Part 2 - Why have social netting?

Frameworks for thinking

In the first in this series of articles on social networking, I referred to the typical business uses of social networking as being for:
- customer intimacy
- product or market research
- employee or partner communities
- product support, and
- project management.

(I neglected to say in that posting how helpful I found the remarks of Charlie Osmond of Freshnetworks. A few days earlier he had kindly set aside time to discuss the subject of social netting with me and passed on some of what he and his colleagues had learned.)

Most recently, I looked at investment motives for businesses, identifying three primary motives for making any change:
- to continue what you're already doing but cheaper
- to continue what you're already doing but better
- to do new things.

Additional motives are investing for compliance, infrastructure and image.

Applying the frameworks

Consciously or not, organizations are in pursuit of combinations of these varied objectives when they set up or participate in social networks. The results of our survey, now closed, contain many examples of how social netting is being used.

I discuss six of those examples below and briefly analyse them in terms of the two frameworks. Afterwards I present the results in tables, for ease of comparison.

1. Aftonbladet

The Swedish tabloid newspaper, Aftonbladet, runs the most popular media Web site in Scandinavia, with more then 2 million unique visitors every day. Interactions are managed using Joshsthlm's XCAP software, in combination with a content management system.

In May 2009, Aftonbladet launched the Snack community at the site. This allows readers to contribute to forums, set up blogs, post photographs and video clips, and comment on articles. More recently, the paper added viewer commenting on its WebTV clips and plans to let readers record video comments.

Aftonbladet intends launching similar services for another 50 editorial groups within the next few years, creating a sub-brand for each. It will move all its 27,000 (!) readers' blogs to the XCAP system by the start of 2010.

The focus of Aftnbladet's networks is customer intimacy. One can assume that, like most newspaper groups, it is keen to attract and retain the attention of readers of its paper editions. Investment motives, therefore, are likely to be outward-looking, combining better externally with new. There is also probably an element of cost saving involved. How all this will translate into greater revenue is not clear to me.

2. Disaster Relief Rotarian Action Group

Not just commercial organizations benefit from social networking. The Disaster Relief Rotarian Action Group uses IGLOO software to help it in its activities. (The group is separate from but associated with Rotary International.)

The DRRAG site connects Rotarians from more than 200 countries to provide immediate disaster relief support and instant access to international non-governmental organizations (NGOs) and government resources. The site provides embedded video files, news, blogs, forums, volunteers' profiles and other relevant content. Through these, people managing relief efforts can rapidly build and mobilise a team. Members can collaborate via the site wherever they are.

Disaster relief is an area where good and speedy communications are essential, primarily to get aid where it's needed as quickly as possible. It can also minimise the duplication of effort and 'turf wars' that sometimes hamper emergency relief work.

DRRAG aims to build employee (that is, volunteer) and partner communities and assist project management. Its implied investment motives are better externally (and possibly internally), cheaper and infrastructure.

3. Rheinmetall

Rheinmetall AG is a large European manufacturer of automobile and military parts. Headquartered in Germany, it has factories and offices around the world, more than 70% of its sales coming from abroad. Rheinmetall employs 21,000 people and its 2008 turnover was about £3.3 billion.

Having grown through acquisition, in 2000 the company began consolidating its resources into its current two divisions - automobile and military. Among the usual drawbacks of such a structure are poor communication between the divisions and a separation of skills. Rheinmetall employees therefore work in process-specific teams, within elastic organizational units that often straddle the two divisions.

This structural plasticity is enabled by the company's use of Lotus Connections, with Quickr and Sametime. People in particular industry segments form their own communities, often internationally, using bookmarking to help them find and share documents and other information. Corporate 'white pages' give a searchable catalogue of skills. Among Rheinmettal's aims for the system are improving product quality and capitalizing on new markets to increase revenue.

The Rheinmetall community's areas of application cover a wide range, including product and market research, employee and partner communities, and project management. Product support might be another ingredient.

The implied investment motives are equally broad, including better externally and internally, innovation and infrastructure. There is likely to be an element of 'cheaper', too.

