- Executive summary
- A new enterprise role for social networking emerges
- A primer on Web 2.0
- How does Web 2.0 impact the enterprise?
- Social networking in the enterprise
- Using social networks in the workplace
- If this is a paradigm shift, what are its implications?
- The future of networked organisations
- About Deloitte
- About the authors
- Figure 1: Potential use and benefits of social collaboration
- Figure 2: The Web 2.0 landscape
- Figure 3: Social networking and the enterprise
- Figure 4: Using social networks in the workplace
With the advent of mass communication over the internet, businesses are trying to innovate by reaching out to employees, customers, suppliers and trading relationships through different channels. Recent trends indicate Web 2.0 is the front-runner of this revolution, with 44 per cent of American adults actively participating1.
"Web 2.0" was coined in 2004 to describe the next evolution of the internet. It is based on the notion that people who consume media, access the internet and use the Web should not passively absorb the flow of content from provider to viewer. Rather, they should be active contributors, helping customise media and technology for their own purposes. Social network sites, blogs, wikis and other collaborative technologies are the result.
Some companies are now taking this notion a step further. Because organisations need to retain knowledge and solve problems to evolve, they are investing in Web 2.0 technologies to link their employees, who are often dispersed around the world. One of the most prevalent trends associated with this movement is social networking.
Social networking connects people with similar interests, experience and backgrounds. This paper explores and unravels the myths behind this trend and outlines its benefits and use in the marketplace, particularly within the enterprise.
A big part of knowledge is understanding where to find the answers. In today's world, global organisations are constantly challenged with disparate pockets of information created within different functional silos and business units. They find it increasingly difficult to locate specific subject matter experts quickly and efficiently. Social networking tools with powerful search capabilities provide a platform to expedite these connections. If organisations cannot effectively connect people and resources across regions, functions and networks, they cannot increase service capabilities.
Many employees are members of social networking sites, such as linkedin.com and facebook.com, which connect them to their colleagues. A social networking model for organisations can facilitate efficient resource connections, allowing practitioners to browse peers' profiles, resumes, availability, project experience, white papers, team information, firm activities and contacts. This new social architecture has forced people to rethink information creation, production, marketing and distribution. These changes provide companies with a transparent platform that can reach their employees, suppliers, customers and other outside relationships using these new and effective methods.
This paper explores trends in Web 2.0, with a focus on social networks, understanding its impact to the enterprise, identifying challenges and benefits in the workplace and demonstrating the need to incorporate social networking into an organisation's cultural fabric (Figure 1). Many organisations have knowledge-based tools and repositories that store white papers, periodicals, leading practices and other important information. But communications and collective intelligence, a signature realisation of the Web 2.0 era, can help workers produce results from this information more effectively. We believe standing still is not an option as industries are increasingly rebuilt in short time frames. Organisations need to respond since changes driven by social networks can challenge basic premises such as the hierarchical command and control structure2. For example, YouTube's sudden and dominant online video presence occurred in less than two years, transforming the 40-year-old media industry3.
Source: Deloitte Consulting LLP
The burst of the dot.com bubble contributed to the growth and explosion of Web 2.0 platforms, concepts, technologies and companies. The consumer adoption of the internet, an increase in broadband capacity and the development of a social culture that stresses information sharing and exchange catalysed this newly connected world. In the past, disruptive technologies have propelled new economies. Now peer-to-peer networking, such as Napster and Wikipedia, has created a platform for everyone to use, share and contribute. In the Web 2.0 era, users have become both the producers and consumers of information.
People often ask, "What is Web 2.0?" According to Tim O'Reilly, who is widely credited with coining the term, Web 2.0 is "the business revolution in the computer industry caused by the move to the internet as platform and an attempt to understand the rules for success in that platform."4 Dan Farber, editor of ZDNet and editorial vice president of CNET Networks, describes Web 2.0 as "the moment when we stopped using computers and started using the internet5."
Adoption of Web 2.0 has been widespread. Forrester's December 2006 survey of 119 CIOs from mid-size and larger companies showed that 89 per cent adopted at least one of the six most prominent Web 2.0 tools: blogs, wikis, podcasts, RSS (Really Simple Syndication), social networking and content tagging. Furthermore, 35 per cent of the companies were using all six tools. In January 2007, McKinsey surveyed more than 2,800 executives - not just CIOs - from around the world. It found that social networking was the companies' most popular tool, with 19 per cent currently investing and 37 per cent planning to invest in it6.
