What? Why? How? – Enigma Enterprise 2.0

During my Christmas holiday I had some time to read an interesting research report on Enterprise 2.0 in Europe, written by David Osimo, Paul Foley and Federico Biagi (Tech4i2); Mike Thompson and Lee Bryant (Headshift); David Bradshaw (IDC).

My first idea was to write a German post highlighting the most important results for companies, communication consultancies and everybody I might be sharing the same objective: Introducing social media into the corporate firewall.

The report presents the interim results of the study “Enterprise 2.0”, executed by Headshift, IDC and Tech4i2 for the European Commission DG INFSO. Its 160 pages offers a great source of data and I decided in the end to gather the most interesting quotes and paragraphs and prepare a simple working paper I might use for my job. Instead of saving it on my PC only, I decided sharing it with you in case you need some interesting background information. All use cases and tables can be read in the report.

From a slideshow from revells found here

Although I tried to summarize the content into a brief blogpost, you will have to scroll down more than you might be used too, but at the end you will want to continue reading the whole report!

Please keep in mind that starting as from the next paragraph all content is taken from the “Enterprise 2.0 study D3 Interim report”.

Is Enterprise 2.0 a passing fad?

Before the conclusion above can be fully accepted one of the key questions is whether this is just a passing fad that will be replaced by something else of whether this is a real market for products that are increasingly playing a valued part in the way the organizations deal with their business problems. Our research affirms that it is the latter.

Organizations are increasingly challenged by competition around the world, but especially in the Western economies. New competitors are of course being generated all the time, but the rise of India and China is having a permanent effect on the world stage. Though the source of their increased power is their lower wage costs, both countries are using this to make a permanent change in their role in the world, developing world players of their own rather than acting as suppliers to Western companies.

Western organizations therefore face a mounting challenge to their market and competitive positions. They cannot meet this challenge through incremental improvements alone, useful though this will be. They must transform their businesses s that they can far more effectively use all their resources to meet the challenge. E2.0 is being seen as a key part of this process by change management specialists.

What is Enterprise 2.0

Web 2.0 is a set of values, rather than simply a set of technologies. And it is the innovation in values that drives deeper social-economic impact, while the technological innovation is in this case only incremental… Organizational and cultural changes combined with adoption of Enterprise 2.0 solutions are likely to generate the most significant impact.

Enterprise 2.0 is technology „to bring people together and let them interact, without specifying how they should do so“ (McAfee, 2009). Another way of expressing this is that enterprise 2.0 supporting the informal organization: the social networks through which work often really gets done (Cross & Parker, 2004)

We can think of E2.0 as a technology that allows the creation of ideas through a non- structured process, to which many people can contribute (some internal and some external). Some ideas will contribute to the creation of better products (perhaps even coming from consumers) while others could lead to the development of better processes. In other cases ideas for new markets might emerge. Even ideas for organizational change could be the result of E2.0 applications. In all these cases it is likely that these ideas will need to be refined, re-evaluated in the context of the firm’s business-model (including its R&D and marketing capabilities) so that the horizontal non-hierarchical network generated by E2.0 will interface with the typical vertical and often functionally- structured organization of the firm.

Moreover, E2.0 also requires careful implementation: if it’s true that networks are generally created through an informal process of collaboration (typically working from the bottom up so that they are inherently democratic structures), it is also true that E2.0 adoption implies non irrelevant set up costs (not necessarily financial) which are likely to be “organization specific”.

Working definition of Enterprise 2.0

McAfee’s SLATES definition provides a starting point for our definition of E2.0. SLATES stands for:

• Allow users to search for other users or content (search)

• Group similar users or content together (links)

• Provide for collaborative authoring (via blogs, wikis and workspaces)

• Allow users to tag content (for better findability)

• Incorporate the recommendations of users and content based on profiles (extensions)

• Allow people to subscribe to users or content with tools from RSS feeds to Twitter „following“ (signals)

Based on SLATES this leads to a working product definition:

• Tools for identifying people with expertise, knowledge or interest in a particular area and linking to them

• Tools for finding, labelling and sharing useful content/information (authoring)

• Wiki/collaboration/authoring and project work

• A full suite of offerings including the above with cross-links and a shared knowledge-base.

