The slippery value proposition- Virtual Spaces

Value Proposition. Return on Investment. Justification for Expenditure.

However you phrase it, there are skeptical people in every organization who want empirical, objective, hard evidence that any new initiative has a clear return on investment. In these harsh macro-economic times, this tendency towards risk-aversion is amplified to the detriment of new technology deployments that can save organizations much needed hard capital in the long term. The conundrum with RoI is that it is best defined after extensive deployments of a given technology, and their associated beneficiaries. When 100 or 1000 early adopters have installed a technology, used it extensively, and have had the leisure to write up a quantitative statement of benefit, the skeptics are happy and have covered their respective assets enough to green-light a project.  This would be fine if the organization wasn't attempting to gain a technological advantage or benefit from either making or saving money in the short term, because these well-defined RoI studies don't emerge until about 25-30% of the way through the maturity curve of a new technology. By the time you can definitively justify it, it's not new.

Looking at Virtual Spaces, there are luckily a number of RoI vectors, with both 'soft' and 'hard' numbers.  Lets walk through some of them briefly and the best sources for updated data:

1) Anecdotal Customer Feedback- This is the weakest form of feedback if your skeptic has the initals 'CFO' in their title or reporting structure.  It is the strongest if you are attempting to gain a competitive edge in deploying technology prior to the 30%-mark above.  Two years ago at the Serious Virtual Worlds Conference hosted by Coventry University, I was shown multiple examples of healthcare applications being used with great success to train both first responders and medical students on emergency medical care.  These systems were being actively used and the students were learning.  Was there a multi-year report of findings that showed empirical gain over conventional methods of learning?  Not yet, but I bet when it comes out in one or two years, it will be extensive.  Meanwhile, they are reaping the benefits today.  Call this the 'leading economic indicator' of ROI studies.

2) Cost-Savings- When initial deployments are made of virtual worlds, the easiest and fastest ROI measure that one can quote is cost avoidance of having virtual versus in-person meetings.  "Here was the travel expense avoided", etc.  This is specious because not all of the virtual meetings would have actually happened if travel expense needed to be approved, and other communications tools exist that can do some, but not all, of the functions needed for an analog of a live meeting. 

If you step back from this for a moment, however, you realize that employees were communicating in a richer manner had they been able to had the technology not existed, and were able to meet without the travel expense.  Hopefully your powers-that-be are intellligent enough to realize that your organization is accomplishing benefits of improved communication and teamwork, and are not sole-focused on that 'T&E BUDGET' line item on their management report.

Having said that, if this is all you have in your ROI report, that you saved a bunch of travel dollars, I would personally ask you why this was better than a WebEx, or video conference, or telephone call.  That comes later.

2a) Carbon Footprint- A corollary of Cost Savings is one that John Jainschigg pioneered with his virtual conferences while he was still at Dr. Dobbs Journal, and still employs in his new capacity at Ziff and World2Worlds.  Virtual conferences are undeniably more environment-friendly than in-person conferences.  All the fiction about avatar carbon emissions aside, the cost/benefit ratio of attending a virtual conference is far beyond any in-person conference.  It's a shame that no one has uncovered a sustainable monetization plan for virtual conferences yet, so we can skip the live equivalents and shed all the air travel indignities.  Still, if your organization has a 'green' push, this can help accessorize your argument.

3) Training/Learning/Education costs- This is similar to the Cost Avoidance above, if your argument is that you were able to do the function cheaper using virtual worlds.  A smarter angle on this is not cost-avoidance, but increased attendance.  You can find more people willing to sit on a one hour virtual training class in classroom filled with avatars (while sitting comfortably at home or in their office) than a class one building away on their corporate campus, that requires they get up and move.  Have you ever had a conference call with participants in the same building as yourself?  Enough said.

So, you host training/learning/education events, and you are able to handle more participants because of the virtual nature of the event, and they are able to have horizontal-interactions just as if they had been in-person in a classroom.  [This is an off-putting aspect of virtual events today, in that the text chat is intrusive and explicit, rather than the sotto voce conversations that usually accompany a classroom or conference table.]

4) Virtual Teams- This is an area that has yet to be explored in earnest, other than ad-hoc communities of interest in social virtual spaces.  If you have large enterprises with 'tiger teams' or 'emergent topic teams', then virtual spaces can provide a function that you cant easily replicate using explicit collaboration tools like video conferencing or web collaboration.  I would love to see a textbook virtual team from within a large company like General Electric or Citigroup that meets regularly, ad hoc, and has persistent data assets within a collaborative virtual space.  Facilitated Serendipity.

There are more, harder, value propositions which I will follow up with in the next blogpost, but are admittedly dull and traditional.

Comments

[chris sherman]

Good to see you blog again. I always enjoy your insight.

Chris

[Jason]

I'm quite interested in hearing your answer to the question about why the virtual world meeting space is better than webex or a video conference.

While I certainly have ideas as the value of "horizontal communication" as you put it, and other social cues and possibilities that become available in a virtual space, I have not yet figured out how to articulate this effectively to management.

[Detune]

@Jason

Caleb Booker recently wrote about webcam vs virtual worlds:
http://www.calebbooker.com/blog/2009/01/27/roi-in-virtual-worlds-1-why-webcams-fail/