Enterprise 2.0

Executive Strategy BriefingWednesday, 7 July 2010

Business Challenges• Rapidly changing market• A drive to return to business

fundamentals• Far-flung and loosely connected

groups, disparate cultures• Desire for better operational

control• A plan to enable future growth

Direction of Investigation

• Seek techniques that can create results not possible before

• Explore emerging yet proven new technologies

• Look at new economic, social, governance, and cultural models for organizational improvement

Best Practical Vehicle for:

Enterprise 2.0

Background• Enterprise 2.0

– Globally visible, persistent collaboration• Employees, partners, and even customers• Leaves behind highly reusable knowledge

– Uses wikis, blogs, social networks, and other Web 2.0 applications to enable low-barrier collaboration across the enterprise

– Puts workers into central focus as contributors

– Builds and sustains strong connections across the organization

– Case studies of early adoption consistently verifying significant levels of productivity and innovation

Enterprise 2.0 systems adapt to the environment, rather than requiring the

environment to adapt to it.

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Recent adopters of Enterprise 2.0

• Enterprise 2.0 tools are being deployed on a wide scale in 2009 by Fortune 500 firms.

• Wells Fargo has rolled Enterprise 2.0 out to 160,000 workers.

• Knowledge workers are often the major target but unexpected adoption is also taking place in other areas, especially the call center

• T. Rowe Price, Vodafone, and others have encountered steady productivity gains. Example: 2 minutes average time savings per phone call x 1200 workers.

• The BBC can cite numerous instances of innovation being directly harvested from their E2.0 platforms directly into business value.

• Target used its Facebook user profile to market to and converse with the incoming 2007-2008 freshman year.

• Enterprise 2.0 is coming in the back door if workplace doesn’t provide it.

• Similar to PCs in the 1980s. Example: AOL, Constellation Energy, and the World Bank

Reported Benefits Of Enterprise 2.0

• Increased knowledge retention

• More collaboration and ties between workers

• Breaking down organizational silos to enable change

• Increased transparency• Less duplication of effort• Higher level of productivity

Applying Enterprise 2.0 to V4G

The lightweight horizontal collaboration and community building known as ‘Enterprise 2.0’ (modern ‘social’ online tools) can help drive the V4G change program towards its goals.

This discussion will include:

• Case studies of other companies engaged in similar activities and business value gained.

• Approximate cost/benefit analysis for using Enterprise 2.0.

• Demonstration that application of Enterprise 2.0 approach is one of the likeliest and least-disruptive candidates for V4G program success.

What is ‘Enterprise 2.0’?

• Simple, easy-to-use ‘social’ software tools to engage for worker activity– Specifically collaboration,

communication, and community building - over modern computer networks.

• These tools are able to support the unique and frequently changing daily activities of knowledge workers in a way that traditional IT systems and process automation are only partially effective in addressing.

Identified at Harvard

Modern Social Computing:Enterprise 2.0

• Conceived by Harvard Business School Professor Andrew McAfee

• Defined as emergent, freeform, social applications for use within the enterprise

• Primarily to improve the collaboration problem (discussed shortly)

• The use of blogs and wikis to capture institutional knowledge, make it discoverable and let structure and community emerge naturally

Bottom Line Results:More Leverage, Better Efficiency,

More People Working

Social Networks vs. Collaborative Networks

• ‘Social Media’ – the freewheeling consumer world of Facebook, Xing, blogs, Twitter and other services that facilitate sociable communication

• This is not the same as Enterprise 2.0 collaborative networking to achieve daily business objectives.

Outcomes with Enterprise 2.0

• More information is left behind by workers at the end of business processes that results in re-use and leverage-over-time

• Faster and improved access to a wider range of ideas and expertise across an organization– 20% of worker time on average is spent

finding information• Active facilities to find and use

institutional knowledge before it gets out-dated

• Persistent, global conversations are created naturally to develop a more unified and coherent business culture

Legacy limitations

• Interoperability and database access difficult and expensive

• Scattered and fragmented knowledge• Struggle to manage costs, integration,

and future requirements, while keeping existing infrastructure running securely behind the firewalls

• Often brittle, inflexible enterprise class systems are hard to integrate and evolve for new uses and emerging market realities

Shadow IT and New Worker Behaviors

• New employees often turn to informal usage of outside Web tools to get aspects of their work done and communicate.

