Chapter 8: Social Media Information Systems

Managing the Risk of Employee Communication

Social Media Policy = which is a statement that describes employee's rights and responsibilities - the more technical the organization, the more open and lenient the social policies Three Key Pillars of Intel Corporation Policy in 2015 (Intel's Rules of SM Engagement): 1) Disclose - *be transparent* - use your real name and employer - *be truthful* - point out if you have a vested interest - be yourself - stick to your expertise and write what you know 2) Protect - don't tell secrets - don't slam the competition - don't overshare 3) Use Common Sense - add value - make your contribution worthwhile - keep it cool - don't inflame or respond to every criticism - admit mistakes - be upfront and quick with corrections

Three SMIS Roles

- Social Media Providers - Users - Communities

Q8-1 WHAT IS A SOCIAL MEDIA INFORMATION SYSTEM? (SMIS)

Social Media (SM) = the use of information technology to support the sharing of content among networks of users Communities of Practice = are groups of people related by a common interest Social Media Information System (SMIS) = is an information that supports the sharing of content among networks of users *Social Media is a Convergence of Disciplines (Psychology, Organization theory, marketing, sociology, computer science, MIS)

Social Media Providers

Social Media Providers = such as FB, Google+, LinkedIn, Twitter, Instagram, and Pinterest provide platforms that enable the creation of social networks - the growth of SM has drawn extraordinary interest from businesses, advertisers, and investors - SM providers compete with one another for the attention of users and the associated advertising dollars Social Networks = social relationships among people with common interests

Using Social Networks to Increase the Strength of Relationships

Strength of a Relationship = the likelihood that the other entity (person or organization) in the relationship will do something that benefits the organization ex: an organization may have a strong relationship with you if you write positive reviews about it, post pictures of yourself using the organization's products or services, tweet about upcoming product releases, and so on - if you want to strengthen your relationship with someone in power, ask him to do you a favor - HOWEVER, at some point, relationships deteriorates due to overuse (social capital can be spent) - continued frequent interactions occur only when both parties see value in continuing the relationship - Social capital can be earned by adding something of value to the interaction

Q8-5 HOW CAN ORGANIZATIONS ADDRESS SMIS SECURITY CONCERNS?

- social media policy - consider risks from nonemployee user-generated content - look at risks from employee use of social media

Communities

- the ability to form communities is responsible for the progress of the human race - SM communities are formed based on mutual interests and transcend familial, geographic, and organizational boundaries - if each community had 100 members, then the SM site would have 100x100 second-tier members, and 100x100x100 third-tier members Viral Hook = some inducement, such as a prize or other reward, for passing communications along through the tiers *the exponential nature of relationships through community tiers offers organizations both a blessing (a member who can share her sincere and legitimate pride in her organization's latest product) and a curse (a member could share private and proprietary organizational data with someone who works for the competition) Social media is a powerful tool; to use it well, organizations must know their goals and plan accordingly

People

users of SM do what they want to do depending on their goals and their personalities - SM is creating new job titles, new responsibilities, and the need for new types of training

SMIS Components

Five Components of SMIS 1) Hardware 2) Software 3) Data 4) Procedures 5) People

Freemium

Freemium = a revenue model that offers users a basic service for free and then charges a premium for upgrades or advanced features - 19% of LinkedIn's revenue comes from premium subscriptions, 62% from online recruitment, and 19% from advertising Ad-Blocking Software = used to filter out advertising content and rarely, if ever, see Internet ads Other Ways of Generating Revenue on SM Sites - the sale of apps and virtual goods; donations; and affiliate commissions or revenue paid as the result of referring paying customers

Problems From External Sources

Major Sources of UGC Problems: - junk and crackpot contributions - inappropriate content - unfavorable reviews - mutinous movements When a business participates in a social network or opens its site to UGC, it opens itself to misguided people who post junk unrelated to the site's purpose - crackpots use the network or UGC site as a way of expressing passionately held views about unrelated topics - organizations should regularly monitor the site and remove objectionable material immediately - unfavorable reviews indicate that most customers want to know the disadvantages of a product before purchasing it - mutinous movements are an extension of bad news (disgruntled customers hijack campaigns)