Why Enterprise 2.0

E2.0 offers the opportunity to:

1. Identify people with expertise, knowledge or interest in a particular area and linking to them. A key part of any organizations resources is the knowledge of its people. In the past this has been the few with the key knowledge. But to survive and thrive in the not too distant future organizations will have to use the knowledge of all its people, not just the few ‚experts‘.

2. Finding, label (tag) and share useful content or information wherever it may be located. Most organizations have enormous volumes of content in their possession, but it is up to individuals to find the useful parts themselves. Making content come alive through tagging will make it available for smarter decision making throughout the organization

3. Improve that way that organizations collaborate. Collaboration has always been necessary for all large organizations, but previously the tools available have been inadequate or overly prescriptive for many of their potential uses. A new generation of collaboration capabilities have on the idea of the Wiki principle, but with modifications seems the way to make collaboration especially at a distance and over multiple time zones to be far more effective.

E-mail and IM are useful for one-to-one or one-to-many communications but they are not the best tool when the purpose is to develop and make accessible knowledge to a group. “Channels” are not the first best. “Platforms” can do more and better: they permit the collection of digital content where contributions are globally visible and persistent.

Reading another document during my Christmas holiday – a case study shared by IBM – „Nurturing BlueIQ: Enterprise 2.0 Adoption in IBMI came across this:

„The ability to work across the organization with different groups of people helps break down walls between organizational units, and also leads to new concepts of how we work. A team is broader than the people who work next to you in the office; they can be across the world. Beyond permanent, assigned teams, employees can work in ad-hoc, multi-disciplinary, and multi-department workgroups based on their networks. Such new contexts of collaboration are becoming the more common ways to work, rather than anomalies.”

 

However, the very nature of web 2.0 tools is that they can be adopted outside the control oft he company CIO. Employees can use (them) also for business purposes without the need to ask for permission. Nevertheless, a recent US survey of 1400 CIOs found that only 10% of companies allow full usage of social networking sites during work hours, while 54% forbid any usage of these tools (Gaudin, 2009).

How to use Enterprise 2.0

Project collaboration

Enterprise 2.0 technologies (for example wikis and blogs) make it easy to communicate, document and track objectives and project information, such as meeting notes or status reports.

 

Awareness

We use the term awareness here to denote the ways in which enterprise 2.0 can help people in organisations to know what is going on with respect to all aspects of the formal and informal organisations. Shared project spaces can help members of a team maintain awareness of the status of work; enterprise microblogging and blogs can help maintain awareness of the status of work, state of mind, location and other factors.

Employee induction and training

The person-to-person connections facilitated by enterprise 2.0 are ideal for mentoring and group learning, enabling continuous, socially-situated learning. Wikis, blogs, forums and other community software can support this socially situated learning, while providing a searchable record of the process.

Communities of interest

Individuals, teams or working groups in organisations may face similar challenges or have similar interests to each other but be unable to discuss these challenges and interests… In terms of technology, shared bookmarking tools allow members of one group to see what other people in similar groups bookmark and therefore consider important in their work. Furthermore, wikis, blogs and forums are great platforms to share experience and expertise.

Employee engagement

Using enterprise 2.0 to communicate on a more human, person-to-person level can humanize the organization for the employees of the organization. Through interaction with superiors and others from other parts of the organization, enterprise 2.0 can help increase an employee’s involvement with, commitment to and satisfaction with work.

Expertise Location

Explicit approaches towards knowledge sharing involve specific question and answer functionality within an intranet or people search facilities that allow a user to find someone based on their expertise. More implicit approaches allow employees to find support in communities of interest and practice where questions and difficulties can be discussed in a more specific social context.

Innovation Management

As organisations grow in size, it becomes harder for an individual employee’s ideas to have an impact at an organizational level… An explicit approach to this problem is to have a dedicated system to support innovation and ideation that operates outside the normal working practices of employees.

Collective Intelligence

O’Reilly (2006) characterized web 2.0 applications as those that “harness network effects to get better the more people use them”. Collective intelligence brings the network effects and participation witnessed on the Internet to the social networks of companies and organisations. Within collective intelligence are more specific use cases such as: Social bookmarking, prediction markets, collaborative filtering.

