Apr 24 2010

Enterprise 2.0: More Important Than Facebook

Published by at 11:45 am under economics,social media

Amongst those that talk social media, the most popular conversation is Facebook. Mark Zuckerberg is the prom king, and the entire high school commons of the blogosphere knows what’s going on with him at all times. That’s part of the reason why WebMediaBrands acquired Social Times, publisher of allfacebook.com. Check out these uniques for All Facebook – growth has tripled in Q1 in part because of increased interest in the platform:

But, there is a much more important conversation that deserves more attention: how collaboration tools are changing internal operations within organizations. These cultural changes have little to do with Facebook, but the impact will be much greater than Facebook’s impact by itself.

The U.S. economy has grown at an average rate of 2.7% since 1980. Economists track growth to three principal factors: population growth, capital investment growth, and productivity growth. Population and capital are pretty straightforward concepts – more workers and more capital investment mean a larger economy overall. But, what is productivity growth? Productivity is the amount of work accomplished per labor hour.

Improving productivity within an economy means that businesses must create more efficient and effective tools. This is the economic underpinning for the entire technology industry today. Businesses are looking for new tools to make them more competitive, which drives technological development from faster semiconductors to email filters.

In the 1950s and 1960s, technology grew from different sources; principally government investment in space exploration and militarization. But, now even those industries are driven by technology innovation radiating from the business community (e.g. Paypal founder Elon Musk now runs SpaceX, a space exploration company). But, as capital growth, deregulation, and globalization caused the size and scale business to grow throughout the 80s and 90s, technology development shifted also to serve the needs of its largest patron.

Productivity growth now accounts for around 25% of total economic growth in developed economies. In the U.S., that equates to $360BN in additional GDP each year. Those are all dollars that come from IT departments, faster computers, better search engines, smaller Blackberries, and other productivity-enhancers within the enterprise.

If we use some crazy assumptions like a 10% discount rate, the NPV of enterprise technology investments is over $125BN. And, while the social component of that investment is small, it is growing dramatically. Mindshare within the IT office demonstrates that future purchasing decisions will driven by social components of software. That’s why Forrester outlines that spending on Enterprise 2.0 is currently $1.8BN, and will command $4.6BN by 2013.

Compared that to Facebook’s estimated revenue of $800M, and you can start to see why the social media community might not be focusing on the right target. How many “social media consultants” understand how decisions are made in enterprises? How many can build consensus within large, disparate organizations?

As danah boyd mentioned in her SXSW keynote, social media are many things to many people. So, not everyone needs to be an expert in organizational structure. But, as shepherds through the confusing space, social media consultants and bloggers need to paint a more accurate picture of the landscape.

Why doesn’t Enterprise 2.0 get more attention in the press? Jake Kuramoto discusses the lack of case studies, and he’s exactly right: great use cases come from subject matter experts in a specific business process, not in social software design. It’s much easier for social media mavens to sit around talking to each other about how great the tools are than to go out and create a newly impassioned advocate that already has too much on their plate in the office so that they can see through the Matrix of data and translate it into a solution.

It’s hard to translate this:

into this:

Sample Manufacturing Workflow Flowchart

But, that’s exactly what we need to do more. By bringing in other parts of organizations, and working with them to find and share value from the toolset, we will create more substantive use cases and then we can all stop talking so much about Farmville.

And that’s a win for us all, right?

I do have to give credit where credit is due. There are some writers doing a great job putting Enterprise 2.0 in context and offering a lot on the space:

Dion Hinchcliffe (@dhinchcliffe) at ZDNet

Alex Williams (@alexwilliams) at ReadWriteEnterprise

Andrew McAfee (@amcaffee) at The Business Impact of IT

2 responses so far

  • lisavalentine

    Speaking of enterprise 2.0 and social media apps, here's a helpful resource on the subject. It's a whitepaper called “To Block or Not. Is that the question?”

    http://bit.ly/9f8WOT

    It has lots of insightful and useful information about identifying and controlling Enterprise 2.0 apps (Facebook, Twitter, Skype, SharePoint, etc.)

    Share it with the IT Dept.

  • http://www.seoconsult.co.uk Jack

    I agree that Social media journalism needs to change – Enterprise 2.0 is way more important than Facebook for those who talk about social media, the most popular conversation is Facebook.As i think Facebook is a great platform.