Finance and Control Implications of Social Media

Finance and Control Implications of Social Media2 november 2011Eddy Vaassen – Professor of Accountancy, Tilburg UniversitySamuel Driessen – Senior consultant, Entopic

Please turn your mobile devices ON! (but keep them silent) #nbavrc

Overview Masterclass• Overview social media• Control of social media• Control with social media• Propositions

• Social networking Social media is an – Social profiles interaction channel – Social network analysis opened for the purpose• Social collaboration of mass collaboration – Wikis – Blogs/microblogs – Collaborative office Social technologies• Social publishing enable social media – Content sharing channels – Content aggregation – Social publishing Wikipedia is social media• Social feedback employing wiki – Social rating, ranking, technology commentary – Social content structure (Gartner)

What UseBlogs Personal channel to expose ideas Executive communications, project and get comments in sequential status, thought leadership postsWikis Collective authoring on a single, Reaching consensus, brainstorming, growing document knowledge diffusionContent Controlled access to Controlled progress towardrepositories downloadable data versioned deliverablesDiscussion Mechanisms for organizing, Group member communication andforums understanding and filtering group interaction activitiesSocial Share/analyze links to useful Organizing & sharing resources,tagging sites, documents, objects discovering trends and expertiseProfiles Descriptions of interests, skills, Building personal links, expertise projects, experiences locationSocial Tools for collection and reporting Helping users navigate, explore,analytics of social signals find people and information (Gartner)

Social Media…• Fun, NOT work• Un-controlled• No privacy

What does social media do to socialnetworks?• It makes networks visible• It supports networks• It accelerates networks

step 1 step 2 step 3 step n

Social Media Strategy Listen (also: who’s already talking?) Comment Join Define goal Choose medium What are you going to share? Build your network, refer to others Patience! (90-9-1 principle) Measure Encourage with guidelines

Organizational barriers to theadoption of social media Others None of the above 1% 11% Lack of strategy or understanding Availability and 19% reliability 4% Loss of control 9% Lack of funding 16% Lack of IT or Unclear business case technical skills or return on 4% investment 25% Lack of support from executive or upper management 11% (Gartner, 2009: n=419)

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Risks in social media deployment• Technical Technology/vendor failure• Organizational Acceptance, use and ability to change• Business Disruption, risk of doing nothing• Financial Payback period, productivity ≠ profit• Security Confidentiality, integrity and availability• Legal Compliance 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 Costs• Operational: • Hardware and software – Data accuracy – Cycle-time • Maintenance – Flexibility • Staffing• Financial: • Development – Transaction costs • Archiving – Error avoidance • Training• Direct customer value: – Acquisition • Communication – Customer satisfaction • Mobility – Problem resolution • User support – Sales• Strategic: – Employee satisfaction – Brand value – Competitive pressure – innovation

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 avoid1. Creating a social media strategy that is not congruent with strategic business goals2. Keeping social media separated from other business processes3. Embarking on too many uncoordinated efforts4. Broadcasting instead of engaging5. Failing to remain true to brand and values

Propositions1. Social media is mainly interesting for the marketing function, not for the finance function2. 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 shape3. It is virtually impossible to calculate returns on investment for social media applications4. It is the task of the controller to monitor social media implementation and usage to enhance its effectiveness5. 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

Contact• Eddy Vaasen @evaassen e.h.j.vaassen@uvt.nl• Samuel Driessen @driessen samuel@entopic.com

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Finance and Control Implications of Social Media

by Samuel Driessen on Nov 02, 2011

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Finance and Control Implications of Social Media — Presentation Transcript