Dr. Chen, Management Information Systems Chapter 8 Social Media Information Systems Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA

Dr. Chen, Management Information Systems Study Questions Q1: What is a social media information system (SMIS)? Q2: How do SMIS advance organizational strategy? Q3: How do SMIS increase social capital? Q4: What roles do SMIS play in the hyper-social organization? Q5: How do (some) companies earn revenue from social media? Q6: How can organizations manage the risks of social media? Q7: 2025? 2

Dr. Chen, Management Information Systems Q1: What Is A Social Media Information System (SMIS)? Social media (SM) –Use of ____ to support content sharing among networks of users –Enables communities, tribes, or hives –People related by a common interest Social media information system (SMIS) –Supports sharing of content among networks of users 3 IT

Dr. Chen, Management Information Systems Social Media Is a Convergence of Disciplines 4 Fig 8-1 Social Media Is a Convergence of Disciplines

Dr. Chen, Management Information Systems Number of Social Media Active Users 5 Fig 8-2 Number of Social Media Active Users

Dr. Chen, Management Information Systems Three SMIS Roles Social Media Providers –Facebook, Google+, LinkedIn, Twitter, Instagram, and Pinterest provide platforms –Attracting and targeting certain demographic groups ________ –Both individuals and organizations _____________ –Mutual interests and transcend familial, geographic, and organizational boundaries 6 Users Communities

Dr. Chen, Management Information Systems SM User Communities 7 Fig 8-3 SM Communities

Dr. Chen, Management Information Systems Social Media Application Providers Facebook, Twitter, LinkedIn, Google Sponsors might pay a fee, depending on application and what they do with it –Creating a company page free on Facebook, but... –Charges fee to advertise to communities that “Like” that page Custom developed SM for company using SharePoint for wikis, discussion board, photo sharing 8

Dr. Chen, Management Information Systems 9 Social media (SM) communities differ from communities in the past because SM communities are ________. A) formed based on family relationships B) limited by geographic location C) formed based on mutual interests D) limited by organizational boundaries Answer: ______ C

Dr. Chen, Management Information Systems Five Components of SMIS 10 Fig 8-4 Five Components of SMIS

Dr. Chen, Management Information Systems SMIS Is Not Free Costs to develop, implement, and manage social networking procedures Direct labor costs for employees who contribute to and manage social networking sites 92% of companies use social media to recruit (93% from LinkedIn) 73% hired using social media, and one-third have rejected candidates because of something on their social profiles 11

Dr. Chen, Management Information Systems Q2: How Do SMIS Advance Organizational Strategy? Strategy determines value chains, which determine business processes, which determine information systems. How do value chains determine dynamic processes and thus set SMIS requirements? SM process flows cannot be designed or diagrammed, they constantly change. 12

Dr. Chen, Management Information Systems SM in Value Chain Activities 13 Fig. 8-5 SM in Value Chain Activities Which activities are likely supported by structured process? ____________Manufacturing and operations

Dr. Chen, Management Information Systems 14 Which of the following statements is true about social CRM? A) Customers likely to generate the most business get the most attention from the organization. B) All the customer relationship processes in social CRM are structured and controlled. C) Each customer crafts his or her own relationship with the company. D) Though relationships emerge from joint activity, companies control the customers. Answer: ______ C

Dr. Chen, Management Information Systems Social Media and the Sales and Marketing Activity Dynamic, SM-based CRM process Social CRM  Each customer crafts relationship –Wikis, blogs, discussion lists, frequently asked questions, sites for user reviews and commentary, other dynamic content  Customers search content, contribute reviews and commentary, ask questions, create user groups, etc.  Not centered on customer lifetime value 15

Dr. Chen, Management Information Systems Social Media and Customer Service Relationships emerge from joint activity, customers have as much control as companies Product users freely help each other solve problems Selling to or through developer networks most successful –Microsoft's Most Valuable Professional (MVP) program Peer-to-peer support risks loss of control 16

Dr. Chen, Management Information Systems Social Media and Inbound and Outbound Logistics Social media can be used to provide numerous solution ideas and rapid evaluation of them May provide better solutions to complex supply chain problems Facilitates user creates content and feedback among networks needed for problem solving Loss of privacy a significant risk Problem solving in front of your competitors 17

Dr. Chen, Management Information Systems Social Media and Manufacturing and Operations Designing products, developing supplier relationships, and improving operational efficiencies Crowdsourcing –Non-employees voluntarily participate in product design or product redesign Widely used in businesses-to-consumer (B2C) relationships to market products to end users YouTube channel and post videos of product reviews and testing, factory walk-throughs 18

Dr. Chen, Management Information Systems Social Media and Human Resources Employee communications using internal personnel sites –Ex: MySite and MyProfile in SharePoint Used for finding employee prospects, recruiting candidates, candidate evaluation Place for employees to post their expertise Risks: –Forming erroneous conclusions about employees –Becoming defender of belief or pushing an unpopular management message 19

Dr. Chen, Management Information Systems Q3: How Do SMIS Increase Social Capital? Capital –Investment of resources for future profit Types of business capital –________ capital: produce goods and services (factories, machines, manufacturing equipment) –_______ capital: human knowledge and skills investments –_______ capital: social relations with expectation of marketplace returns 20 Physical Human Social

Dr. Chen, Management Information Systems What Is the Value of Social Capital? Value of social capital  ________ of relationships,  _______ of relationships, and  Resources controlled Adds value in four ways: 1.Information 2.Influence 3.Social credentials 4.Personal reinforcement - professional image or status 21 Number Strength (be a form of)

