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)

Internal enterprise use of social media.

The social aspects of social media that allow the collecting and sharing of collective intelligence among the social media platforms users can be used by organizations to internally collect, retain and share information. The web 2.0 structure and technologies can also be used for easier communication and collaboration in organizations.

Brzozowski et al. (2009) write about the internal use of social media at Hewlett-Packard (HP). Social media provides a free broadcast platform that allows authors to circumvent traditional organizational hierarchies and reach organizationally distant readers. Unlike email that is targeted to specific recipients.

HP offers all employees a variety of social media services used for internal collaboration and communication. Internal blogs for example can facilitate internal collaboration and knowledge sharing and aim at the benefits of lightweight informal collaboration among employees.

To reap the benefits of internal social media usage managers should be stimulated to ‘leed by example’. For venues that imply discussion (e.g. blogs, comments, forums) external validation from managers is more important to the users than in venues of archives (e.g. links, wikis). Culture and organization structure also influence the internal support to use social media.

Analyzing the building blocks of web 2.0 and social media

Organization theory also indicates the importance of technologies and their consequences on organizations. 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. These invariants will be used to analyze web 2.0. The consequences on IT that are found seem to be in line with the technological trends we see in web 2.0.

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. This is: “the long-term exponential growth of hardware power, broadband, storage and the miniaturization of IT devices”. Moore’s law, which states that the processing power doubles each six months, can explain this growth in computing power and has proven to be accurate. 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 by making these possible and easier to achieve.

Digital representation is the technological invariant that has enabled many of the web 2.0 services to exist and grow with further digital representation of information. Blogs and wikis contain text, pictures, sounds and videos and increasingly more data and information that is made possible by digital representation of this information (Dhar & Sundararajan, 2007).

Computing power has increased and become cheaper (Dhar & Sundararajan, 2007) making internet publishing on blogs, wikis and other services fast, reliable and cheap. Barriers that might have existed in broadband for the streaming of video for example have been overcome by this continuously increase in computing power over the past 40 years.

Modularity drives the flexibility of web 2.0 allowing new functionalities and usability to be added to existing systems. Existing technologies on web 2.0 platforms are often updated enabling new functionalities. Gmail labs from Google and new functionalities in video’s on Youtube are examples of this. Widgets on blog services and widgets/apps on mobile phones also enable publishers to aggregate complexity trough modularity and offer users new functionality and usability trough updates and releases of widgets.

These three invariants are clearly identifiable in web 2.0 and contribute to the three consequences in the model.

Consequences in business

These three technological invariants form the building blocks to recognize the consequences of IT developments in business. Dhar & Sundararajan (2007) recognize three business consequences of these invariants. Digital representation together with the growth of computing power and communication power facilitate the separation of information from a growing number of artifacts. An example is the music CD, where the digital distribution of mp3′s only became feasible once there were internet connections fast enough to transfer the data.

This separation of information from its artifacts can alter the fundamental economics of an industry, making their products become information goods. The economics and production of information goods differ from 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 music industry is one of the greatest examples of this and had to change traditional business models to still make profit in the digital music age.

The second consequence is the growth in computing hardware power and the ability of software to be layered in a modular way. This allows for IT infrastructures to become larger, more powerful and more accessible. 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.

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 technology mediated spaces are shaped continuously by the participants, where as real-life spaces 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 evolvement of spaces and build of new ones with little effort.

The first consequence ‘information separates form its artifacts’ in some industries has led to products to become information goods. In combination with electronic networks this has enabled and hasten the transformation of physical products to service products (Rust & Kannan, 2003), fundamentally changing economics and production of businesses in industries that are affected. In the music industry this has had great consequences. On the internet we see iTunes and Hulu as a response from the music and film industry to adapt to these changes and create new business models.

The second consequence, shared IT platforms of growing functionality, where IT infrastructures become larger, more powerful and more accessible. An on-demand search platform like Google is an example of this. These large accessible IT platforms can create opportunities and threats for companies which need to be addressed in corporate strategy.

The third consequence, the growth in importance of technology-mediated spaces and interfaces. Digital representation enables exchanges of information in these spaces and is what happens on blogs, wiki’s and other web 2.0 services. These exchanges are mediated in services and spaces that are found on IT and web 2.0 platforms. This is resembles what we see in social media spaces where: “collective goods are produced through computer-mediated collective action”(Smith et al. 2008). And these exchanges arise on web 2.0 services and platforms.

I argue that the third consequence is largely connected to the second consequence on the web. The technology-mediated spaces can be found in the social media part of web 2.0 that operates on large shared IT platforms.

Conclusion

The technological invariants and consequences of IT in business can be used to analyze the building blocks of web 2.0 technologies and the consequences of web 2.0 on IT in organizations. Web 2.0 is greatly driven by modularity and result in the creation of large IT platforms and computer-mediated spaces. Analyzing these IT developments in business has show that web 2.0 technologies are important for organizations.

Here is the first part of a serie of blogposts where I present the the research and findings of my Social Media & Business thesis. I hope you’ll comment and share your views on the material. In the end I will make a pdf available and we might even have updated sections based on comments/discussions!

Introduction

We are at the point of new developments in IT and business in the form of social software and social media applications. Many organizations and researchers have begun experimenting with the internal use of social software in the workplace (Brzozowski et al. 2009). The use of these technologies is quickly maturing and moving to enterprise-level projects and platforms and the social software marketplace is now starting to attract large vendors such as Google, IBM and Microsoft (Gartner research, 2008).

