I’ve yet to encounter an IT project that didn’t have to justify its budget against business needs in some way. Whether you’re deploying infrastructure, applications, or evaluating services, the funds that are being allocated need to match up against some measure of the value that the project will deliver to the business over the life of the investment. This is a continuing challenge in the UC space since numerous analysts, consultancies, and vendors regularly publish reports that seek to quantify the actual business benefit of UC technologies. It even provided the launching pad for a report I recently published on the topic (subscribers can find it here) that focused on developing a stronger understanding of where and how UC impacts business processes and performance.
Shortly after that report went in for final editing, I ended up having a conversation with a peer here at Gartner, Richard Hunter. It was one of those interactions that made me wish I could pull a report back and make some significant changes if the production cycle would have allowed it. Richard pointed out that we frequently attempt to apply the wrong metrics against business value, which can end up undermining support for a given project or effort. He noted that when an expenditure is intended to help the business “run”, as opposed to “grow” and “transform,” the most appropriate metric to apply is “price for performance.” This applies to anything the enterprise does that can’t be directly tied to a particular revenue stream, as opposed to initiatives that clearly target a specific market and customer segment (like attracting new customers, reducing the time required to provide service, shrinking the costs involved with developing a product, or similar market-focused activities). If the enterprise can’t link a project with a specific paying customer, then return on investment (ROI) is almost certainly the wrong measure of value. Total cost of ownership (TCO) and price to meet the performance requirements of the organization are better metrics for this purpose, since they express the fundamental relationship of price to performance for essential services for which no measure of return is possible, but performance requirements are clear.
Shortly after this conversation, I had a client inquiry that reinforced this distinction in a fairly stark way. The enterprise I was talking to was preparing a strategy to offer UC services to tens of thousands of employees around the globe and had positioned their UC deployment as a new suite of applications and services that would enhance worker productivity by streamlining communications and collaboration. In particular, the system would offer improvements to remote or mobile workers by extending the enterprise platforms to them in a manner that the legacy voice, videoconferencing, and other environments simply didn’t support. But they were struggling to define the ROI for the UC platform based on the expected improvement in performance that the enterprise would recognize.
The problem is – for that ROI calculation to work, the IT organization would need to be able to tie specific performance improvements back to the investment in the UC system and its deployment. This means that in addition to being able to measure employee productivity effectively, the measurement would need to be able to distinguish between any productivity improvements that relate specifically to the UC solution rather than any other initiative that the organization happened to undertake while the UC deployment occurred. That’s a tall order.
These two conversations led me to ask “why is it that we’re so focused on ROI for UC?” Despite the volume of reports and articles available, numerous discussions with enterprises demonstrate that the business case isn’t sufficiently sound to be convincing from a business perspective. The end-user productivity benefits, although perceived to be real to some degree, simply are too “soft” for business managers to find them convincing enough to fund the investment. Which caused me to think back to the consulting work on PBX platforms that I’ve done in the past. Although these project always focused on the financial aspects of a deployment, they never attempted to quantify the ROI of the investment in the phone system – they strictly focused on the ability of the platform to meet enterprise communication requirements in a sufficiently cost-effective manner.
Although I can’t say I can clearly answer that question as yet, the comparison between the two different projects does at least provide me with some clues that I think will ultimately build a compelling case. When deploying a PBX, the investment was presented strictly as infrastructure – systems and services that simply had to be available to meet basic communications requirements in a broad-based fashion. But when we turn to UC solutions, they’re typically presented as an application instead – a solution that’s designed to address a relatively targeted requirement (in this case, communications and collaboration capabilities). That’s a presentation that shares more with the way that organizations evaluate a communications platform like contact center systems rather than basic infrastructure like a LAN deployment. The application is expected to target some specific business need (e.g. reducing agent labor costs or managing agent workloads more effectively) rather than supply a fundamental service (such as providing dial tone) that can be tracked with a relatively high degree of fidelity.
In the end, this pair of interactions exposes something important for IT to consider – how you present UC to business management may have a great deal to do with the questions that you get asked to justify the expenditure. In many circumstances, it will be more effective to present UC solutions as infrastructure in the same way that we approached PBXs or Ethernet switches in the past – systems and services that provide a baseline capability that’s simply “table stakes” for the enterprise. Without the baseline capabilities, the enterprise can’t identify or deploy the interesting applications of communications and collaboration that are associated with more targeted improvements in business performance. Without the UC solution to meet the “run” needs, you can’t explore the applications that meet the “grow or transform” desires. Sure, a UC solution that includes instant messaging may provide a broad productivity benefit across the board, but unless that can be tied to a specific business activity, monitored with sufficient clarity, and reported on within the context of a specific business process it will be difficult or impossible to truly show the ROI of the solution. Which makes presenting a UC solution as an application or suite of applications a dangerous proposition. It changes the conversation from one that focuses on underlying capabilities that the enterprise simply must have to enable future, targeted applications to one where IT is implying that the solution is an application that can be measured in a targeted fashion immediately. Since many IT organizations will struggle to quantify that type of performance improvement with sufficient clarity and credibility, perhaps the wisest course to approach UC from an infrastructure and price for performance perspective rather than injecting ROI into the conversation out of the gate.
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