• ‘Shadow IT’ - is a growing phenomenon, and occurs at a relatively informal personal and group level, often spreading virally after initial use.

Many large organizations, including AOL, Constellation Energy, and the World Bank, have reported that workers have widely adopted Web 2.0 tools internally on their own initiative.

In each of these three cases, the Web 2.0 tools later became officially sanctioned applications for communication and collaboration.

Latest Worker Behavior Findings from Accenture

Real-Time Interoperability

• The greater 2.0 technology movement utilizes an information cross-pollination model

• Enables multiple sources of information and data to be aggregated into a single user experience, a term commonly called a ‘mashup’

• information from multiple sources juxtaposed in context within a single browser window to the end user

Email Shortcomings

• Email has its place in the enterprise but is the lowest common denominator of communication.

• One-to-one or one-to-few communication is highly inefficient

• Doesn’t expose information to teams and groups effectively and encourages information hording.

• Interruptive and hard to leverage• Builds silos of communication

Demo

The Solution: Aligning Increased Efficiency Goals with Enterprise 2.0 Initiatives

• Identifying areas where bridging and contextual collaborative interaction between business units and systems will provide results within an official Enterprise 2.0 environment

• This can be quickly achieved with strategic planning and community building.

• Ad hoc usage of Enterprise 2.0 is increasing whether desired or not: – Embrace and shape usage than it is to pass edicts forbidding

use, as many organizations have found

Software Required:But It’s Process and People:

• Work processes are unique in each distributed organization as are the people themselves.

• Software isn’t primary solution, business processes that are more open, community-based, and silo-resistant.

• Online business communities must be tailored to be fit for specific purposes and business outcomes

Community Management Process

• In successful Enterprise 2.0 rollouts, community management has proven to be the enabling capability

• Community management guides and directs the participants in an Enterprise 2.0 ecosystem,

• Driven by management goals and given reach by its pervasive social nature, a more unified global culture of mutually visible and communicating workers grows.

Case Study• Fidelity has innovative Internal

collaboration policies. • Started with email discussion

forums in 2001 with groups of 300-700 people

• Moved to cross organization wikis, locked and open as appropriate.

• Forums widely used instead of email in rolling discussion areas, such as innovation and specific application user best practice.

Fidelity Investments: Social Publishing (Blogs)

Three major success stories internally:• Thoughtleader blogs - Senior management and recognized innovators have

had great success sharing insight and informing the greater internal community.• Venture Team blogs - These have been of great value in exposing projects to

the wider internal audience with some valuable connections and insights captured from commented feedback.

• Run of the mill blogs - When Fidelity employed 1000 new employees in a new North Carolina unit they encouraged line of business employees to blog about their everyday work experiences.

HR and management found the feedback about support desk process experiences and other descriptions of how workflow functionality actually happened invaluable.

Fidelity Investments: Directory

• Fidelity have had great success with a sophisticated internal address book known as ‘The Directory’.

• This was originally a mashup of the existing corporate directory of all employees adding organizational hierarchy, groups and geography as well as correct name pronunciation.

• Social search, bookmarking and tagging made this grass roots project – which originally ran on a single computer under its creators desk – so popular that well over a quarter of the 50,000 employees worldwide relied on it as the most efficient source of information.– Helped build stronger internal community ties

• First generation Directory has been superseded by a more formal build out to take advantage of the added efficiencies and context the original innovations brought to the enterprise.

Case Study #2• Call center capture of frequently asked

questions in wiki• Average call times declined and customer

satisfaction increased noticeably. New workers had knowledge available that constantly evolved in open and transparent fashion.