Conversations in boardrooms today between industry analysts, CIOs and business leaders around the world are about how and when do companies use this new phenomenon and integrate it with their current technology environment. Software consumption currently follows a traditional model of e-mailing word-processed documents and spreadsheets when Web 2.0 tools exist. Google Docs, Central Desktop and other online word and spreadsheet applications with collaborative editing and sharing capabilities are examples of this model.
As the line continues to blur between Web 2.0 applications and traditional software platforms, future upgrades will need to have these new standards incorporated to stay competitive in the marketplace. At least one major software provider has long promoted its intranet platform for corporate intranets and workflow management tools. In addition, the company has continuously expanded its capabilities to incorporate other Web 2.0 tools, such as blogs and wikis, into the workplace as part of its enterprise suite. It is increasingly clear that Web 2.0 is going to transform every organisation in some way and it is only a matter of time before its use becomes widespread.
In our work across industries, we have observed leaders in technology who continually seek the latest Web 2.0 research and development. This incredible connection between millions of people has far more capacity than any single organisation can produce, resulting in its growing prominence as a key source of innovation in business. As the number of members of these social communities and the productive capacity of the world continues to grow, the lines between external, internal, social and technical are blurring and overlapping with new business models (Figure 2).
Source: Deloitte Consulting LLP
Collective intelligence, which Tim O'Reilly describes as "wiring up the global brain," 7 is a vital component of Web 2.0. By harnessing collective intelligence, companies can create systems of network effects and feedback loops that improve as use increases. Companies like Google, Flickr and YouTube are prime examples of network effects used to increase knowledge and content exponentially.
What are network effects? The essential idea is that the greater a network application's value is the more people use it. Further, the more people who use it, the more value it has.
Corporate intranets are a rich information source and effective communications tool for most organisations. As new participation models evolve and mature, more organisations are moving to provide blogs and wikis to their workers. Dario de Judicibus, an IBM social-networking analyst, has proposed a different definition of Web 2.0 that focuses more on social interactions and architectural implementation: "Web 2.0 is a knowledge-oriented environment where human interactions generate content that is published, managed and used through network applications in a service-oriented architecture."8
The driving forces for Web 2.0 advancements are aging IT systems, collective intelligence-powered business software, web-oriented architectures and social software that relates to social networking. Using Web 2.0 models, these changes will likely focus primarily on the monumental shift toward user ownership, new participation architectures and social computing. Early adopters are most likely to focus on:
- New and improved social media tools that analyse enterprise systems, catalogue meaningful results and data mine in-house project- and organisation-related information effectively.
- Increasing use of intranet solutions that incorporate social networking tools as organisations look to improve skills assessment and identification, remote collaboration, project management, relationship management and innovation.9
Social networking is coming of age in the business world. Networks such as LinkedIn, Ning, MySpace and Facebook have become mainstays for connecting like-minded people, acquiring talent, creating business opportunities and building brands.
The term social networking was coined in 1954 by J. A. Barnes. He called it "a map of the relationships between individuals, indicating the ways in which they are connected through various social familiarities ranging from casual acquaintance to close familial bonds."10 The internet has helped social networks proliferate, allowing people to access profiles of users in the network and expand their connections and contacts.
Social networking was originally intended for like-minded people to stay connected. It began in the United States in 2001, with Ryze.com, a site for members of San Francisco's business and technology community. The site allowed members to use their connections for business purposes. Since 2001, technology innovations have made social networks very visible and allowed people to get involved regardless of number, location, prominence, or affiliation. The three current corporate social networking trends are depicted in Figure 311.
Source: Deloitte Consulting LLP12
In addition to the use and development of social networking, companies are making significant investments in the commercial use of social networking to provide people and organisations the ability to build their own social platform and networks. For example, Cisco Systems Inc. decided to develop a service line that caters to the Web 2.0 social networking niche. Its acquisition of Tribe.net, a social networking site, in 2007 has allowed Cisco to develop social networks for corporate clients that plan to enter the lucrative social networking market13.
Regardless of the industry, firms are reaping the benefits of social networking. By connecting people to specific resources, social networking can be used to help solve business problems. Social networking tools can allow members to interactively search for business solutions. In the process, people and organisations can contribute to the network's body of knowledge.
Organisations that have adopted social networks have created significant value in several key areas of the workplace (Figure 4). These networks help companies in their efforts to collaborate, reuse and offer easy access to innovative ideas.
