s needs and concerns by:

  • Providing government with the tools for a much greater level of community engagement
  • Allowing the users of government services much greater participation in their design and continual improvement.
  • Involving communities of interest and practice outside the public sector — which offer unique access to expertise, local knowledge and perspectives — in policy making and delivery.
  • More successfully attracting and retaining bright, enthusiastic citizens to the public service by making their work less hierarchical, more collaborative and more intrinsically rewarding.

These are only some of the intangible benefits that can be achieved by introducing Social Media technologies and most of these are of more value to a government agency than monitory gains.

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About jcoglan2013

I am currently completing my master in IT at QUT, I am the ICT/CAD Manager for the department of Public Works Queensland Government.
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5 Responses to ROI of Social Technology Implementations in Government.

  1. Sarun Y. says:

    Hi John,
    According to your post on the ROI calculation, I agree with you that it is really rare to see almost all of the organisations gaining fully benefits from the social technologies adoption, especially those who are new to the following technologies. In terms of being ‘open’, I think that the government somehow need to consider some tradeoffs for this (e.g. privacy, control) (http://bit.ly/19mdqaD / http://bit.ly/1brLU32). This is also like what you have mentioned on building the ‘online’ culture. Although the government decide to adopt the social media tools in promoting collaborations among agencies, but some social policies (http://1.usa.gov/11eDsj8) need to be set and applied before using those tools.

    Great analysis for ROI’s post, John 🙂

  2. Tom says:

    Great work on calculating ROI. In terms of reducing time wasting by employees do you think that will simply lead to a reduction of employee numbers once efficiencies improve?

    • jcoglan2013 says:

      Most technology implementation will reduce staff workload in some aspects this doesn’t always result in redundant staff. It can free up staff time to allow the staff to participate in more fee earning exercises. However at times it can result in reduction of employee numbers, again another cost saving exercise for the organization. Thanks for your comments Tom

  3. Good calculation example on ROI, I’m just wondering now, how they get funds to invest? as it shows in millions 😉
    What if ROI is less or its below profit line, in that situation, what firms will do to overcome the lag? Any idea? Cost cutting 😀 As all factors are important to the firms and employee cost cutting is the last option for every organization.

    • jcoglan2013 says:

      Hello Ashwin,
      Thanks for your comments. To answer your question about getting funds to invest it all depends on the urgency to invest. An example of this was with the Y2K bug, companies were borrowing money to invest in ERP Y2K compatible software. Sometimes the company board may decide to cut funding in other areas to finance these ventures. Or sometimes the investment is simply parked until funds are available.

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