Social Networking and the Business: Friend or Foe?

By Julie Craig

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Anyone who has teenagers is well aware that social networking sites are becoming a primary communications vehicle. EMarketer.com reports that 37% of adult and 70% of teen Internet users access a social networking site at least once a month. Meanwhile, advertising on such sites is growing as well, with worldwide spending in 2008 estimated at over $2 billion, and growth to $4 billion projected for 2011.

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While social networking is busy changing the way people interact with one another, the marketplace is still unsure about its business ramifications. And many CIOs in particular are wondering whether to view it as a boon or an impediment.

The bigger question, however, has to do with IT and its ability to manage change. Most new technologies impact IT at some point—as those of us who survived the introduction of Internet radio quickly discovered. Suddenly, network bandwidth was being gobbled up, mission-critical applications slowed down, and nobody could figure out why.

In the case of social networking sites, the resource toll may not be as heavy as the impact on employee productivity; users in the dating game might check Match.com from time-to-time, and the team likely gathers around the PC once in a while to watch the latest stupid pet trick on YouTube.

Discussing the impact of any innovation be it AJAX, REST, VOIP, SaaS, or social networking is really a discussion about change. One reason why is, in our business, change is synonymous with risk. Our research indicates, for example, that between 25-and-80 percent of IT infrastructure changes have an adverse impact on IT production systems. For this reason, IT's initial response to change is often to take the "little Dutch boy" approach—stick a finger into the dike to prevent the flow of new technologies into and throughout the enterprise.

Over time, we found that approach did not work well. Users found ways to work around IT and the business turned to outsourcing to replace and/or supplement IT departments viewed as overly expensive and/or inflexible. The bloom has largely faded from the outsourcing rose, but the role of IT has substantially changed from what it was even five years ago.

Today, IT is seldom the provider of 100% of a company's technology services, although it does typically oversee the delivery of these services. Technology services are differentiating into utilities and business-differentiators. Utility services like email and remote access are common to almost every company, while business-centric applications require deep understanding of the company's industry, its competitive landscape, and its business goals and objectives.

While utility services are increasingly offloaded to software-as-a-service (SaaS) and hosting providers, business-centric services are thrusting IT onto center stage as a contributor instead of a cost center. IT is becoming the technology consultant to the business, the group that keeps on top of both the business and new technologies, leveraging them to achieve business goals.

What does all of this have to do with social networking? Social networking sites should not be ruled out as potential business assets just because they tend to be frequented by adolescents. Evaluating them for their applicability to the business should be an ongoing activity, and some very large companies are already investing IT cycles in doing just that.

Changing Interactions

Most IT professionals, at some point in their career, find themselves on the road more than they are at home. While this can be interesting short-term, for most of us life as a road warrior loses its shine after a year or two of wearing suits and living out of a suitcase. With this in mind, one of the most intriguing features of social networking is it has subtly altered the way human beings interact by banishing distance and turning unlikely strangers into friends.

There are significant political and social implications to this evolution, but most of them are beyond the scope of this article. Suffice to say that Internet users, and the younger generation in particular, are experts in terms of interacting with distant people as if they were in the same room. This "social-networking generation" is accustomed to developing relationships and collaborating remotely, and this familiarity will likely have profound impact on the world of work over time.

This generation will expect to work remotely, to develop budgets and business plans with colleagues in other countries, and to consider people they have never met to be close friends. The world is far smaller than it used to be, and online meetings will become the norm instead of the exception, and business travel the exception instead of the rule. From this perspective, Cisco's telepresence initiative is right on the mark

For today's IT executives, watching trends and "real world" technology adoption can give valuable insight into future direction. Social networking sites, for example, provide clear indications of what users want, even if they don't know it yet themselves.

Who knew that online auctions would become a national pastime and spawn thousands of small businesses? Who could have anticipated that people would pay cash money for Linden Dollars (L$), and, in turn, use those dollars to buy virtual real estate and equally virtual body parts? And for those among us who flee from friends and coworkers waving vacation scrapbooks, who would have ever anticipated that 14 million people would interact with FaceBook during August 2007?

The growth of social networking makes it very clear that collaboration may be more important than many of us might have thought. It is also becoming clear that people are seeking and finding new ways to interact, and that this interaction includes more ways to make money online than anybody ever suspected.

Smart IT executives will undoubtedly seek ways to make their own observations and figure out how to use them to benefit the business.

Social Networking as a Business Asset

At a recent analyst conference, IBM presented a product demo in Second Life. Now, while Second Life is still somewhat cartoonish, it is three-dimensional and provides a much richer experience than, say, a PowerPoint presentation. I was struck by IBM’s ingenuity. I’m sure that other vendors are leveraging Second Life and other such sites as well, but this is the only presentation to date that I have attended on Second Life.

As I watched the presentation, I was struck by the fact that social networking sites enable collaboration on a grand scale. I could see Second Life beginning to displace presentation platforms like WebEx over time because of the more compelling interface and the presenter’s ability to tweak a presentation in real time. Although I haven’t heard about any such inroads to date, I would venture to guess that, within the next two-or-three years, social networking sites will start to impact the sales of traditional collaboration and presentation platforms because of their hosted nature and ease of use. It is likely that more than one CIO is evaluating Second Life for applicability to enterprise collaboration projects.

Within this framework, social networking sites can also be viewed as potential sources of hosted applications, especially as they mature over time. Since most such sites are currently designed for private end users rather than businesses, they lack the service level agreements (SLAs) and uptime guarantees critical to running the business. Over time, however, it is likely that they will become more business-friendly. Google is the poster child in this regard, and this is likely one reason why Google stock recently closed at $638, even on a down market day.

LinkedIn is emerging as a prime source for high quality employee hires, without the flood of resumes generated by sites like Monster and Dice. Second Life is already offering business-related services, such as store fronts and office buildings. YouTube has a somewhat convoluted "Terms of Use" specification that prohibits many commercial uses, but has significant commercial potential that likely won't remain untapped forever.

It would certainly make sense to have a central site for product demos, sales presentations, and other business assets commonly hosted on private sites, and YouTube as a hosting platform could fill that bill.


A new role is emerging for IT executives, the role of technology consultant to the business. Part of this new responsibility includes a deep understanding of the arsenal of technology that is available in the "technology toolbox" to help the business achieve its goals. This knowledge can be used to craft a bridge between intangible business goals and tangible business outcomes. Social networking sites, and the growing acceptance of such sites for both personal and business use, add another tool to the business service toolbox.

Julie Craig is a senior analyst with Boulder, Colo.-based Enterprise Management Associates, an industry research firm focused on IT management. Julie can reached at jcraig@enterprisemanagement.com