The goal of this research is to develop a model that allows web 2.0 and social media to be aligned with organization strategy. Reason for this is that aligning the business and IT strategies in organizations helps realizing more effective investments (Henderson et al.1993). These theories are analyzed in this paper and come together in the model that will be presented at the end.

Problem statement

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?

Web 2.0 and social media theory

To get a clear definition of what web 2.0 and social media is and how organizations can use these, first web 2.0 will be researched. At the end of this chapter a clear definition of web 2.0 and social media is given and how they are connected.

Historical perspective of web 2.0, the dot-com bubble

After the burst of the dot-com bubble in 2001, it became clear that organizations that survived the crash had certain web business characteristics in common that were later identified as web2.0. (O’Reilly, 2007)

O’Reilly’s definition of web2.0 in 2006 is the following: “The business revolution in the computer industry caused by the move to the internet as a platform and an attempt to understand the rules for success on that new platform” (Valacich & Schneider, 2009). This indicates a shift in thinking about internet as a new platform. Web 2.0 is not only a collection of technologies but also a way of approaching these new technology applications to create successful business model.

The following list was created by O’Reilly when analyzing which applications are thought of as web2.0.

From an internet business perspective key to web 2.0 is: “The embracing of harnessing collective intelligence”. The new technologies and use of the web to allow a collective intelligence to be formed and created online. Businesses who succeed in embracing this can use it to their advantage.

According to O’Reilly (2007) internet businesses need to embrace this as a core competence and understand that: “Network effects from user contributions are the key to market dominance in the web 2.0 era”. This stresses even more the need for companies -especially internet business related- to understand this shift towards web 2.0 and the changes that it has brought.

Definition of web 2.0

While O’Reilly’s paper mainly focuses on the changes after the dot-com bubble for internet businesses it helped identify the general business aspect of web 2.0 as the ‘harnessing of collective intelligence’. It is hard to have a clear definition of a concept like web 2.0, because it doesn’t have clear boundaries (O’Reilly, 2007) and web 2.0 cannot be reduced to one principle (Hoegg et al. 2006).

Web 2.0 technologies can be used to develop different web 2.0 services and platforms. These web 2.0 services include: Blogs, Wikis, Podcasts, Social Networks and Social Bookmarking. Technologies like AJAX, API’s and RSS have made these new web 2.0 services possible and feasible ( Hoegg et al. 2006) .

Anderson(2007) presents a list of principles that he sees as key ideas that help define web 2.0. These key principles are in line with O’Reilly’s ‘collective intelligence’ definition and add to the definition of web 2.0 not only being a collection of technologies.

All these key principles offer new possibilities for communication, collaboration and business. The key idea of openness refers to the social philosophy of web 2.0 and data on an epic scale refers to the amounts of data we produce electronically. Some argue that maximizing the collective intelligence of the participants is fundamental to web 2.0 (Hoegg et al.2006). Web 2.0 isn’t just only about technological aspects, but also about social aspects like collective intelligence, communication and collaboration.

Definition of social media

From a sociological perspective, social media can be described as “collective goods produced through computer-mediated collective action”. An example is Wikipedia, where the collective goods are articles, and the collective action is the co-editing process of article writing (Smith et al. 2008). These goods are produced and shared on web 2.0 computer-mediated platforms.

Social media platforms offer valuable high quality content that is embedded in socially constructed repositories and the structure of these content collections is different from the web 1.0 structure (Smith et al. 2008). Social media uses the possibilities of the web 2.0 structure to enable the social aspect of collaboration, communication, media sharing and more.

Conclusion: Technology, services and platform aspects of web 2.0

Web 2.0 is not just a collection of technologies, but is a broader concept where technologies, services and platforms come together (Hoegg et al. 2006). To get a clear view of what web 2.0 and social media is and how these affect organizations a distinction is made between the different aspects of web 2.0.

Web 2.0 is a combination of technologies, services and platforms. For organizations to better understand web 2.0 and social media we make a distinction between three aspects of web 2.0. First we have web 2.0 technologies like AJAX, API’s and RSS. These enable web 2.0 services like Blogs, Wikis and Podcasts. These services come together on web 2.0 platforms like Facebook (social networks), Google, Blogger and Twitter. These platforms also allow new applications to be created on top of them like crowd sourcing, viral marketing campaigns and real-time information. On this platform aspect of web 2.0 is where social networks are found and where Social Media operates.

I argue that Social media can be identified in web 2.0 services and platforms and thus overlaps with the application aspect of web 2.0. Defining social media as: collective goods produced through computer-mediated action on web 2.0 services and platforms, gives a better indication on which level of web 2.0 social media operates. This has led to the following distinction between web 2.0 aspects and gives a clear overview of both web 2.0 and social media definitions, that can help identify where the business use of both can be found.

I argue that the business use of web 2.0 can be found in social media. Social media is where the application and platforms that are interesting for the business use of web 2.0 come together and where strategic decisions are made. These platforms offer opportunities for organizations like crowd sourcing, collecting data, marketing and many more. Making use of the collective intelligence aspect of web 2.0 and using social media platforms to collect and share this collective intelligence among the users. In this paper social media is identified as the services and platforms that are interesting for business use and where we the focus will lay on in this paper.

Part 2 follows soon!