finance and control implications of social media

Finance and Control Implications of Social Media

2 november 2011Eddy Vaassen – Professor of Accountancy, Tilburg UniversitySamuel Driessen – Senior consultant, Entopic

Please turn your mobile devices ON!(but keep them silent)

#nbavrc

Overview Masterclass

• Overview social media• Control of social media• Control with social media• Propositions

• Social networking– Social profiles – Social network analysis

• Social collaboration– Wikis– Blogs/microblogs – Collaborative office

• Social publishing– Content sharing– Content aggregation– Social publishing

• Social feedback– Social rating, ranking,

commentary– Social content structure

Social media is an interaction channel

opened for the purpose of mass collaboration

Wikipedia is social media employing wiki

technology

Social technologies enable social media

channels

(Gartner)

What UseBlogs Personal channel to expose ideas

and get comments in sequential posts

Executive communications, project status, thought leadership

Wikis Collective authoring on a single, growing document

Reaching consensus, brainstorming, knowledge diffusion

Content repositories

Controlled access to downloadable data

Controlled progress toward versioned deliverables

Discussion forums

Mechanisms for organizing, understanding and filtering group activities

Group member communication and interaction

Social tagging

Share/analyze links to useful sites, documents, objects

Organizing & sharing resources, discovering trends and expertise

Profiles Descriptions of interests, skills, projects, experiences

Building personal links, expertise location

Social analytics

Tools for collection and reporting of social signals

Helping users navigate, explore, find people and information

(Gartner)

Social Media…

• Fun, NOT work• Un-controlled• No privacy

What does social media do to social networks?• It makes networks visible• It supports networks• It accelerates networks

step 1 step 2 step 3 step n

step 1 step 2 step 3 step n

Social Media StrategyListen (also: who’s already talking?)CommentJoin

Define goalChoose mediumWhat are you going to share?Build your network, refer to othersPatience! (90-9-1 principle)Measure

Encourage with guidelines

Organizational barriers to the adoption of social media

Lack of strategy or understanding

19%

Lack of funding16%

Lack of IT or technical skills

4%Lack of support from executive or upper

management11%

Unclear business case or return on investment

25%

Loss of control9%

Availability and reliability

4%

None of the above11%

Others1%

(Gartner, 2009: n=419)

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Risks in social media deployment• Technical

Technology/vendor failure

• OrganizationalAcceptance, use and ability to change

• Business Disruption, risk of doing nothing

• FinancialPayback period, productivity ≠ profit

• SecurityConfidentiality, integrity and availability

• LegalCompliance with tax law, computer law, privacy law and other laws and regulations

Control of Social Media• Costs of:

– Development– Maintenance– Security– Control– Usage

• Functionality– Target specific business value – Link to established goals

• Social media attribution

Costs of development• Hardware• Software• Subscriptions• Training

Costs of maintenance• Continuity of social media push• Keeping software up-to-date and monitoring of updates• Opportunity costs of personnel• IT-related security issues

Costs of security• Preventing cyber attacks moderated by social media• Mobile technology management• Social media policy• Mobile devices policy

Costs of control• Management and internal control• Personnel• Overheads

Costs of usage• Communications• User support• Content• Costs of advertising via social media

Target specific business value• NOT: providing access to social media and see if something good

comes out of it• Define targets• Link to issues that the organization faces, so link to established goals

Link to established goals• Link to issues that the organization faces• For example:

– Organizations that want to economize on employee travel expenses, yet maintaining adequate levels of communication between key functions should consider investing in web- and videoconferencing technologies to bridge geographical distance

– These could be supplemented by instant messaging and shared work space tools

– Ensure that every member of the organization knows that the new capabilities are linked to the business objective of economizing on employee travel expenses

– It helps to pilot new ways of working with several departments so that their working modes can be matched

Social media attributionValue• Operational:

– Data accuracy– Cycle-time– Flexibility

• Financial:– Transaction costs– Error avoidance

• Direct customer value:– Acquisition– Customer satisfaction– Problem resolution– Sales

• Strategic:– Employee satisfaction– Brand value– Competitive pressure– innovation

Costs• Hardware and software• Maintenance• Staffing• Development• Archiving• Training• Communication• Mobility• User support

Control with Social Media• Revenues:

– Interactivity– Productivity– Data– Knowledge creation and -integration– Personnel– Marketing– Enabling role

Interactivity• Instant feedback• Real-time service• Systematic (as in interactive control systems)• Within boundaries (as in boundary systems)

Productivity• Distraction• Efficiency• Differential performance peaking

– Small chunks versus large chunks of information– Sequentially organized versus directly accessible information– Images versus words– Multi-tasking versus single-tasking– Personality type A versus B

Data• Collect data to find out about:

– What people are saying about us– How we can find contacts and prospects– Who is working on the same things we are– Employee engagement– How to reduce costs– If and how we can shorten project delivery times– If there is a better way to define and share best answers to customer

requests and complaints• Coherence is needed to link the choice of social media tools to issues the

organization faces (NOT to respond to ad hoc requests from end-users or just vendor releases)

• Finance provides the needed scorecards

Knowledge creation and -integration• Crowd sourcing• Leveraging social media:

– Immerse; tone-at-the-top– Reflect; be critical– Define; set goals and align the organization– Engage; excellent content– Evaluate; ROI

Personnel

• Hiring• Training• Education• Support

Marketing

• Awareness• Word-of-mouth• Finding communities and effectively communicate with them

Enabling role• Enablers of old concepts that previously where technologically

unfeasible, e.g.:– Continuous enforcement of awareness of values and norms– Interactive control systems– The learning organization– HEROes

• Highly Empowered Resourceful Operative: use IT to serve customers’ needs, operate safely

• Versus managers: making innovation a priority, support HEROes, work with IT to manage risk

• Versus IT: support HEROes with IT, scales up solutions, provides tools to manage risk

Five critical failures to avoid

1. Creating a social media strategy that is not congruent with strategic business goals

2. Keeping social media separated from other business processes

3. Embarking on too many uncoordinated efforts4. Broadcasting instead of engaging5. Failing to remain true to brand and values

Propositions

1. Social media is mainly interesting for the marketing function, not for the finance function

2. There is no point in trying to apply existing control frameworks to social media, since this is all so new that any control framework will be useless in its current shape

3. It is virtually impossible to calculate returns on investment for social media applications

4. It is the task of the controller to monitor social media implementation and usage to enhance its effectiveness

5. Social media contributes by removing the illusion of control as caused by hard controls, and substituting these by well-demarcated and defined soft controls

Takeaways

• We talked about what is social media in a business context• Social media makes networks visible, supports and accelerates them• Two control notions:

– Control of social media in terms of cost control, risk control and revenue generation

– Control with social media to make the organization better of than without social media

• Important is that any social media project is systematic, aligned with the organization’s strategy and within well-defined boundaries

• It’s all about marketing and interactive control systems• Financial metrics are hard to calculate, but the science is progressing

– social media attribution

• Eddy Vaasen @evaassen e.h.j.vaassen@uvt.nl

• Samuel Driessen @driessen samuel@entopic.com

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