The Utility of Private Social Networks – Building Better Organizations and Saving Money Too

At a company I worked with last year I was asked to look at the documenting of all of its processes. The exercise was about creating collective awareness of best practices throughout the organization. Through documentation, we would discover redundancies, modify processes and create new efficiencies.

Everyone was invited to contribute their part of the process in a collective blogging exercise. What quickly became apparent was there was “tech speak” that often caused one part of the company not to understand what the other part was talking about. I was referee while at the same time I had to cut through the jargon and create something that everyone could understand.

As bloggers made their contributions and jargon got sorted out it became apparent that a common knowledge repository was needed and an internal Wiki that had lain dormant for some time was revived and populated. Employees were encouraged to contribute to the company Wiki. The beginnings of a enterprise social network were underway.

Blogs, wikis, chat and document sharing are just a few of the tools available within the category of web software applications that we call social networking today. In an article written by Andrew Conry-Murray, entitled “Can Enterprise Social Networking Pay Off?,” he describes a number of high technology company projects where enterprise social networking is in play.

Companies like Dell have yet to try to measure the dollars and cents impact of their investments in enterprise social networking. Says Bob Pearson, a Dell VP, “It’s not like you’re creating revenue.” But Pearson is convinced that social networking will alter the way Dell works.

Another article penned by Chris Murphy describes quotes John Parkinson, CTO of TransUnion, a credit rating company, who estimates that the company has saved $2.5 million in the first five months while spending $50,000 on a social networking platform called Socialtext.
Parkinson derived the dollar savings by counting things that the company deferred from buying. He observed that brainstorming ideas across departments and groups had significantly reduced demand for new technology and outside consulting services. The need for new software tools, processing capacity and hardware dropped dramatically.

Parkinson made the decision to introduce an enterprise social network because of internal demand. TransUnion employees were requesting a Facebook site for the company. His surveys showed that more than 2/3s of TransUnion’s 2,700 employees were already on sites like Facebook and MySpace. Parkinson was concerned that sensitive data such as highly confidential credit reports might end up on these sites where it could easily be compromised. An inside-the-firewall solution seemed like the best way to go. He launched Socialtext, a platform with personal profiles, a wiki, instant messaging, a forum for posting questions and answers with ratings and polling by employees on which answers were the best.

As employees started using the network, Parkinson studied usage and soon discovered who among the employees were best at problem solving. The result - the company is experimenting by creating new roles for forum experts. “It was never very clear to us, looking in, who the authoritative sources were, who was good at solving problems,” Parkinson states. Now it is. The benefits are incalculable and Parkinson forecasts that the investment in enterprise social networking will yield between $5 and $8 million in savings in 2009.
TransUnion has just started down the path of enterprise social networking and they are realizing a significant ROI. Other companies like Dell are also just getting started. More and more businesses, not-for-profit organizations, educators and charities are realizing that private social networking brings the potential of so many benefits. Here are just a few.

1. Private social networks give organizations a ROI in all their people. Every organization has people that do not talk in meetings. They may feel intimidated or defer to more forceful personalities within the company. These are people who never put up their hand in school. But these people can be hidden gems, and although they lack the “chutzpa” to talk aloud, they have ideas and expertise. In a private social network that encourages and rewards online contributions these people can feel liberated and make contributions. Once out they can begin to be appreciated on a whole new level as they contribute their “two cents,” helping the organization to achieve its goals.

2. Many large organizations develop silos, departments that are self contained. Organizations that suffer from silos lose so much. Connections across the organziation don't happen. With private social networks organizations can break down silos. They can let interaction, knowledge sharing, and collective problem solving become the normal communication pattern throughout the organization.

3. Sales is such a competitive occupation. Traditionally compensation plans reward individual sales achievement. Cross fertilization of successful strategies through the deployment of CRM tools runs counter to this “all-for-one” sales reality. A private social network that encourages mentorship and rewards such behaviour can create winning sales teams where sales strategies are shared, and top salespeople are compensated for helping the “newbies.” This represents a significant cultural shift for the normal sales organization. It means new compensation plans that reward both individual sales achievement and collective knowledge sharing contributions to develop overall team success.

4. It is clear that with the advent of Web 2.0 applications, the relationship between customers and suppliers is changing. One can describe the new model as being “customer web-centered.” It has always been true that it is easier to sell to an existing customer than it is to recruit a new one. Hence the relationship with existing customers is something that private social networking can address. Through a private social network, customers can be invited into online communities. These communities may include other customers with similar challenges. Communities can become great listening posts for organizations to learn about common customer problems. They can be great places to do collective sales pitches.

5. Private social networks begin with individuals creating profiles. Profiles are great ways to discover hidden talents. We tend to pigeonhole people by job title but most of us are much more than our jobs. For example I write music and do orchestration when I am not working with clients. People in the accounting department or in shipping may also enjoy music or play instruments. This type of discovery can pay huge dividends in improving morale within an organization. It can even impact the bottom line when you find out that someone is experimenting with open source software application development at home and has come up with a new widget or gadget that can be shared with others in the organization with similar interests, leading to who knows what.

Collaboration, discovery, knowledge sharing, collective success, communication, fun and individual recognition are what social networking is all about. Whether for profit or not, private social networks can give an organization a distinct competitive advantage in both bad and good economic times.

A pilot project is an inexpensive way to test the waters. As John Parkinson noted in his implementation at TransUnion, $50,000 spent on a social networking platform, yielded a $2.5 million saving in less than 5 months and an estimated $5 to $8 million in total savings just in the first year. That’s a lot of savings for such a small investment.