Social Media and Inbound and Outbound Logistics

Companies whose profitability depends on the efficiency of their supply chain have long used information systems to improve both the effectiveness and the efficiency of structured supply chain processes - solving problems is an exception for the unpredictability of dynamic, adaptive processes; social media can be used to provide numerous solution ideas and rapid evaluation ex: Japanese earthquake of 2011 created havoc in the automotive supply chain when major Japanese manufacturers lacked power and facilities to operate - SM is used to dispense news, allay fears of radioactive products, and address ever-changing needs and problems) => SM communities provide better and faster solutions to complex supply chain problems SM is designed to foster content creation and feedback among networks of users, and that characteristic facilitates the iteration and feedback needed for problem solving Loss of privacy is a significant risk - problem solving requires the open discussion of problem definitions, causes, and solution constraints - supply chain problem solving through social media may be problem solving in front of your competitors

Managing the Risk of Inappropriate Content

Designating a single individual to be responsible for official organizational SM interactions and by creating a process to monitor and manage SM interactions - this allows organizations to have a clear, coordinated, and consistent message User-Generated Content (UGC) = content on your SM site that is contributed by users, is the essence of SM relationships

Advertising

FB made 94% of its 2015 first quarter earnings from advertising - Advertising in SM can come in the form of paid search, display or banner ads, mobile ads, classifieds, or digital video ads Pay-Per-Click = the ability to track the percentage of viewers who clicked a particular ad, led to development of the Pay-Per-Click revenue model, in which advertisers display ads to potential customers for free and then get paid when the customer clicks on the ad - the more people use a site, the more value the site has, and the more people that visit it - the more value a site has, the more its existing users will return

Using Social Networking to Increase the Number of Relationships

Influencer = your opinion may force a change in others' behavior and beliefs - using SM to instantly communicate your experience using text, pictures, and video to everyone in your social network - promoting your business by asking certain clients to like your FB page as well as tag people in the client's pictures to bring more awareness to the business - all the people in the client's social network see the likes, tags, and tweets - by using SM, you have grown your social network to reach potential clients who you wouldn't have otherwise had access to

Internal Risks From Social Media

New Risks that can be threats to information security, increased organizational liability, and decreased employee productivity 1) SM Can Directly Affect the Ability of the Organization to Secure their Information Resources ex: a senior level employee tweets different personal info that can provide attackers with the answers to password reset questions - once attackers reset the user's passwords they could have full access to internal systems - employees using SM can unintentionally leak info about intellectual property, new marketing campaigns, future products, potential layoffs, budget woes, product flaws, or upcoming mergers 2) Employees may accidentally increase corporate liability when they us SM ex: a coworker regularly looks at SM content with questionable sexual content on his or her own smartphone => the organization could be slapped with a sexual harassment lawsuit - posts, tweets, pins, likes, comments, and endorsements all take time (64% of employees visit non-work related Web sites each day) - Smart managers will understand that SM comes with both benefits and costs

Q8-6 WHERE IS SOCIAL MEDIA TAKING US?

New mobile devices with innovative mobile-device UX, coupled with dynamic and agile IS based on cloud computing and dynamic virtualization, guarantee that monumental changes will continue to occur over the next 10 years - Organizations such as Harvard, Microsoft, and Starbucks are concerned enough with SM that they have hired Chief Digital Officers (CDO), a position responsible for developing and managing innovative SM programs - organizations are needed to raise and conserve capital and to organize vast groups of people and projects - no group of loosely affiliated people can envision, design, develop, manufacture, market, sell, and support an iPad => organizations are required

How Do Social Networks Add Value to Businesses?

Organizations have social capital just as humans doe - organizations created social capital through salespeople, customer support, and public relations ex: endorsements by high-profile people are a traditional way of increasing social capital Elements of Social Capital (To understand how social networks add value to businesses) 1) Number of Relationships 2) Strength of Relationships 3) Resources Controlled by Friends

What is the Value of Social Capital?

