Internet Evolution interviewed TransUnion CTO John Parkinson about the ROI of Social Networking. It is relatively early in their use of Socialtext, but they are already achieving significant success. Here is the sidebar article, quoted in full:

Transunion Finds Cost Savings, Seeks More

Can’t put an ROI on social networking? TransUnion CTO John Parkinson has his: an estimated $2.5 million in savings in less than five months while spending about $50,000 on a social networking platform. The savings comes from buying less stuff. TransUnion is one of the big three credit report companies, and it runs on a lot of custom software code. Instead of buying more gear to improve IT performance, employees are brainstorming ideas across larger groups on the company’s Socialtext platform. “The savings mostly come out of teams that would have historically said, ‘Buy me more hardware’ or ‘I need a new software tool’ or ‘I need more processing capacity,’ who figured out how to solve their problems without asking for any of those things,” says Parkinson.

While the estimated ROI numbers look promising, Parkinson stresses that wasn’t why TransUnion got started with social networking. He thought it would meet a need for employees, and, just as importantly, “I wanted to defend against too much of this going on in public,” he says.

TransUnion knew it was time to provide an internal social networking tool when people started asking for permission to set up an employee group inside Facebook. So the company did a quick survey. About 2,000 of its 2,700 employees were using some kind of public social networking tool. Since the company deals in credit reports, it wasn’t keen on employees gathering to talk shop on the public Web. So the IT team set up Socialtext inside the company firewall. Parkinson liked the features of the online network Ning but decided he needed the software on its own network for security.

The Socialtext platform has profiles, a wiki capability, and instant messaging. Perhaps most powerfully, employees can use it to ask questions of a broad group. People can tune their settings to allow all questions or allow only those from certain groups or people. But all the questions and answers get written to the database. The platform lets people vote on answers they like. It also has tools to analyze which answers people are reading and using to solve problems, and how answers correlate to topics that are most valuable to the company.

Here’s where this idea gets even more interesting. TransUnion is studying usage data to learn who’s best at solving business problems raised in the social network. With that, it’s experimenting with new job descriptions for a couple of them, so that handling these questions within the forum is a formal part of their role.

“It was never very clear to us, looking in, who the authoritative sources were, who was good at solving problems,” Parkinson says. “Now we can see a lot of that because we’re starting to see patterns emerge, to see who’s following whom, who’s the good source of questions, who offers good answers. All those things that you sort of know by the grapevine, we now have data for.”

TransUnion’s Socialtext platform co-exists with Microsoft SharePoint, which has some of the same wiki and networking tools. Parkinson draws the line this way: If an activity is part of a formal process, the collaboration should happen in SharePoint. In bringing on a new customer, for example, many formal steps are involved, and SharePoint has workflow tools that allow for collaboration while making sure the necessary hand-offs happen and the process is completed. “On the other hand, if I want to improve the process of bringing on a customer, I launch a discussion on Socialtext,” Parkinson says.

Extrapolating on the company’s success so far, he hopes the platform can deliver $5 million to $8 million in total savings this year. The platform only went live in October, and company-wide in January. Will the momentum continue? Will people find uses that are less productive? Parkinson isn’t declaring victory yet, but he likes what he’s seen.

– Chris Murphy (cjmurphy@techweb.com)