There's Nothing Wrong with the Social Networking Industry that Some Honest (Cost) Information Won't Fix

By Dennis D. McDonald

Jeremiah Owyang’s LiveBlog: What’s Wrong with the White Label Social Networking Industry?, especially if you read the comments, delivers a good snapshot of the gaps that still exist between product evangelism and the realities of implementing specialized online social networks.

In a nutshell, the participants at this “unconference” event seem to be saying that there is a gap between the selling of online social networking products by vendors and the actual implementation over time by the customer of services using that product.

At the end of the day, in one example I’ve heard in my own research, the social network manager has to deal with the recalcitrant VP who refuses to give up emailed attachments even in the face of waves of employees using more efficient collaborative tools. “Resistance to adoption” has many such components.

Depending on your vantage point, such resistance factors can make a lot of sense to those involved, even though they drive up the complexity and costs of the adoption process.

One hobby-horse of mine is the need to understand the costs of what is being implemented. Some vendors — and evangelists — are fond of saying “…how inexpensive social networking software and services are in relation to other enterprise level systems.”

Oh, yeah? The following fictional pie chart is from a slide I use when I’m presenting on social media in large organizations. The total circle represents costs, and the breakdown is between  technology related costs (e.g., what the vendor charges you for the product or service) and the process related costs (e.g., the cost of staff time — yours or the vendor’s integration charges — needed to get the product implemented and into operation):

 

One of the problems is that this breakdown is going to differ from implementation to implementation. It’s one of those situations where “one size does not fit all.” Everyone seems to have a different perspective on what goes into each numerator and denominator.

One reason for this complexity is that the industry is still at a point where it’s common to compare apples and oranges. An excellent example is presented in Carlos Caballero’s post titled Evernote: new collaboration modality emerging or just note taking? What is your workspace vision? The author outlines how approaches to social networking technology in the enterprise can differ so much:

So, we can see that several patterns emerge as we differentiate philosophies of workspaces:

• Interaction modalities – Rich, abundant, complex, or mostly asynchronous
• Attention focus – Individually produced documents, collaborative documents, and users
• How is content created – Mostly individually, on the desktop, or collectively, on line.

As you read through his distillation, you can see how potentially complex it is to come up with estimated costs to compare the different possible approaches to implementing social networking technologies in the enterprise. Partly this complexity is the same as with any enterprise-level cost estimating exercise where there is a need to make practical distinctions between categories such as fixed versus variable costs, one-time versus recurring costs, and direct versus indirect costs.

 

Note that I didn’t say “impossible,” I said “complex.”  Such estimating complexities, with appropriate effort, can be overcome. What can’t be overcome is a failure to agree on the scope of what is being defined. Given the far reaching impact of what is impacted by social networking technologies — aspects of communication, document management, search, attention, retrieval, social networking, expertise management, etc. etc., — there is a danger of oversimplification of the adoption process on the part of the vendor and the inside evangelist. “Let’s start small, gain some experience, avoid entanglement with the IT department, and grow this thing virally.”

That may be a good way for a vendor to get a foot in the door, but will the resulting experiment actually provide the needed insight into enterprise adoption realities — and costs — if the initial effort is “too far under the radar?”

Fortunately, there is so much information sharing today that it’s pretty hard for failed experiments to go undetected and incognito for long. Vendors themselves are also tending to be a lot more forthcoming about their efforts than with previous generations of enterprise software. As long as people continue to share information about the realities of adopting enterprise social networking systems, we’ll all benefit.

 

• Copyright (c) 2008 by Dennis D. McDonald
• Need help estimating costs? Email me at ddmcd@yahoo.com
  

Comments

[Shaun Callahan]

Dennis - As you know, I am a vendor in this space. I agree with your post completely. At CollectiveX, we try and simplify this challenge both for us and for our clients (now over 15,000).

Our product (Groupsites) is free. If you buy all of our a la carte features, your Groupsite will cost $399 per year (Enterprise pricing offers 10 of this full-featured Groupsites for $2,500 per year).

That's the price.

The cost of adoption? A lot of that has to do with managing expectations. We don't do everything. Our product takes the most useful features of online groups and listserves (to communicate), collaboration software (to share) and social networks (to network).

We do not have every bell and whistle and our clients can't pay us to add them.

We do not synchronize with SAP, Peoplesoft, Seibel or any other ERP platform. It is not what we do. We are a situational application that allows groups to make things happen today - without customization.

We always prefer a "No" over an uncomfortable "Yes".

We have the features that 90% of our users use 90% of the time.

Many of our competitors will accept large checks and undertake immense custom development jobs on the promise of future ROI.

If our clients don't get value from us on day one, we are not the right tool for them - and that's OK.

[Dennis D. McDonald]

Shaun -

Thanks for the comment and for laying out your corporate philosophy - and pricing. As a consultant and integrator I know how much it can cost to customize applications that offered much functionality "out of the box." Costs can really go through the roof when there's a need to integrate a new application with a variety of existing applications that have different architectures. Focusing on a "sweet spot" of functionality, and resisting customization, can really help to speed benefits and control costs.

- Dennis

[Jeff Foster]

Hi,

I am also a consultant & a developer in the white label industry. I agree with Dennis that you should try to stick the basic functionality of the software to make it cost effective.

Too many focus on the usability (90% of our users use 90% of the time) rather than 5% of our users create 95% of our revenue...or whatever that number may be.

I would like to see platforms judge their software based on the profitability. Every marketer knows social networking communities generate far less ad revenue (even in a niche) than most other sites.

Jeff

[Dennis D. McDonald]

Jeff-

Thanks for the comment. Another consideration, for the small vendor especially, is having sufficient developer/programmer resources to support both a "basic" product and the customizations that larger (paying) customers may desire.

- Dennis