By publishing my thesis in parts on my blog i received much feedback in the reactions and on twitter. Special thanks to Michiel Hartman for pointing out that the evolution of web 1.0 to 2.0 hasn’t been a linear process.

You can download the ‘The alignment of web 2.0 and social media with business strategy’ (van der Weel, A. T. ,2009) pdf here.

For those who want to read the short summery and conclusions I included them here at the end of the blogpost. I also added the references for those who are interested in finding more academic research papers on social media and business strategy.

Research questions

Corporations trying to adopt and use web 2.0 and social media applications in their business, raises the question of how organizations can use these in extend to their strategies.

• How should web 2.0 and social media be approached and how can organizations align these web 2.0 and social media developments with their organization strategy?

To answer this question the following sub questions need to be answered:

• What is web 2.0 and social media and what are good definitions?
• How can social media be approached and used by organizations?
• How can social media be aligned with the business strategy of organizations?

Short summary

I expanded existing academic theory on ‘Possible uses of the World-Wide Web for business’ by adding customer service as the main new opportunity offered by web 2.0 and social media.

My literature research identified two frameworks that can be used to analyze web 2.0 and social media. One is the ‘Technology-Centric view of IT in Business’ (Dhar & Sundararajan, 2007), which presents technological invariants and consequences in business. This framework can be used for fundamental analysis of the building blocks and consequences of web 2.0 and social media.

The ‘Strategic alignment model’ (Henderson & Venkatraman, 1993) indicates the importance of a functional and strategic fit between business and IT. Together with the the ‘Value Disciplines’ framework (Treacy & Wiersema, 1993) these frameworks can be used to align organization business strategy with social media and web 2.0.

The Value Discipline that express the business focus on organization or department level can be used to guide the focus of the social media strategy. While the thesis mainly looks at the business strategy of the organization as a whole, it can also be used for departments to align their social media strategy.

In the end the researched frameworks come together to present my ‘social media governance framework’ which looks at the internal and external dimensions and the usage channel of social media in the organization. It can be used to align new social media projects with business strategy or to analyze the strategic fit of current social media projects in the organization by placing them in the matrix.

Conclusions

Web 2.0 was identified after the dot-com crash and is a collection of technologies, services and platforms. Key to business in web 2.0 is the ‘harnessing of collective intelligence’ often also called the ‘power of the crowd’. Social media can be defined as ‘the collective goods produced through computer-mediated action on web 2.0 services and platforms’. When focusing on the business uses social media encompasses these services and platforms that can be used by organizations. Social media and web 2.0 are greatly driven by modularity and result in the creation of large IT platforms and computer-mediated spaces.

Like internet, social media can be used for: Publicity, marketing and advertising, direct online selling, research and development, communication, collaboration and customer service. E-services helped identify the customer service path as a new business use after the dot-com crash and rise of web 2.0. Enterprise use of social media mostly focuses on reaping benefits from internal communication and collaboration cross traditional organizational hierarchies. Social media can be approached from an inward(internal) e-commerce perspective or from an outward(external) e-service perspective e-strategies depend on the approach.

For investments in social media to be effective corporations need to have an alignment between social media (IT) and business strategy. Also the strategic fit between the internal and external IT domain needs to be considered. The social media governance framework I present helps identify how different types of organizations should deploy social media applications depending on the purpose and business strategy in the internal or external domain. Alignment between the social media (IT) and business strategy occurs by using the value disciplines of an organization to formulate social media strategies. I argue that operational excellence organizations should have a focus on internal use of social media and that customer intimacy organizations should have a focus on the external use of social media. With the growing importance of social media in organizations, social media should become part of IT governance in organizations top management to support the alignment.