Crowdsourcing

Crowdsourcing refers to the act of outsourcing work to people who are not explicitly employed or contracted to do it. This can be done through blogs, forums and microblogging applications… the company benefits from discovering new ideas and building trust and engagement in the people involved.

In addition the report includes: Customer/Public Engagement, Stakeholder Engagement, Recruitment.

The Role of Organisational Culture

A prerequisite to a successful adoption of E20 solutions is the existence of a collaborative and collegiate culture, where innovation is rewarded. It is difficult to reap the rewards from investment if the culture is not there and there is no top management endorsement. However, there is also evidence that the adoption of E20 tools generate cultural change by encouraging collaboration and reducing silos effect: for example, the Intellipedia case showed how wiki were able to foster a more open and collaborative approach by the US intelligence agencies (McAfee, 2009)

 

Results or process: process-oriented organisations prefer the security of using well-understood and predictable operating methods whereas results-oriented organizations encourage experimentation and development of new and innovative techniques;

Employee or the job: employee-oriented organisations show genuine concern for the employee’s welfare whereas job-oriented organisations are focused on the completion of tasks with little regard for the welfare of the employee;

Open or closed communication: open communication organisations are characterized by openness to sharing experience and information in support of colleagues; closed communication organisations have more secretive and reserved employees.

Culture clearly plays an important role in a company’s ability to adopt enterprise 2.0. Almost all the companies studied as part of the research had an open, communicative and innovative culture and where this appeared to be less true the adoption was somewhat limited in scope. Implicit in the discussion of culture so far is an assumption of a one way relationship – that culture affects an organisation’s ability to adopt enterprise 2.0. But can enterprise 2.0 software itself change culture?

The evidence from both literature and the case studies points to the importance of leadership to successful enterprise 2.0 initiatives. Indeed, in every case study, there was an illustration of how leadership was crucial to the success or development of the project.

Barriers for Enterprise 2.0

  • McAfee (2009) states that according to lead companies he interviewed, users resistance is the single greatest barrier to enterprise adoption. He suggests that the main “competitor” to E20 tools is e-mail, which is the single most used Internet application, therefore being particularly hard to substitute.
  • A recent survey by Forrester3 argues that while fully 50% of business make use of Enterprise 2.0 software, “employees access remains low”.
  • The E20 adoption council (InformationArchitectedInc, 2009) reports that 72% of organizations reported resistance from users, and only 32% overcame it.

In general, it appears that ad hoc, practical collaboration tools are more successful than knowledge sharing approaches such as internal “companypedias”. This confirms McAfee’s suggestion that E20 tools, to be successful, should be designed “in the flow” of work, rather than “above the flow”. They should not represent an additional burden on top of existing work, but be embedded in the workflow. Costs of participation should be minimized to ensure sustainability, and tools should be designed with a user-centred approach.

Individual acceptance of enterprise 2.0 is very important to its success. Because use of the vast majority of enterprise 2.0 initiatives is discretionary, the project must appeal directly to the needs of its intended users if it is to be successfully adopted. Cost of participation should be maintained as low as possible (leveraging weak forms of participation). In the case of E20, the key driver is “expected social influence”, as participation in social platforms enhances the visibility of the individual employee and its career opportunities.

Finally, all cases show that take-up does not follow a linear pattern, but struggles in the initial phase to achieve sufficient critical mass, and therefore requires proactive effort of animation. If and when critical mass is achieved, social tools become self-sustained and grow virally.

Key barriers to adoption are the lack of understanding and cultural resistance by employees and by management, often accompanied by concerns about security and privacy. No case study reported particular concern of security and confidentiality of information, despite the fact that sensitive information can be irregularly spread: soft governance appears to be sufficiently effective. So while the perceived risks lie in misbehaviour and excessive information circulation, the actual risk lie much more in the lack of participation by users.

The Market and supply side

E2.0 market is expected to rise at rates that are much higher than the rates for the other types of software (almost 10 times higher). However, the size of E2.0 in the overall software market is still very small so that even large growth rates cannot generate a very large market, especially when looking at the EU: 559 million of euro in 2015 cannot be expected to generate large direct effects on the EU economy. Perhaps more interesting is the fact that there are 16.1 million expected users in the EU in 2014. This means that diffusion is going to be quite large.

