Is Business-centric Social Networking a Revolution — or a Ruse?

Programs like Twitter, Facebook and LinkedIn have become a popular way for families and groups of friends (or groups of strangers) to share information and organize their lives. Now corporations are hoping they can tap into those capabilities as a way to improve employee productivity, collaboration and communication on the job — and a long line of software vendors, such as Cisco, SAP, Oracle, Microsoft, IBM and Salesforce.com, along with upstarts like Yammer, are hoping to position themselves as the platform to integrate social networking and business processes.

But will it work? And is it worth it? Research firm IDC projects that the global market for social platforms will jump from $630 million in 2011 to $1.86 billion by 2014. But while proponents tout the push for a more “social” business sector as a new era that will alter the way companies manage employees, skeptics say it could amount to nothing more than a ploy to help software companies sell more products.

“Clearly, social media has revolutionized how human beings interact,” says Kendall Whitehouse, director of new media at Wharton. “It’s logical to ask how it can transform internal business processes.” Shawndra Hill, a Wharton operations and information management professor, agrees, but says there is a lack of concrete measurement on the impact of social networking on business returns. “Social networking in the enterprise sector is relatively new, and better tools can enable people to communicate across an organization. But before this really takes off, there needs to be some proof that these things are useful.”

Today, creating effective social networking applications for the enterprise space is still a work in progress. Salesforce.com in February launched a social business tool called Chatter.com that is an extension of the company’s cloud-based customer relationship management software. In many respects, Chatter.com — which was promoted by Salesforce with ads that aired during the Super Bowl — mimics Facebook and Twitter in allowing employees to share profiles, comment on projects and “follow” colleagues as well as corporate business processes such as invoices and sales proposals. In December, Salesforce.com CEO Marc Benioff, the most visible champion of social business, described Chatter as being like “your business is Tweeting you.”

Wharton management professor Nancy Rothbard says the introduction of social networking into office culture could have “profound” implications for the way businesses are structured. “The benefit of social networking is that it creates communities, but it creates a very different kind of community than offline communities,” notes Rothbard, who is currently studying how people juggle their personal and professional personas online. “The piece of this that can be really amazing is that it creates community action, awareness and knowledge about issues and events that may be relevant, and creates a sense of intimacy, which can lead to trust and closeness.”

It is unclear, however, if that idealized scenario can be fully achieved in a real-life workplace, Rothbard says. Social networking in the broader public sphere has allowed people to become virtual “friends” of politicians, actors and famous musicians, and has created the feeling that users can interact with those public figures on a familiar level. But what happens if the same issues of hierarchy come into play when a CEO “friends” all of his or her employees on a work-based social network, Rothbard asks.

Tearing Down Silos

Many of these social networking and management experiments are being undertaken by traditional business-focused technology companies. At its Lotusphere conference in January, for example, IBM executives talked about how the company was working to integrate social tools into its own operations with the addition of collaboration software for viewing documents, forums to post ideas and mobile applications. IBM has also been building social tools into its cloud-based LotusLive business networking and collaboration suite for use in a range of sectors including marketing, customer service, sales, product development and human resources.

In October, Cisco CEO John Chambers said the company has been using social networking internally to “flatten the organization.” In this model, social networks are used to build product and project management teams. Expertise is quickly rounded up, and employees are judged on their collaboration skills. Murali Sitaram, general manager of Cisco’s enterprise collaboration platform, wrote in an October blog post that companies will have to transform as “large numbers of Gen X and Y individuals start entering the workforce.”

Because young people increasingly rely on Facebook and Twitter to communicate in their personal lives, employers must bring similar tools to those workers, experts say. Cisco turned its internal social networking software into a product called Quad, which integrates with business and Internet content management systems and includes Facebook-style status updates, instant messaging and a task manager. However, there are risks. Chambers said in October that Cisco’s move to use a social networking hierarchy to run the business was among the most significant challenges facing the company. “The thing that’s about to change for organization structures is that executives will serve on social networking groups … based on function,” noted Chambers. In this model, executives are viewed more as general managers and can be called on to fill multiple functions based on their expertise.

Benioff frequently cites Dell, a key partner of Salesforce.com, as an example of how social networking — specifically Chatter — is changing corporate interaction. Dell has rolled out Chatter to 113,000 employees. Company officials said they found the application was effective in connecting its sales team to the manufacturing department, which helped the firm better meet delivery promises to customers and in setting expectations overall. Salesforce.com also uses Chatter internally.

“These networks provide this vast democratization and it blows up … the hierarchy in your company…. It empowers and enables the employees who are really making a difference, which are not necessarily the people, for example, who are working for me,” Benioff told the audience at GigaOM’s “Net:Work: The Future of Work” conference in December. “It’s not my direct reports or even my top managers…. I started to see [that] the people adding value in the company were not the senior VPs and the VPs, but this powerful network of individual contributors [providing business ideas].”