• As a result much more institutional knowledge was retained on the network for future call center employees.

• Cost to organization was low, with technology forming the smaller part of the total cost with customization and community management forming bulk of investment.

Enterprise 2.0 ROI for Financial Services

• US credit reporting agency TransUnion recently claimed an initial estimated saving of $US2.5 million within 5 months after using an Enterprise 2.0 social networking platform to connect their 2,700 employees.

• In this specific case, the social networking platform coexists with Microsoft Sharepoint, which is utilized for more formal structured workflows.

• Transunion estimates the platform can deliver an estimated $5 to $8 million in total savings this calendar year for an outlay that is a tiny fraction of that amount

• $US50K total expenditures was reported by the CEO, resulting in an extremely impressive 50x return on investment .

Strategic Alligenment• The global financial crisis has changed every industry drastically. Cost

optimizations need to be made as a result of growing operating and IT expense.

• Meanwhile market perceives a lack of aggression, innovation and speed along with a low speed to market - even as customers require increasingly rapid delivery of ever more customized products and services

• Reduce complexity of operating model as well as reducing risk while overcoming challenges

• The need for operating and IT cost containment within the goal of a single IT platform aligned to standardized processes, all at a time when innovation, aggression and speed need to be ramped up are not complimentary.

Why connectivity and community tools are key to succeed

• The general information worker spends more than 20% of his time searching for the right information. Having the right information at their fingertips will reduce that time, and improve productivity. The right decisions can be made if all the information that is needed is at the decisions maker disposal.

– Connect people (connect people to purpose)– Be able to find the right experts within the organisation (connect people to the right

people)– Find local experts that can assist in tailoring a common approach to a local situation.– Capture and share experience and knowledge from implementation in one country

and use it for implementations that will follow in other countries (connect people to the right information).

– Facilitate formal and informal learning: 80% of what people learn is learned on the job and via networking (informal).

• An enterprise community platform can enable this.

Strategic Uses• Cost Reduction: Increasing innovation and agility can be effectively addressed with the intelligent use of

appropriate Enterprise 2.0 tools and technologies: this will have a significant impact on reducing expenses in structured information while greatly increasing efficiencies around unstructured information amongst knowledge workers.

• Agility: While foundational structured IT continues to play the role of backbone of most business units, it will not be possible to achieve the target operating model of services and sub services using a traditional, more inflexible approach exclusively.

• Unified Business Culture: Seeing the various services as bricks, the unstructured interoperability can be seen as the mortar or cement that binds the various regional units closer together.

• Alignment: The focus on people needs to capitalize on innovative uses of enterprise 2.0 to draw employees closer together and align objectives with services and subservices where needed.

• Ease of Adoption: Low entry barrier way to engage the workforce and have positive bi-directional communication on the objectives, progress and needs of the program.

• Rapid Start: A strong way to stimulate sharing of expertise and knowledge in the region that exceeds country borders

• Leverage of New Technology: Lightweight integration to help secure knowledge about new technologies, such as business process management tools and middleware, more efficiently and between many different IT staff. This will strongly drive enthusiasm and a feeling to contribute and work together.

• Cost Effective: Low cost implementation and low entrance fee. • Silo Reduction: Integration with back-end knowledge and content management repositories, such as Sharepoint,

web-based GUI systems and other internal sources. This should ensure efficient collection, consolidation and sharing of knowledge and expertise which should then stimulate people to read, learn and change.

Business Case• Direct productivity gains• Regional growth• Cost savings• Low cost implementation and low entrance fee.• Average Reported ROI: 10%-40% (first year only, levels off 2nd+)• Estimated ROI Ceiling: 15% (Where applied)• Cautionary Note: Aberdeen Group Suggests As Little As 1%

• Costs per Employee: +/- 20-40 EUR

• Most cost are community management, integration, customization, and management:

Enterprise 2.0 Program Cost Component Proportion

Tools (Licenses) 0.1

Integration, Customization, Security, Operations 0.3

Community Management 0.3

IT and Business Steering Overhead 0.1

Program Management and Metrics 0.2

Bottom-Line Value Proposition1. Local acceleration of regional growth

The value propositions of adopting Enterprise 2.0 methodologies and associated technologies at ING include

– Substantial productivity gains – improved efficiency – Nurturing of innovation– Reduction of work duplication across departments and divisions– Improved knowledge retention– Increased expertise location– faster responses to business situations

• Aligning new internal community engagement with accelerating product roll out and stronger brand identification will enhance performance and agility in the regions.