The other factor that emerges clearly from the report is that E2.0 adoption is much higher in large firms, relative to SMEs. It is true that growth rates are higher for SMEs, but the expected market in 2015 for large firms is still expected to be three time larger than the market for SMEs. This, again, is in line with our theoretical considerations.

The key characteristics of the Enterprise 2.0 market in the EU27 are that it is:

1. Small but rapidly growing market: compared to the overall software and IT services markets, Enterprise 2.0 is very small indeed ($108 million in 2009 for E2.0 compared to $79.9 billion for the entire EU packaged software market)

2. Served by a mix of local and international players: The vast majority of the international players are US companies, with Atlassian (Australian) being the main exception. They have the advantage over the smaller European players of greater resources and visibility, though some European players (for example, Huddle) are growing strongly.

3. A pioneering market: In most EU organizations, Enterprise 2.0 is not yet perceived to be relevant to the mainstream of the business. Some of the problems that E2.0 addresses are present, but using a set of software tools to address them is not seen as an option.

4. Many EU organizations that do see software as means of addressing these problems will have tried to address them using software “Enterprise 1.0” software such as knowledge management, content management and collaboration tools.

5. However there are increasing number of organizations that do see Enterprise 2.0 as a way of addressing these problems in certain areas, including but not limited to sales, marketing, research and development.

Relationship between E2.0 software, implementation services and change management services

As the diagram shows, IDC estimates the implementation services will be approximately one to three times the cost of the software, while change management services will be much more expensive, probably at least 10 time the cost of the software and potentially much more. Indeed, such a project is not really about software, though it does use the software as a vital element of the project.

Global comparisons

In summary, Australia and China seem to be moving most positively towards adopting E2.0 after the US. India is a way behind, hindered by local communications infrastructure, despite there being a strong and growing technology sector. In Japan and South Korea, E2.0 has not achieved traction yet due to business culture.

As with most technology-focused innovations, European organizations are lagging the US in their uptake of the technology. The vendors we interviewed consistently described key differences in purchasing and adoption process between the US and Europe.

1. In the US, purchase decisions tend to be comparatively rapid, and once the decision is made, the purchasers tend to move rapidly to full implementation. The project tends to be regarded as strategic by management.

2. In Europe, purchasing decisions tended to take much longer, and the implementation that followed was usually a pilot project in one small area that would take multiple years to escalate into an organization-wide implementation. The project tends to be regarded as tactical by management.

 

Benefits of Enterprise 2.0

  • Collaboration: A group of people working jointly towards solving a problem or meeting a challenge
  • Communication: The exchange of information through social contact
  • Connection: Forging new interpersonal ties within an organisation or between an organisation and its partners, customers and the outside world

It is not in these competencies that the return on investment of enterprise 2.0 can be found, but in how these competencies contribute to helping an organisation meet its goals. Each of these competencies is not an end in itself (Carpenter, 2009). Organisations, or people within organisations, collaborate, communicate or connect in order to meet a business objective.

 

 

Current debate in the literature and in the blogosphere has proposed on a set of benefits of adopting E20 solutions. Among others, Hutch Carpenter proposes a hierarchy of benefits adapted from Maslow’s hierarchy of needs. This is a useful departure point for our reasoning, insofar it remarks how the importance of the benefit is inversely proportional to its measurability.

On cost savings, there is evidence that E20 helps reducing internal emails for exchanging different versions of documents. This could reduce substantially email storage costs: according to NewsGator4, “one Fortune 100 manufacturing company calculated that a simple 2 percent reduction in email volume could save $2.6 million per year”. Secondly, E20 helps reducing travel costs by making more efficient the remote collaboration of dispersed teams. Reduction of travel cost and time is indicated among the top 5 key drivers for E20 adoption in the survey conducted by “The Adoption Council”. In the case studies we examined, several cases confirm that email reduction is one key area of impact, with companies such as Westaflex reducing internal email by 80%. Pfizer on the other hand states that 76% of decision makers were saving more than 30 minutes a week thanks to the tools implemented.

Secondly, E20 can represent a revenue generating opportunity, by providing new product and process ideas, as new contacts with potential customers. In the case studies we examined, we have seen how USEO has gained 4 new customers through its online community of 1000 participants.