Meanwhile, Salesforce.com has made a series of acquisitions to bolster Chatter’s features. In recent months, Salesforce has acquired Manymoon, a social productivity company; DimDim, which provides web meeting tools; and Activa Live, a corporate chat software specialist.

According to Whitehouse, these types of products can serve to break down the dreaded siloed organization by weakening barriers between departments and creating a venue for employees to trade insights and offer feedback. When companies grow, information and knowledge is more difficult to surface because “people are too busy and are focused on their own outcomes. The revolutionary platforms like Facebook and Twitter began as consumer products focused on individuals,” he says. “That kind of information interchange would be hugely valuable for businesses. How can we bring some of the energy and information exchange found in the personal sphere to the enterprise?”

Although the goal of many of these networking programs is to break down silos, there are also drawbacks to total transparency in an office setting, according to Rothbard. For one thing, employees could easily become overwhelmed by too much communication. For another, there are significant variances in the way people post on social networking sites — or whether they post at all.

“With Facebook, the implications are very different. If I have a very bare-bones page … who really cares?” Rothbard notes. In an office setting, where posts and updates are being used to evaluate work performance, however, it “could have negative repercussions. You could also have people who post too much. There are ‘TMI’ [too much information] people in terms of personal stuff. There could also be ‘TMI’ people in terms of work — to the point where you just say, ‘Stop already’…. There are issues generally about information processing, but also of hierarchy and status that play out in terms of what people post, who they are connected to and how comfortable they may feel revealing information.”

The value of corporate social networking may not be immediately apparent, Hill notes, but companies need to consider the end results they hope to achieve. “What are the needs of the organization?” asks Hill. “Some will use social networking to get better insights on what improved communication means to the business. Others will use the transparency to observe how companies and employees interact and then link that communication to business performance.”

In Need of a Hype Check?

Andrea Matwyshyn, a Wharton professor of legal studies and business ethics, warns that the concept of social business tools can be oversold. “There are uses for social networking as a collaboration tool when working together in teams,” she says. “However, merely having social networking on all the time can divert employee attention.”

In other words, social tools need to be balanced with other priorities, and they may not be as transformative to office culture as expected. “Conceptually, there should be a lot of value added,” Matwyshyn notes. “But the benefits will be different for each worker.”

Hill agrees. If employees use corporate tools for microblogging, blogging and creating profiles for purposes other than what was intended, the applications may become just another excuse to procrastinate from the task at hand. After all, many workers likely spend at least some part of the day sneaking peeks at, and updating, their profiles on Facebook and Twitter.

A lack of widespread employee usage of corporate social networking tools would be equally problematic, Hill points out. After all, collaboration software and knowledge management systems have been around for years, with varying levels of success. “It’s not clear that corporate social networking will be any different than what was offered before,” Hill notes. “The employee asks, ‘Why would I trust your team with my information?’ The tools are better, but information is still in a silo.”

According to Kartik Hosanagar, a Wharton professor of operations and information management, social business tools will likely find users, but the positives of these efforts may be vastly overrated. “I’m a little skeptical about usage, but I’m even more skeptical about benefits to corporations,” Hosanagar says. “Companies may use it, but I don’t think it will provide the productivity benefits vendors claim they will provide. To me, it feels like a reasonable feature of collaboration software, like Microsoft’s SharePoint, rather than revolutionary new software for enterprises. In other words, Chatter is not exactly the big thing that Salesforce.com’s original [customer relationship management software] was.”

The buzz around social networking may just be the latest iteration of technology’s hype cycle, Hosanagar suggests. “There is too much buzz about social networking and about the ‘consumerization of the enterprise space’…. Vendors are capitalizing on it by offering the next ‘put-the-buzz-word-in-here’ products, and firms are falling for the trap.”

The Wild Card

Rather than companies buying an entirely new program, the current generation of enterprise software may evolve to the point where social networking features are standard, Whitehouse predicts, because businesses continue to desire the identity management, security and enterprise-level support of their existing systems. “Today, social networking is being thought of as a separate thing,” Whitehouse says. “We’ll see that fade over time, and it will become just part of the way we interact.”

Hill agrees, noting that gaining scale is key to making social networking successful. If only a few employees use social networking, the benefits dwindle. Chatter has a good chance at staying power because it is built on top of the Salesforce.com’s existing platform, she notes. “To succeed in a big way, social networking will have to interface with standard enterprise software.”

Thus, the technology suppliers that are currently ingrained with existing business processes may have the best shot at social networking success with corporate customers, Whitehouse says.

The wild cards in this market, however, are current social networking champions like Facebook. While Salesforce.com is aiming to be the Facebook of the enterprise sector, it is possible that Facebook, Twitter or LinkedIn could launch a business version. The chances of that are remote, Matwyshyn says, but such a move would be interesting. “To work in business, Facebook features would have to be improved with enhanced security,” she notes. “But the ease of use would already be there.”

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