4. Tierportal

Tierportal.de is a Liferay customer. It is a social network for pet owners in Germany. Westdeutsche Allgemeine Zeitung (WAZ), one of Germany's largest publishing houses, funds and runs the site through its Gong Verlag subsidiary. Tierportal offers a new marketing channel for WAZ's print magazines and a way for trading partners to sell their products and services.

The site has collections of information and content about a wide range of animals. Tierportal also offers tools for community knowledge sharing, including blogs, forums, photographs and videos. Members gain reward points for social activity, such as the number of forum posts. They can redeem these points for gifts from online vendors featured on the site.

Tierportal is aimed at customer intimacy, with scope for market research. The implied investment motives for Gong Verlag and its partners are doing better externally, doing new things and image.

Tierportal probably needs plenty of moderator activity to stop the quality of contribution falling unacceptably low as members pursue points. Should that happen, then "community binding" will possibly fail.

5. T-Mobile

The mobile telephone network operator, T-Mobile, is using Jive Software to aid collaboration within its business and retail sales teams. The company's marketing department set up the network, which links roughly 700 sales people under the name MagentaNation (after the colour of T-Mobile's trade mark).

Using company-wide or specific forums, employees can share competitive intelligence and ideas on best practice. RSS feeds bring newsfeeds from outside the company; video feeds deal with topics of sales interest. Team leaders post details of their activities and a scrolling header shows sales numbers and details of important updates.

The results of using MagentaNation include faster responses to customers' questions, and a better-informed and more engaged sales force. New members of staff learn the ropes quicker. A possible next step is to make the software available on mobile devices.

MagentaNation is aimed at building and helping employee communities, possibly with some product support activities. The main investment motives would seem to be better internally and externally.

6. TransUnion

TransUnion is one of the world's largest credit-checking companies, holding credit histories on an estimated 500 million consumers around the globe. It runs an internal social network based on Socialtext software, linked to an installation of Microsoft's Sharepoint. The latter mainly handles formal processes.

The company set up its network because it found that most of its employees were using external social networks to discuss work matters. Employees had even asked permission to set up an employee group inside Facebook. The confidential nature of TransUnion's business meant this posed an unacceptable security risk. Those discussions now run inside the firewall.

Since installing Socialtext, TransUnion's employees have begun brainstorming ideas on improving the performance of the company's computer systems. Its chief information officer says this is saving it significant amounts of money because those teams would previously have simply asked for more software or processing power. He estimates the saving to be $2.5 million in less than five months, from an expenditure of about $50,000.

The clear focus of TransUnion's network is employee communities, with perhaps an element of project management. Its main investment motives look to have been better internally and externally (risk reduction) and infrastructure, possibly with some compliance concerns. The fact that it is saving money is a bonus, an emergent property not envisaged at the outset, so "cheaper" doesn't apply.

Summary

These six brief case studies show not only that social networking can be helpful to organizations but also that it can apply to varied types of business. (I count DRRAG as a business.) They also illustrate the range of objectives and investment motives that can lie behind it. Social netting is no one-trick pony.

To make it easier to see the range and variety of reasons and results, I have compiled these two tables. As with the analyses above, each reflects my interpretation of the cases. I based them on what software vendors said in their survey responses and some brief research on the Web.

The first table summarises the application focuses for each case. A single filled star means the case falls into the category or one of them at the head of that column. Two stars show it meets both categories listed. An empty star means that category possibly applies.

(Click on either table to make it larger and clearer. "Back" returns you here.)

Table of application focuses

The second table summarises the investment motives for each case. Only single stars appear here, with the same meanings as above.

Table of investment motives

None of the cases has a return-on-investment number (ROI) attaching. This does not weaken the argument for social networking. It could perhaps mean these organizations have not bothered trying to calculate the ROI. This is common among such outward-looking initiatives.

It might be too early for some. The TransUnion case, for instance, looks promising but the installation is just a few months old.

Equally, it's possible that some of the user organizations have done their financial sums but their suppliers did not include the results in their survey responses. We didn't ask specifically about the topic, so that would be no surprise.

Following up

I hope this posting and the preceding material have been helpful. Please let me know if there's anything you strongly agree or disagree with.

These postings will form the basis of the first of the forthcoming Bloor Research reports on social networking. It will appear in September.