Source: Deloitte Consulting LLP
The shift toward social networking can impact organisational and social industry practices. The following are some of the workplace issues that can impede the business application potential of Web 2.0 tools14:
- Productivity - Users employ social media tools for non-productive purposes such as socialising.
- Security - Web 2.0 progress increases the importance of heightened enterprise security and privacy vulnerabilities.
- Copyright violation - Third-party material such as essays, articles and photographs are used without written consent from the proprietor.
- Continued interest - Potential snowball effect of Web 2.0 tools, where adoption of specific technology identifies the need for several others, can occur. Expansion of freeform platforms without purpose can lead to dilution of tool goals.
- Another silo - As a primarily consumer-side invention, social media lacks enterprise data feeds. This encourages cut-and-paste publishing from traditional enterprise IT systems into social media, creating another silo of data.
- Trust - Data reliability commonly causes issues for social media in the workplace. The Web has partially solved this with techniques such as inbound link counting, but reputation and voting systems are starting to appear, often as plug-ins, for social media tools.
- Organisational change - Freeform platforms require increased scrutiny for content accuracy.
- Litigation issues - Discrimination, defamation, violation of privacy and harassment are some of the potential concerns that might result in litigation issues.
- Technical integration - Most organisations note that integration between individual Web 2.0 applications and their overall infrastructure is a major concern.
- Information hoarding - In many industries, value is placed on what an employee knows that others do not know. This belief prevents data sharing.
- Quantification - Researchers currently face challenges quantifying social networking benefits.
The new social, collaborative tools will allow ad hoc and emergent teams to network, form and execute business activities as needed. Collaborative intelligence could be a long-term transformational business strategy for broad industry uptake. In his blog on Wikinomics, Deloitte Touche Tohmatsu CEO James H. Quigley recommends soliciting global contributions, emphasising collective "best thinking" for clients15.
Tomorrow's organisations will likely use the maturing human network for its economic value in several ways:
- Improve the ability of employees, customers and vendors to interact with collaborative platforms.
- Make shared data, information and in-depth experience available in real time.
- Offer decision support tools to help employees analyse and make decisions faster.
- Decentralise decision-making and let solutions evolve through collaboration, leading to higher productivity.
- Augment client value by creating wikis for customer-contributed insight or by corporate messaging through blogs. Client value increases when it is relation-based as well as transaction-based.
- Expedite the resource allocation and staffing process through virtual teaming.
- Improve the relationship with employees and clients. Sharing and staying connected is necessary to establish credentials and develop relationships.
- Lower content development costs and increase participation at the same time. Users cannot spend time cutting and pasting between applications. They need to be able to access content in one click instead of three.
- Supplement corporate branding.
- Reduce research and development costs and time by pooling competencies. User intelligence and community input raises the success rate.
Social software can empower every person in an enterprise. People can connect easily within the enterprise, unlocking the knowledge and skills within the organisation and beyond. People want to connect and organisations must support and nurture the process. Enterprise social networking has the potential to help transform an organisation from disparate units into a single network while solving complex business problems at the same time.
Let's get heard. Let's get visible. Let's get connected!
This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates and related entities shall not be responsible for any loss sustained by any person who relies on this publication.
As used in this document, "Deloitte" means Deloitte Consulting LLP. Please visit the web page for a detailed description of the legal structure of Deloitte & Touche USA LLP and its subsidiaries.
Raj Gopal is a manager in the IT Strategy and Management service line of Deloitte Consulting LLP. He specialises in leading consulting teams with IT strategy and operations experience, knowledge and skills in providing services to clients in support of their efforts to lead, design, develop and implement system integration solutions. His current focus is in the public sector, serving clients in health and human Services. He has broad industry experience having worked with in a variety of technology initiatives in industries such as telecoms, manufacturing, investment management and healthcare.
Namita Khandelwal is a consultant in the enterprise applications service line of Deloitte Consulting LLP. She specialises in leading the technical consulting teams in providing services to clients in support of their efforts to implement the Oracle E-business suite for the clients in public sector and manufacturing industry.
Megan Moy is a consultant in the enterprise applications service line of Deloitte Consulting LLP. She specialises in leading consulting teams in providing services to clients in support of their efforts to implement system change and release management operations as they develop and maintain business solutions. Her current focus is in the public sector serving federal clients such as health and human services.
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