Thirdly, opening up conversations with customers is likely to gain customer satisfaction through better understanding of customer needs. Public customer feedback and new product ideas are likely to positively impact on their satisfaction, and better coordination during project implementation. In our case studies, most applications were internal, not open to customers. However, cases such as aRway confirm that project- related wiki and micro-blogging have been instrumental to the achievement of collaboration with customers, ultimately leading to higher customer satisfaction rates.

Employee engagement and satisfaction is a key impact of Enterprise 2.0. It is often mentioned that employees are the most important source for innovation in a company. E20 enables better connection and integration between employees, which are better able to express and contribute to the company development and receive recognition for it. And better employee engagement has significant influence on the performance of the company: Companies on Fortune magazine’s annual list of the „100 Best Companies to Work for in America“ between 1998 and 2005 returned 14% per year, compared to 6% a year for the overall market, according to Edmands 2010. In our cases, KPN shows how an open approach to internal negotiations through their blog has been able to generate positive sentiments towards management. However, our cases also show that successful cases of enhancing employees’ satisfaction have not been caused by the simple adoption of E20 solution, but rather by the implementation of the solution in an already positive cultural context of employees engagement.

E20 radically improves cross-organisational collaboration, by facilitating direct personal contacts between employees and increasing transparency and awareness. The scholarly case of Intellipedia presented by McAfee (2009) shows how through the adoption of wiki-style software, a radically new culture of collaboration has been introduced between the different US intelligence agencies. In our cases, several companies use wiki and microblogging for making collaboration with partners and customers more fluid and increasing awareness of a project’s progress. For example, A&O uses is for collaborating “on the fly” with external consultants. USEO uses its community do further develop project and prospective collaboration. ArWay use their wiki space to work with partner companies. Overall, increased collaboration across organization seems to happen mostly on an operational project-basis, while the adoption of more strategic open innovation approaches for new business generation across organization is far more rare.

An innovation culture is both a prerequisite and an outcome of E20 solutions. By adopting open idea brainstorming, many companies have been able to increase the quantity of idea generation in the organization, increase the quality of the ideas generated and reduce time-to-market of those innovation. As Burt (2003) demonstrates, the level of connectedness of an employee has a significant impact of the quality of the ideas generated. Furthermore, the open publication of ideas through tools such as Uservoice significantly increases the level of attention that can be given to the idea. Secondly, the immediate publication of the idea generates incentives to employees to propose these ideas, as colleagues by inspiration and imitation are induced to propose other ideas. The case of Intuit reports that after the introduction of E20 solutions, the rate of ideation went up by around 1000% and the amount of participation was up over 500% and time-to-market was reduced from 13 to 5 months5. In our case studies, Pfizer has been implementing E20 applications for their research teams in order to facilitate cross-discipline information sharing. A&O was able to increase the rate of collaboration and innovation across their dispersed teams. KPN involved a large number of employees as test users of a new product.

Finally, organizational agility indicates the capacity of companies to adapt and take advantage a rapidly changing environment. It is now a well-accepted truism that the rate of change has been accelerating dramatically over the last twenty years. E20 tools provide key support to seeing changes in the market faster, shifting resources in response to new opportunities, mixing incremental and disruptive innovation, moving on from initiatives, programs, markets, products that no longer work, empowering employees to recognize opportunities and threats themselves, and act accordingly. Crucially, they enable the faster integration of new hires through a combination of formal and informal learning. In our cases, companies such as Westaflex benefited from higher capacity to avoid costly mistakes, deal with changes in their workforce, integrating new recruits. USEO uses its community to be more aware and in touch with market developments. Pfizer’ decision makers argue that after the introduction of the new solutions, the access to strategic decision-making information has improved.

In summary, E2.0 can provide solution to the following real problems:

1) How to capture a company engineering knowledge and deliver it fast to new hires without major training costs;

2) How to create a sense of community, which ultimately has a positive impact on workers’ productivity

3) How not to miss important info on new trends, new markets, new technologies

4) How to proficiently connect info coming from different sources so that a broader picture can be obtained and more efficient decisions can be taken

5) How to use productively info that are dispersed among millions of individuals

Note on the relevance of the Open Innovation paradigm

There exists solid and widespread evidence that ICT and organizational change (including workplace practices) are complementary investments, together with human capital, and the three together can have a significant impact of firms’ productivity.

