Network effects

On 21 July 2010, social networking phenomenon Facebook announced that it had reached the milestone of 500 million users, just six years after its inauspicious beginnings as a Harvard University dorm project. In early 2011, investment bank Goldman Sachs valued Facebook, now the Internet’s second most popular website, at $50 billion.

Meanwhile, micro-blogging website Twitter has also experienced explosive growth. In 2007, the service was estimated to have just over 500,000 regular users. In October last year, it was reported that this number has ballooned to approximately 175 million, many of which are commercial organisations.

It has long been established that social media is not simply a technological fad, the CB radio of the current era. Those figures justify the claim that it is a bona fide cultural phenomenon. But while many businesses have tapped into it in a number of different ways, so far the growth of social media in business has been decidedly muted compared with consumer adoption.

The Effective IT Survey, for example, showed that 40.3% of respondents’ organisations had formally adopted ‘Web 2.0’ tools, up slightly from 36.9% in 2009.

Broadly speaking, use of social media within the enterprise can be split into two camps. The first concerns the use of these applications for marketing and customer relationship management (CRM): by setting up a Facebook page or Twitter profile, businesses effectively give their customers a forum where their queries and complaints can be answered by company staff and fellow users on the public Internet.

But social media has also gathered steam as an internal enterprise application for communication and collaboration. On-demand CRM vendor’s Chatter, launched in the past 12 months, is one of the products pitched at this market.

The application mimics the aesthetic of Facebook, letting employees post real-time status updates, share documents and form project-specific groups, all within an organisational context. A use case for Chatter given by is an employee posting a preliminary design of a new product, which colleagues can then publicly appraise and post feedback on.

More than 60,000 organisations are now using Chatter, says. Computer maker Dell, its largest customer of the product, has so far rolled it out to more than 90,000 of its employees.

But it is not just disruptors such as that are waking up to the potential of social media-like functionality in the workplace. In its latest edition of collaboration portal SharePoint, Microsoft added social networking functionality such as activity feeds and improved user profiles. In March, business applications giant SAP launched StreamWork, an application that allows users to share and collaborate on projects in real time. “The major vendors getting into the game in a more realistic way was one of the things we certainly saw happening in 2010,” comments Jeff Mann, an analyst at IT research group Gartner.

It is obvious from where these products take their cue. SharePoint’s user profiles are similar to Facebook pages, while Streamwork resembles Google’s defunct collaboration tool Wave. Many businesses are only taking their initial steps into social networking, so this lack of “real innovation” does not matter too much at the moment, says Mann. “When you look at these vendors, the question isn’t ‘are they the best?’, but ‘are they good enough?’” he explains. “In 2009, they weren’t. More often in 2010, they were.”

Blocking social media

Many organisations choose to block social networking sites for fear that employees will waste time on them. But in some cases they do so out of anxiety that staff may disclose sensitive corporate information.

This fear is not without grounds, as a few incidents in 2010 demonstrated. For example, the UK’s Ministry of Defence admitted in February that staff had leaked military secrets on sites including Facebook and Twitter over an 18-month period. Three months later, last-minute talks aimed at averting industrial action at British Airways were abandoned after it came to light that a union leader was broadcasting updates on negotiations via Twitter.

Protecting against the information security risks of social media use is not helped by the fact that, for many organisations, it goes on without their knowledge. A study published by security software vendor FaceTime in 2010 found that social networking was used by at least one employee in 100% of surveyed organisations, but also that 38% of IT professionals interviewed insisted that there was no social networking use in their organisation.

Gartner analyst Mann claims that security concerns are among the main reasons that organisations implement their own, business-focused social networks. “A lot of it is defensive,” he explains. “They say ‘well, people are using Facebook anyway’, which they see as a risk, and so they look for a way to make it secure or an enterprise alternative.”

Besides this, many of the proposed reasons for adopting social media tools internally are cultural, and are therefore highly debatable. For example, social media experts often argue that one such reason is to meet the expectations of younger employees, but Mann is sceptical of this argument. “It really underestimates the power of culture within an organisation,” he argues. “If you have 20,000 employees in a company that has taken on 100 new hires this year, the 20,000 are going to have a much stronger say [on how the company works] than the new ones who come in.”

Even if such arguments hold water, it is difficult, if not impossible, to express that kind of benefit in commercial terms, and therefore to make sure any implementation is cost effective.

Mann argues that return on investment, the measure by which most organisations appraise the contribution of their IT projects, is not suitable for social media implementation. “Very often, though, ROI is the wrong question,” he believes. “This stuff isn’t necessarily about saving money or driving a return – it’s about doing new things, and doing them differently.”

But without some way of formally expressing, measuring and benchmarking the benefits, business social media tools are unlikely to win Facebook-like adoption any time soon.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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