People Benefit From Social Capital in Four Ways (Nan Lin) 1) Information 2) Influence 3) Social Credentials 4) Personal Reinforcement Information - relationships in social networks can provide info about opportunities, alternatives, problems, and other factors important to business professionals Influence - social networks provide an opportunity to influence decision makers at one's employer or in other organizations that are critical to your success ex: playing golf every Saturday with the CEO of the company you work for could increase your chances of being promoted Social Credential - being linked to a network of highly regarded contacts is a form of social credential Personal Reinforcement - being linked into social networks reinforces a professional's identity, image, and position in an organization or industry ex: being friends with bankers, financial planners, and investors may reinforce your identity as a financial professional Value of Social Capital = determined by the number of relationships in a social network, by the strength of those relationships, and by the resources controlled by those related - our network of current professional contacts provides the most social capital - you gain social capital by adding friends more friends and by strengthening the relationships you have with existing friends - Klout.com searches social media activity on FB, Twitter, and other sites an then creates what it calls a Klout score, which is a measure of an individual's social capital

Q8-4 HOW DO (SOME) COMPANIES EARN REVENUE FROM SOCIAL MEDIA?

Processing time, data communication, and data storage may be cheap, but they still cost something - SM companies like FB, Twitter, and LinkedIn also need to pay people to develop, implement, and manage the SMIS - Fortune pays authors for the content that it offers for free

Social Media and Customer Service

Product users are amazingly willing to help one another solve problems; even more, they will do so without pay - organizations whose business strategy involves selling to or through developer networks have been the earliest and most successful at SM based customer support - the developers in Microsoft's networks have a business incentive to participate because that activity helps them sell their services to the communities in which they participate - primary risk of peer-to-peer support is loss of control

You Are the Product

SM Companies want to build a large network of users quickly, but they have to offer a free product in order to attract users How Do Companies Monetize (Make Money) Their Application, Service, or Content? - answer: by making users the product - when a company runs an advertisement, it's essentially being paid to put the ad in front of its users (the company is renting your eyeballs to an advertiser for a short period of time) ex: Google is paid to target users with ads based on their search terms, the sites they visit, and "scans" of their emails - users are the product being sold to advertisers

Q8-2 How Do SMIS Advance Organizational Strategy?

SM is by its very nature DYNAMIC - SM fundamentally changes the balance of power among users, their communities, and organizations SM in Value Chain Activities 1) Sales and Marketing 2) Customer Service 3) Inbound Logistics 4) Manufacturing and Operations 5) Human Resources

Social Media and Human Resources

SM is increasingly used for finding employee prospects, for recruiting candidates, and in some organizations, for candidate evaluation - LinkedIn is used to hire the best people more quickly and at a lower cost (for $750/month, recruiters can search through 350 million LinkedIn members to find the perfect candidate) - LinkedIn also gives employers access to passive candidates who might not be looking for a job but are a perfect fit for a particular position (once hired, the employer can leverage that new employee's social network to hire more candidates like him or her) - Reppler, a social networking image management company, reports that 93% of employers it surveyed used social media to screen candidates - SharePoint provides a place for employees to post their expertise in the form of "Ask me about" questions

Hardware

SM providers host the SM presence using elastic servers in the cloud - users and organizations process SM sites using desktops, laptops, and mobile devices

Software

SM users employ browsers and client applications to communicate with other users, send and receive content, and add and remove connections to communities and other users - social media providers develop and operate their own custom, proprietary, social networking application software - supporting custom software is expensive over the long term; however, vendors must do so because features and functions of their applications are fundamental to their competitive strategy - most social networking vendors use a NoSQL database management system to process their data (traditional relational DBMS products are used as well)

Revenue Models for Social Media

The two most common ways SM companies generate revenue are by advertising and by charging for premium services - FB charges a fee to advertise to communities that "like" that page

Responding to Social Networking Problems

Three Possibilities of Managing Social Networking Risk - leave it - respond to it - delete it Leave It - if problematic content represents reasonable criticism of the organization's products or services, the best response maybe to leave it where it is - such criticism contains legitimate user content Respond to It - if response appears to be defensive, it can become a public relations negative - if the response is patronizing or insulting to the content contributor, it can enrage the community and generate a strong backlash Delete It - should be reserved for contributions that are inappropriate because they are contributed by crackpots, they have nothing to do with the site, or they contain obscene or otherwise inappropriate content

Q8-3 How Do SMIS Increase Social Capital?

