Social Networks Finding Their Enterprise Niche

A couple of years ago, Web 2.0-based social networking was very much a consumer-only affair. It was a way for people, kids, mostly, to find out what was hot and what was not. More recently, of course, businesses have gotten into the act. Many companies have blogs and Facebook pages, and more executives are using Twitter as time goes on. 

Industry observers say a new phase is dawning as enterprise social networking begins the maturation process in earnest. And, like everything else, that evolution is being colored by the financial crisis.   Organizations are recognizing the vast power of enterprise social networking and that it's relatively inexpensive. They are beginning to understand the difference between consumer and business social networking and to systematically assess what works and what doesn’t. They are looking at how specific tools work in a variety of contexts. 

“Until about six months ago – it depends on the enterprise – they were starstruck,” says Vanessa DiMauro, the president of Leader Networks, a company that helps organizations with their social networking and online community initiatives. “They were looking at social networking as a cool new tool, but they didn’t know what they were doing. They had no effective processes. Now they have more agile organizations. They have stepped back and have enough experience. They now understand that social media is not a tool or toy, it’s a strategy.” 

Now more than ever, organizations are interested in low-cost tools with the fastest possible return on investment (ROI), and social networks fit the bill perfectly. Michael Cochrane, vice president of Information Technologies for The Palladium Group, a consultancy, says that platforms are starting to mature. Some are measuring “tonality” as a way to determine the attitude of people involved in the social-networking session or process. Other tools can do such things as measure Twitter tweets and track how many times a particular topic comes up in a social-networking encounter. DiMauro adds that companies are developing lagging and leading indicators for the effectiveness of various tools. “It is beyond the shiny and new phase,” Cochrane says.

Two Platforms

Enterprise social networking is evolving in two directions. Older platforms and applications are aimed at employees and closely track unified communications initiatives. More recently, companies have begun to more directly reach out to customers and prospects. 

“The way we look at the market is to segment it into inward- and outward-facing,” says Will Zachmann, an analyst for Wainhouse Research. 

Though the technologies overlap, the goals of the inward and outward types of social networking are quite different. While inward, employee-based social networking is about finding new ways to more efficiently get clearly delineated tasks accomplished, dealings with consumers are by definition far more open-ended. The tools have to be able to satisfy the sometimes-fickle public. 

“It does not matter what they do when they get there, but you want to bring them in and keep them there,” Zachmann says. 

A further shift is ongoing, DiMauro says. Organizations, now more sophisticated with both the ethos of social networking and with the tools at their disposal, are shifting from traditional one-to-many to more one-on-one approaches. 

“The biggest thing we are seeing and the biggest change that we are noticing is the use of social media is moving away in some regard from interactive marketing to engagement. Engagement is everything,” she says. 

The key is that the relationship between the consumer and the company – at least those consumers who are on the leading edge – is irreparably changing. 

“You [formerly] put up blogs, had commenting. But it was still one-to-many engagement. Here it is an ongoing, sustained conversation. It is about a community of practice around a business issue or thought leadership initiative,” DiMauro says. She adds that the engagements that are purely about marketing are not likely to be successful. 

New Limits 

There are a number of interesting issues in the near future. Many stem from the fact that business and consumer activities are different. For instance, the role of the user, whether he or she is a consumer or an employee during a particular social-networking session, will affect precisely what they can do and what information is available. 

For legal and competitive reasons, companies must be more circumspect in the way they handle employees, both in terms of who they allow to speak to each other and what information is available to them, than when consumers are involved. 

“The expectation of wide sharing of information is unrealistic,” says Sumner-Smith. “The challenge is to get the benefits of the tools while taking account of the practical reality that enterprises simply can’t share everything.” 

The enterprise social-networking scene has a Wild West element to it. The big players are there, of course, and they have helped end users. 

“The vendors have some really interesting and laudable success stories with products and platforms, but it is not like everyone is doing it quite yet,” says Charles King, the principal analyst at Pund-IT. “It is still fairly early in the adoption curve for this type of solution. I expect more organizations and companies to pick it up over time.” 

King says that IBM Lotus Connections suite was the first product from a major vendor to include enterprise social-networking features. Microsoft followed eight or nine months ago with features in SharePoint. Both are introducing features aimed at customers as well as employees. 

“A next step that we are seeing more frequently now is an effort to widen the collaborative circle to include players outside the primary organization,” he says. 

It will be interesting to see what role the economy plays in the inevitable weeding out process. To a great extent, of course, the drivers of social networking are small vendors and service providers. In any era, a good number of such organizations would likely shut their doors or be acquired. The shakeout is likely to be more extreme and quicker during a deep recession. 

This matters to more than just the vendors themselves. An organization can combine best-of-breed tools into an elegant social-networking platform – only to see the progenitor of a key element disappear. Sumner-Smith says organizations must pay attention. 

“That is going to challenge enterprises,” he says. “They may have to compromise on the technology choice to go with a company that has a greater breadth. They need a reliable vendor and supplier because they are going to invest in it internally.” 

That’s one side of the coin. The other is that the poor economy is accelerating the move to social networks because it's an inexpensive way to do business. 

“We’re really seeing an uptick in business these days,” DiMauro says. "It’s moved out of the fad and into the business-mandate stage. It is actually viewed as providing a competitive edge. People now understand that it’s a race to the future and are looking at modern ways of reaching the customer.” 

The next phase, perhaps predictably, will be about control. “Who owns it: IT, marketing or sales?” DiMauro asks rhetorically. “It crosses everything. It is similar to the battle over Web sites. It is one thing I am watching with amazing fascination.”