CIMA Warns of Web 2.0 Risks

CIMA Warns About the Risks of Jumping onto the Social Networking  Bandwagon Without a Robust Business Case

Organisations experimenting with web 2.0 - the new generation of web technology where users provide content and help shape the site - could find these projects prove to be  costly failures, according to a report by CIMA (The Chartered Institute of Management Accountants) entitled  ‘Beyond Enthusiasm: Making the business case for your organisation's use of web 2.0'

CIMA believes that too many Web 2.0 projects have started without a full and rigorous business case, leading to several high profile failures.   It is calling for finance professionals to use their skills to create a robust business case before allowing their companies to embrace platforms like Facebook and Twitter.

The report found that decisions to implement web 2.0 projects are often  made on the basis of enthusiasm alone and  that too often marketing, social media and IT specialists had  excluded the finance function from the initiation of web 2.0 projects.

The result was that many web 2.0 projects were undertaken without a clear understanding of their objectives or how return on investment would be measured.

Louise Ross, a CIMA Technical Specialist and author of the report, said; ‘‘Making a business case for web 2.0 projects can be tricky because there is so little benchmark data available . However, the difficulty of assembling and presenting decision-useful information is not an excuse to avoid making a business case.

"For example, it is difficult to measure the results of marketing and advertising projects, yet we have developed processes to do this. It is the role of the management accountant to find and combine internal and external information of various types into an analysis and to ensure that enthusiasts can't convince management to undertake projects which don't have a good strategic fit for the company.''

The report includes 20 global case studies of successful, and not so successful, business uses of web 2.0. A web 2.0 business case should ensure that the success measures are in line with the organisation's overall business strategy and that the costs and benefits are assessed to make sure the initiative  delivers what the company needs it to.

In order to help finance professionals make the case for their organisations use of this initiative, CIMA has created a tool for framing web 2.0 business cases which is included in the report. This new tool guides management accountants through the decision making process and identifies the use of tried and tested management accounting techniques to help organisations make the right decisions and measure their return on investment.

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