Three Types of Capital: 1) Traditional 2) Human 3) Social Capital = the investment of resources for future profit - refers to investments into resources such as factories, machines, manufacturing equipment, and the like Human Capital = the investment in human knowledge and skills for future profit - you are investing in your own human capital (you are investing your money and time to obtain knowledge that you hope will differentiate you from other workers and ultimately give you a wage premium in the workforce) Social Capital = is investment in social relations with the expectation of returns in the marketplace - you strengthen your social relationships when you help someone get a job, set a friend up on a date, or introduce a friend to someone famous - you can use SM to increase your social capital by recommending or endorsing someone on LinkedIn, liking a picture on FB, retweeting a tweet, or commenting on an Instagram picture

Social Media and the Sales and Marketing Activity

Traditional CRM = manage customer touches (ensured that the organization spoke to customers with one voice and that it controlled the messages, the offers, and even the support that customers received based on the value of each particular customer) Social CRM (Customer Relationship Management) = is a dynamic, SM-based process - in addition to the traditional forms of promotion, employees in the organization create wikis, blogs, discussion lists, frequently asked questions, sites for user reviews and commentary, and other dynamic content - each customer crafts his or her own relationship with the company - because relationships emerge from joint activity, customers have as much control as companies (this characteristic is disliked by many traditional sales managers who want structured processes for controlling what the customer reads, sees, and hears about the company and its products) - many organizations are struggling to make the transition from controlled, structured, traditional CRM processes to wide-open, adaptive, dynamic social CRM processes

Data

Two Categories of SM Data: 1) Content Data = is data and responses to data that are contributed by users ex: you provide the source content data for your FB site, and your friends provide response content when they write on your wall, make comments, tag you or otherwise publish on your site 2) Connection Data = data about relationships ex: on FB, the relationships to your friends are connection data ex: on FB, that you've liked particular organizations is also connection data - only social networking applications store and process connecting data

Users

Users = include both individuals and organizations that use SM sites to build social relationships - organizations create and manage SM accounts just like you do - these companies hire staff to maintain their SM presence, promote their products, build relationships, and manage their images

Using Social Networks to Connect to Those with More Resources

Value of social capital is the value of the resources controlled by the parties in the relationships - the more views a channel gets, the more the content creator gets paid - the resources (money) controlled by the viewers of the food and cooking channels may be higher than the viewers of the beauty and style channels Social Capital = Number of Relationships x Relationship Strength x Entity Resources => multiplicative nature of social capital means that a huge network of relationships with people who have few resources may ultimately be of less value than a smaller network of relationships with people who have substantial resources

Does Mobility Reduce Online Ad Revenue?

as users increasingly move from PCs to mobile devices, particularly small-screen smartphones, there is much less ad space available - the average click through rate of smartphones is 3.75% while that same rate on PCs is 2.29% - mobile users click ads more often and hence generate more revenue Conversion Rate = measures the frequency that someone who clicks on the ad makes a purchase, "likes" a site, or takes some other action desired by the advertiser - conversion rates for PCs (3.41%) are higher than those for tablets (2.85%) or smartphones (0.92%) => on average, PC ad clicks are more effective than mobile clicks - mobile devices are unlikely to spell the death of the Web/social media revenue model - the computer industry is superb at solving design problems (how best to configure the mobile experience to obtain legitimate clicks and conversions); given the current dynamic evolution of mobile interfaces

Social Media and Manufacturing and Operations

operations and manufacturing activities are dominated by structured processes - SM plays a role in product design, developing supplier relationships, and improving operational efficiencies Crowdsourcing = the dynamic social media process of employing users to participate in product design or product redesign - user-guided design has been used in the creation of video games, shoes, and many other products Business-to-Customer (B2C) = SM has been widely used in this kind of relationship to market products to end users Business-to-Business (B2B) = manufacturers are starting to use SM to become industry leaders, promote brand awareness, and generate new Business-to-Business (B2B) leads to retailers ex: a manufacturer might start a blog that discusses the latest industry-related news, posts interviews with experts, and comments on new product innovations ex: they could also create a Youtube Channel and post videos of product reviews and testing and factory walk-throughs - retailers will view manufacturers who engage in these SM efforts as industry leaders

Procedures

software is designed to be easy to learn and use - social networking procedures are more formalized and aligned with the organization's strategy - organization's develop procedures for creating content, managing user responses, removing obsolete or objectionable content, and extracting value from content - organizations also need to develop procedures to manage SM risk