Moreover, some studies have documented that IT can have a significant positive impact on “connective capital”, through the creation of internal and external networks. These results are very interesting and should be related to the literature on open innovation. In fact, open innovation is a business paradigm that can help in explaining how and why “connective capital” is generated within and among firms.

  • Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to markets.
  • Open innovation combines internal and external ideas into architectures and systems whose requirements are defined by a business model.
  • Open innovation is the purposive inflow and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation.
  • Open innovation is both a set of practices for profiting from innovation, and also a cognitive model for creating, interpreting and researching these practices.

In an open innovation model information flow freely from the outside to the inside and viceversa, cooperation is a way to generate knowledge that is later utilized internally by the firm or by other economic actors (including competitors) and this implies that almost no effort is wasted: somewhere in the economy the knowledge generated will be of some use.

Note on broadband connectivity, penetration and performance in Europe

EU Fixed Broadband Penetration as of January 2009

EU Commissioner Reding’s policy targets to have “internet broadband for all Europeans by 2010 and high-speed internet broadband for all Europeans by 2013” does not explicitly define connectivity speeds for the two goals. Generally, broadband is regarded as any speed in excess of 1 Mbps and high-speed broadband as a speed in excess of 30 or 40 Mbps.

The broadband performance of a country can be assessed not just on its coverage and penetration levels. The ultimate aim for Europe is, of course, not the diffusion of broadband technologies per se, but, rather, to pursue the i2020 political objectives to boost the countries’ ability to promote social, cultural and political change, and innovation as well as to increase competitiveness and ability to grow.

Europe’s Digital Competitiveness Report highlights how the broadband performance index clearly shows that – with just a few exceptions – countries with the highest rankings have a balanced combination of the different factors. Both Sweden and the Netherlands have high levels of broadband coverage and competition, high average speeds, relatively cheap prices, high levels of take-up of services, and a sound socio- economic context. Denmark, which is in third place, shares very similar features, but is lagging behind the others for what concerns competition. These three countries are also those with the highest broadband penetration rates.

It is evident that in Europe and other countries with the highest broadband performance indexes there is also a correlation with high per capita income and education levels.

Note on Enterprise 2.0 and cloud computing

“Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction” > National Institute of Standards and Technology.”

Cloud computing creates business opportunity by providing the means to innovate faster and at a lower cost than previously possible with on-premises IT infrastructure.

Increasingly, enterprise providers are taking open cloud models and making them available as protected / private access clouds for corporate clients. Private clouds are being adopted by large corporations looking for complete control, often as a tightly- controlled base to be augmented with commodity public cloud offerings.

Did you know?

In October 2009 Finland became the first country in Europe to declare broadband a legal right. A Universal Service Obligation was imposed on telecommunications service providers, which guaranteed that all residents and businesses would be able to receive a 1Mbps service downstream by July 2010. The Ministry of Transport and Communications confirmed that they would expect the USO connections to be provided at a „reasonable price“ and that FICORA (the Finnish Communications Regulatory Authority) would monitor the pricing, although the legislation did not in itself include any pricing ceilings. Minimum standards for broadband speeds were also imposed (the average speed of downstream traffic must be at least 75 per cent of the required speed in a measuring period of 24 hours. In a four- hour measuring period the speed must be at least 59 per cent of the required speed) .

Ein Gedanke zu “What? Why? How? – Enigma Enterprise 2.0

  1. Pingback: Berlin and Melbourne – a tale of two cities | Zytnik Consulting

Schreibe einen Kommentar

Trage deine Daten unten ein oder klicke ein Icon um dich einzuloggen:

WordPress.com-Logo

Du kommentierst mit Deinem WordPress.com-Konto. Abmelden / Ändern )

Twitter-Bild

Du kommentierst mit Deinem Twitter-Konto. Abmelden / Ändern )

Facebook-Foto

Du kommentierst mit Deinem Facebook-Konto. Abmelden / Ändern )

Google+ Foto

Du kommentierst mit Deinem Google+-Konto. Abmelden / Ändern )

Verbinde mit %s