Dennis D. McDonald ( consults from Alexandria Virginia. His services include writing & research, proposal development, and project management.

How Do Social Media Change the Economics of Process Automation?

By Dennis McDonald, Ph.D.

In September 2006 I published The Justification of Enterprise Web 2.0 Project Expenditures. It examined differences between the cost justification of current information systems compared with cost justification of older systems. It discussed how some of the rules for calculating and thinking about technology related costs have changed.

Decades ago, automating repeatable manual and clerical processes was common. Automation was often seen as a straightforward generator of benefits such as cost savings and increased service consistency.

Sometimes such savings could justify custom system development. Customizable ERP systems were also developed and marketed based on the concept of “best practices.” ERP customers benefited when a variety of repeatable processes could be automated and standardized around a core set of standardized data and application development technologies.

Things have gotten more complex since then. Systems available off the shelf have expanded in variety. The power and sophistication of software has also advanced. Universal availability of web based search tools and web hosted applications has  altered how people use and justify new applications. Outsourcing practices have altered cost-benefit calculations.

Today, social media, social networking, “web 2.0,” and “enterprise 2.0” approaches are widely available. Systems using such technologies have altered how people can create, exchange, share, and collaborate. Eventually “semantic web” technologies could enable even more sophisticated approaches to the automation of basic processes.

New media have also changed how many people build, maintain, and interact with social and professional relationships. Increasingly, whom you know or have an online relationship with can change and accelerate how you make a decision or solve a problem. After all, why invent a solution — or automate it — if you can quickly reach out to your “online buddies” for help or support?

It’s also possible to engage with users to help with supporting a product or service, even when those users have no financial or employment relationship with the organization providing that product or service. In such cases costs for supporting a product or service are borne at least partially by people employed by other organizations. The availability of such “community based” support cannot be ignored by planners, and it can only be indirectly controlled.

With this as background, consider that you are looking for ways to improve a complex process. If you’ve ever been involved in developing or implementing a complex information system, you know that there are likely to be points in an overall process that cannot efficiently be automated. Some of these are administration or management oriented, some are policy related, some change too rapidly, and some are just too obscure or complex to automate cost-efficiently. 

Such difficult-to-automate process points are traditionally where real people get involved in the process. Perhaps it’s the review of a complex insurance claim, perhaps it’s creation of a research summary, perhaps it’s the rapid assessment of risk where professional judgment or experience are needed. In many system supported processes, there’s a place where manual, intellectual, knowledge-based, or people driven processes must be inserted and managed, either because automation would be too difficult or not cost effective. 

How are social media and social networking impacting decisions to automate various processes? There are at least three considerations:

  1. Social media make it possible for more than one person to participate in performing a process.
  2. Not everyone who participates in performing a process needs to be in the same location.
  3. Some of the costs for performing a given process may be borne by people working — and being paid by — other organizations.

Governance of a process, if it is performed collaboratively, needs to be exerted differently than with a group of people all working with the same organization. Since monitoring costs has traditionally been a basic component of management, altering how costs are defined and measured may  also impact the appropriateness of different governance and control methods.

The identity of the system developer will also impact how different types or costs and benefits will be considered in approaching process automation:

  • If the developer is associated with a small commercial startup, considering the benefits of some type of collaborative sharing of various processes might make sense when time and funds are limited; after all, working with “other people’s time and money” has always been a consideration in building a business.
  • If the developer is a public or nonprofit institution where the distribution of costs and benefits for participation in a process are spread across a variety of institutions, the lack of a single point of control where all costs can be considered may reduce management’s ability to control process performance and outcomes.

The incorporation of social media and social networking technologies into a complex process may significantly improve the abilty to reduce the time it takes to solve a problem based on improved access to experience and expertise. At the same time, careful consideration should also be given to defining and controlling the associated costs of such technologies, even when these costs are incurred by individuals or organizations outside the normal span of control of management.

Copyright (c) 2009 by Dennis D. McDonald, Ph.D.

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