finance and control implications of social media
TRANSCRIPT
Finance and Control Implications of Social Media
2 november 2011Eddy Vaassen – Professor of Accountancy, Tilburg UniversitySamuel Driessen – Senior consultant, Entopic
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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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© SAP 2009 / Page 16
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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