References

• Anderson, Paul (2007). What is Web 2.0? Ideas, technologies and implications for education. JISC Technology and Standards Watch, Feb.
• Brzozowski, Michael J., Sandholm, Thomas and Hogg, Tad (2009). Effects of Feedback and Peer Pressure on Contributions to Enterprise Social Media. GROUP‟09, May 10–13, Sanibel Island, Florida, USA.
• Cockburn, C. and Wilson, T. D (1996). Business Use of the World-WideWeb. Vol. 16, No. 2, pp. 83-102.
• Dhar, Vasant and Sundararajan, Arun (2007). Information Technologies in Business: A blueprint for education and research. Information systems research, vol 18, No. 2, pp. 125-141.
• Eichen, Marc (2006). Value disciplines: a lens for successful decision making in IT. EDUCAUSE Quarterly, Vol. 29, No. 2. pp. 32-39.
• Gartner research (2008). The Enterprise Social Software Market Continues to Expand. 30 May.
• Gurbaxani, Vijay and Whang, Seungjin (1991). The Impact of Information Systems on Organizations and Markets. Communications of the ACM, January Vo1.34, No.1.
• Henderson, J.C. and Venkatraman, N. (1999). Strategic alignment: Leveraging information technology for transforming organizations. IBM systems Journal 38, 2/3 pg. 472.
• Lai, Vincent S. and Wong, Bo K (2005). Business types, e-strategies, and performance. Communications of the ACM, May Vol. 48, No. 5
• O’Reilly, Tim (2007). What Is Web 2.0: Design Patterns and Business Models for the Next Generation of Software Communications & Strategies no. 65, 1st quarter.
• Hoegg, Roman, Meckel, Miriam, Stanoevska-Slabeva, Katarina and Martignoni, Robert (2006). Overview of business models for Web 2.0 communities, Proceedings of GeNeMe: 23-37
• Kochan Thomas A., Useem, Michael (1992). Transforming organizations. Oxford University Press US http://books.google.nl/books?id=qU96bV4OtdgC.
• Raghupathi, W. RP (2007). Corporate governance of IT: A framework for development. Communications of the ACM , August Vol. 50, No. 8.
• Rai, Arun, Patnayakuni, Ravi and Patnayakuni, Nainika (1997). Technology Investment and Business Performance. Communications of the ACM, July Vol. 40, No. 7.
• Rust, Roland T. and Kannan, P.K. (2003). E-service: a new paradigm for business in the electronic environment. Communications of the ACM, June Vol. 46, No. 6
• Smith, Marc, Barash, Vladimir, Getoor, Lise and Lauw, Hady W. (2008). Leveraging Social Context for Searching Social Media. SSM‟08, October 30, Napa Valley, California, USA.
• Tracy, M. and Wiersema, F. (1993). Customer intimacy and other value disciplines. Harvard Business Review 71 (1), Jan/Feb, pp. 84-93
• Valacich, Joseph and Schneider, Christoph (2009). Chapter 6 Enhancing Collaboration Using Web 2.0 in Information Systems Today: Managing the Digital World, Prentice Hall; 4 edition (March 13)

A technology-Centric view of IT in Business

Dhar & Sundararajan(2007) argue that the past forty years certain principles in IT can be recognized that remain constant. These invariants can be used to interpret the past and make predictions about information technologies in the future. They present a model where in the influence of these technological invariants and the consequences on IT in Business are explained.

Technological invariants

The first technological invariant is digital representation, the visualization of things as information and in particular digitally represented information. Examples are: a bank balance, music, our voice or video can all represented as digital information. This digitalization allows for new possibilities in the use and transport of information.

The second invariant is computing power. “The long-term exponential growth of hardware power, broadband, storage and the miniaturization of IT devices”. Moore’s law states the doubling of processing power each six months and explains this grow in computing power. Computing power has grown, become cheaper and software has made it more reliable.

The last invariant is modularity, this is the sustained increase in programmability of IT systems in a modular way. This allows aggregated complexity to be easier integrated into existing standardized software platforms. This allows existing IT systems to add new functionality and usability with just modular additions to the software. This way Modularity fundamentally provides power to the first two invariants.

Consequences in business

These three technological invariants shape the base to recognize the consequences in business. Dhar et al. recognizes three consequences of this invariants in business. Digital representation together with the growth of computing power and communication power facilitate the separation of information from a growing number of artifacts. The music CD, where the digital distribution of mp3′s only became feasible once there was enough broadband is an example of this.

This separation of information form its artifacts can alter the fundamental economics of an industry, making their products become information goods. The economics and production of information goods differ form tangible goods and will have many consequences for the way business operates once this separation starts to plays a role in the company’s sector.

The growth in computing hardware power and the ability of software to be layered in a modular way allows for IT infrastructures to become larger, more powerful and more accessible. According to Dhar et al. supply chain management software platforms and on-demand search platforms like Google are an example of this. Modularity results in functionality adopted by early innovators to be incrementally integrated into these powerful and shared infrastructure platforms.

As a result these large IT platforms can create opportunities and threats for companies which need to be addressed in corporate strategy.

The third consequence is a growth in society of the importance and variety of IT mediated spaces of interaction. The difference between Technology-mediated spaces and spaces in the physical world is that the latter is shaped continuously by the participants, where the IT ones are developed and launched in less continuous form. Digital representation is key in facilitating exchanges of information in these spaces. Computing power supports this by allowing the built of complex Technology-mediated interfaces and Software modularity enables the evolution of spaces and the build of new ones with little effort.

This results in new way of organizing and manipulating information, giving rise to new social structures and business models. Organizations need to understand that these developments and changes in spaces can disrupt the existing business models.

Conclusion: Why IT is important in business.

We have seen that IT can transform industries and that production, economics, social structures, business models and corporate strategy are all effected by these consequences of IT in business. This underlines the importance of IT in business.  “Executives need to be vigilant about how information technologies might be transforming their industries and must be able to anticipate future transformation before it occurs.” The model they presented can help analyze the building blocks and consequences of web 2.0 and social media for businesses and the transformation that they might bring to industries.