Does Collaboration Impact Business Performance?

April 7, 2010
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Recently I highlighted and reviewed a report by Frost & Sullivan which talked about the impact of collaboration on overall business performance.  The report was created a few years ago and was thus slightly dated.  Fortunately someone from Verizon sent me a more updated version of the report, this one was conducted in 2009 and provides more insight and information into how businesses are collaborating and how effective that collaboration actually is.  The new report talks much more about UC&C or Unified Communications and Collaboration and also introduces ROC or return on collaboration.  As with the previous report, there is no mention of Enterprise 2.0 anywhere, just collaboration.  Let’s dive right into it.

What I find fascinating about this diagram is that over 43% of UC&C tool deployments happened in the past 12 months.

In my opinion this helps crystallize the Enterprise 2.0 market and shows that companies are indeed taking this seriously and that collectively companies are moving towards more enhanced collaboration.  Now keep in mind that this only speaks to tool deployment and says nothing about strategy, results, adoption, or

Recently I highlighted and reviewed a report by Frost & Sullivan which talked about the impact of collaboration on overall business performance.  The report was created a few years ago and was thus slightly dated.  Fortunately someone from Verizon sent me a more updated version of the report, this one was conducted in 2009 and provides more insight and information into how businesses are collaborating and how effective that collaboration actually is.  The new report talks much more about UC&C or Unified Communications and Collaboration and also introduces ROC or return on collaboration.  As with the previous report, there is no mention of Enterprise 2.0 anywhere, just collaboration.  Let’s dive right into it.

What I find fascinating about this diagram is that over 43% of UC&C tool deployments happened in the past 12 months.

In my opinion this helps crystallize the Enterprise 2.0 market and shows that companies are indeed taking this seriously and that collectively companies are moving towards more enhanced collaboration.  Now keep in mind that this only speaks to tool deployment and says nothing about strategy, results, adoption, or effectiveness.  This is simply the percentage of companies that have deployed these tools within the organization.  Frost & Sullivan also point out that this shift towards UC&C tools was probably facilitated by current economic conditions which have been putting pressure on companies to produce, innovate, and cut costs.  Furthermore over 80% of companies surveyed that currently have not deployed UC&C tools plan on doing so in the next 2-3 years.  This roughly falls in line with market predictions from large analyst firms which are predicting strong growth in the enterprise 2.0 space by 2013 (even though the predictions vary quite a bit).

For those companies that deployed collaboration tools, 72%  stated that they experienced better business performance compared to only 46% of companies that did not deploy them.

Companies that deployed collaboration tools saw improved performance in innovation (68% vs 39% that didn’t deploy), sales growth (76% vs 50% that didn’t deploy), and profit growth (71% vs 45% that didn’t deploy).  These are pretty solid numbers across the board.  To help break down collaboration even further Frost & Sullivan separated companies into 3 categories: basic, intermediate, and advanced collaborators.  You can see what constituted each of the categories in the image below:

What’s interesting is that none of the choices above really address innovation tools such as Spigit, collaboration platforms such as Blue  Kiwi, or anything even close to Wikis.  Still, the fact remains that collaboration has proven to be an important factor on overall business performance.  What I really want to see is a similar report that brings into play some of the actual E2.0 tools that many companies are using.  All of the collaboration tools mentioned above are of course offered by Cisco and/or Verizon.  While I think these collaboration tools are important are they are greatly missing painting a bigger collaborative picture.  I conducted an in depth case study on Enterprise 2.0 at Vistaprint (and there are plenty of other companies deploying E2.0 tools) which probably doesn’t fall into the above collaboration categories yet has seem tremendous results as a result of their efforts.  Don’t get me wrong I’m sure Vistaprint is using things such as web conferencing, perhaps some form of softphones, and a few other things up on that list.  However, nothing on that list addresses the fact that Vistaprint was able to cut training time by almost 50% for new engineers by deploying a wiki; there’s no area or category for that in this report and that is  HUGE miss.

I’m sure a good amount of the companies surveyed have some sort of E2.0 collaboration tool deployed yet their effectiveness and presence is lost in this report perhaps leaving the overall impact of collaboration on business performance understated.

Let’s keep going.

As I mentioned above Frost & Sullivan introduced ROC (return on collaboration) into the mix and defined it as such:

ROC = ((functional area spend) * (functional area charge)) / overall UC&C spend

For definitions of what these variables mean you can refer to the full report.

Based on the 3 categories of collaborative companies here is the ROC that they received.

You can see from the diagram above that the more advanced collaborative companies see a higher ROC.

Next Frost & Sullivan broke down ROC for various departments within an organization.  While many people may lurk or pay attention to what happens on various web 2.0/collaboration sites; only a small portion of users actually contribute and create content.  This means that you need a certain scalability affect to achieve success and this is precisely why many Facebook fan pages with only a few hundred or even thousand fans are still like ghost towns.  Frost & Sullivan found something similar when they looked at collaboration across various departments.  The departments with the largest staff had the greatest ROC, this again is because more people means more contributions and perhaps greater results.  Yes, the focus should be on quality and not quantity but when you only have a small percentage of contributors you need a greater overall pool of users (which means more contributors).

Here we can see that sales and R&D saw the highest ROC while HR saw the lowest.

Again I feel that the size does matter when it comes to collaboration as is further evidenced by the breakdown of collaboration by company size below:

Here we see that large companies see a MUCH higher ROC when compared with smaller companies.  Could there be other variables that affect this?  Sure, but so far we seem to have a pretty good case that collaboration is more effective in large companies and large departments, and I think that makes complete sense. Finally, we get to what I think is the most important image in the report and that is how the type of collaboration impacts business performance across various departments.  As we saw with the first report I commented on a few weeks ago, collaboration is still currently a massive driver for overall business performance.

So let’s take a look at this chart to see exactly what it means.  In a nutshell this chart says,

“The better your company collaborates, the greater the impact is across departments and the organization as a whole.”

Simple enough to understand right?  Again something to keep in mind and something the Frost & Sullivan mention in the report.  The R&D and sales departments are usually the largest ones and also see the highest ROC for those in the advanced collaborator category.

There are a few other interesting findings in the report which you can check out for yourself.

The report was sponsored by Verizon and Cisco which both offer their own suite of collaboration tools.  This report does a great job of building the case for their respective uses but I think overall we need something that looks at E2.0 platforms and how effective they can be for collaboration as well.  I’m actually working on a report for SNCR which will hopefully answer some of these questions towards the end of the year.  For now, consider that collaboration does have an overall large impact on business performance, that should be the key takeaway from this report.

I’m also open to creating/conducting research into SCRM, E2.0, and social media.  If you want to sponsor a report please let me know.

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