• Greater collaborative connectivity between local units and central offices will create consistency of effective customer messaging while proving an invaluable internal feedback loop to identify what works in each region.

• Enables market intelligence to be both received and distributed at all levels, and avoids reinventing the wheel endlessly and at enormous expense.

2. A single operating model and system to create scale

– Grow the business in a time-efficient manner while supporting cost reduction initiatives and adapting to rapidly changing market conditions requires a degree of centralization.

– By creating an integrated internal online community as part of the core values of the single operating model, and by designing this to accommodate scale, informed knowledge workers will contribute and benefit from ever increasing contextual information at all levels.

– The primary value of this will be to capture and share tacit knowledge that will flesh out a more robust and consistent organizational model.

– Importantly hooks into structured information will inform these collaboration networks, providing in some cases context outside the information’s original intent. An important component of innovation discovery is exposing information and realizing new purposes for it.

3. Common winning performance culture – Achieving a single well aligned organizational culture through the

creation of an integrated internal online culture that can serve ‘point of sale’ teams at the regional level is dependent on people and processes more than the enabling Enterprise 2.0 technologies.

– Change management is a critically important component of achieving these values, and is driven by clear top down direction defining the way ING employees are being asked to work to achieve goals.

– Ambiguity at a management level coupled with the power of modern technology can quickly create a new generation of technology powered silos without clear oversight and guidance.

– Interoperability and connectivity between business unit systems should be the overarching goals where appropriate – clearly defining guidelines for adoption and providing appropriate training as required will get all participants ‘singing from the same sheet of music’.

Strategic and Tactical Alignment

• Informed and considered uptake of Enterprise 2.0 will enable:– A single high level company roadmap that unifies and clarifies Enterprise 2.0

operational model and services– The creation of a unified online community, with subsets of collaboration

networks– Alignments and awareness between business units for innovation,

consistency and avoidance of duplication– A centralized market intelligence community which can feed regional satellites

tuned in to customer needs– Cross pollination of electronically stored information from regionally hosted IT

infrastructure where appropriate and possible– A framework designed for contextual, organic growth instead of isolated

verticals– Enterprise 2.0 policy that is aligned and not in conflict with IT governance and

other shared services but successfully embedded to play a key role in transformation objectives

Risks of not adopting a formal approach to Enterprise 2.0 methods and technologies:

• Continued fragmentation and the development of parochial new silos of tools, often with informal and inconsistent use of Enterprise 2.0 technologies

• Lack of effective centralization and unification of workers and efforts at regional units

• Expensive updates and integrations of enterprise class technology to provide services more agile, flexible and inexpensive Enterprise 2.0 technologies are more effective at providing

• No formal role for Enterprise 2.0 in the target operating model• No central platform for development, launching, and managing

enterprise-wide initiatives• Electronically Stored Information siloed and inaccessible; findability

an increasing problem

Conclusion• Enterprise 2.0 has become a widely used approach in the financial

services industry, as evidenced by the four well-known companies cited in this work.

• The costs/benefit model is extremely compelling and the risks of not using Enterprise 2.0 models are of roughly the same magnitude as managed adoption, if not slightly higher.

• It is recommended that a proactive Enterprise 2.0 strategy be used as a key strategic enabler across the organization.

• Focused initial pilots on where change needs to happen the fastest to start with, with equal focus on Enterprise 2.0 and strong community management, followed by a larger initiative using early lessons learned from the pilots, will form a larger company wide rollout later

Discussion