Dr. Chen, Management Information Systems How Do Social Networks Add Value to Businesses? Progressive organizations: –Maintain a presence on Facebook, LinkedIn, Twitter, and other SN sites –Encourage customers and interested parties to leave comments –Risk: excessively critical feedback 22

Dr. Chen, Management Information Systems Using Social Networking to Increase the Number of Relationships 23 Fig 8-6 Growing Social Networks

Dr. Chen, Management Information Systems Using Social Networks to Increase the Strength of Relationships Strength of a relationship –Likelihood other entity (person or organization) will do something that benefits your organization Write positive reviews, post pictures of you using organization’s products or services, tweet about upcoming product releases, and so on Organizations strengthen relationships with you by asking you to do them a favor 24

Dr. Chen, Management Information Systems Using Social Networks to Connect to Those with More Resources Social Capital = Number of Relationships __ Strength of Relationship __ Entity Resources Huge network of relationships with people who have few resources may be of ____ value than a smaller network of relationships with people who have substantial resources Resources must be relevant Most organizations ignore value of entity assets and try to connect to more people with stronger relationships. ______ Rule? 25 × × less 80/20

Dr. Chen, Management Information Systems 26 When a student attends a business function for the purpose of meeting people and reinforcing relationships, he or she is investing in his or her ________. A) human capital B) process capital C) social capital D) structural capital Answer: ______ C

Dr. Chen, Management Information Systems Q4: How Do (Some) Companies Earn Revenue from Social Media? Hyper-social organization –Use social media to transform interactions with customers, employees, and partners into mutually satisfying relationships with them and their communities You Are the Product –“If you’re not paying, you’re the product.” –Renting your eyeballs to an advertiser 27

Dr. Chen, Management Information Systems Revenue Models for Social Media Advertising Pay-per-click Use increases value: The more people use a site, the more value it has, and the more people will visit. Freemium revenue model: _______ Advantage –Offers users a basic service for free, and then charges a premium for upgrades or advanced features Sale of apps and virtual goods, affiliate commissions, donations 28 FREE

Dr. Chen, Management Information Systems Does Mobility Reduce Online Ad Revenue? By 2018, number of mobile devices is expected to reach 10 billion Mobile data traffic will increase eleven-fold Average click-through rate of smartphones is 4.12%, but just 2.39% on PCs ___________ rate –Frequency someone clicks on ad makes a purchase, “likes” a site, or takes some other action desired by advertiser 29 Conversion

Dr. Chen, Management Information Systems Does Mobility Reduce Online Ad Revenue? (cont'd) PC ad clicks ______ effective, on average, than mobile clicks Clickstream data easy to gather Android users far more likely to click and convert on Facebook ads than iPhone users Mobile devices unlikely to kill Web/social media revenue model How best to configure the mobile experience to obtain legitimate clicks and conversions 30 more

Dr. Chen, Management Information Systems 31 ________ measures the frequency that someone who clicks on an ad makes a purchase, "Likes" a site, or takes some other action desired by the advertiser. A) Pay-per-click B) Conversion rate C) Folksonomy D) Enterprise 2.0 Answer: ______ B

Dr. Chen, Management Information Systems Q5: How Do Organizations Develop an Effective SMIS? Focus on being cost leader or on product differentiation Industry-wide or segment focus Premeditated alignment of SMIS with organization’s strategy Next slide shows process of developing a practical plan to effectively use existing social media platforms 32

Dr. Chen, Management Information Systems Social Media Plan Development Define Your Goals 2. Identify Success Metrics3. Identify Target Audience 4. Define Your Value 5. Make Personal Connections 6. Gather and Analyze Data Fig 8-7 Social Media Plan Development (KPI)

Dr. Chen, Management Information Systems Common SM Strategic Goals GoalDescriptionExample Brand Awareness Extent that users recognize a brand Organization’s brand mentioned in a tweet Conversion Rates Measures the frequency that someone takes a desired action Likes the organization’s Facebook page Web Site Traffic Quantity, frequency, duration, and depth of visits to a Web site Traffic from Google+ post mentioning the organization’s site User Engagement Extent to which users interact with a site, application, or other media User regularly comments on organization’s LinkedIn posts 34 Fig 8-8 Common SM Strategic Goals

Dr. Chen, Management Information Systems Common SM Metrics GoalMetrics Brand Awareness Total Twitter followers, audience growth rate, brand mentions in SM, Klout or Kred score Conversion Rates Click rate on your SM content, assisted social conversions Web Site Traffic Visitor frequency rate, referral traffic from SM User Engagement Number of SM interactions, reshares of SM content Fig 8-9 Common SM Metrics

Dr. Chen, Management Information Systems Q6: What Is an Enterprise Social Network (ESN)? ESN –Software platform uses social media to facilitate ___________ work of people within an organization –Improve communication, collaboration, knowledge sharing, problem solving, and decision making Enterprise 2.0 –Use of emergent social software platforms within companies, or between companies, partners or customers 36 cooperative

Dr. Chen, Management Information Systems Enterprise 2.0: McAffee's SLATES Model 37 Fig 8-10 McAfee’s SLATES Model

Dr. Chen, Management Information Systems Changing Communication Communication channels within corporations changed in equally dramatic ways –Using ESNs, employees can _______ managers and post ideas directly for CEO to read –Quickly identify internal experts to solve unforeseen problems 38 bypass

Dr. Chen, Management Information Systems Deploying Successful Enterprise Social Networks Organizations still learning how to use and successfully deploy ESNs Develop a strategic plan for using SM internally via same process as used for external social media use Assess likelihood of employee resistance 39

Dr. Chen, Management Information Systems ESN Implementation Best Practices 40 Fig 8-11 ESN Implementation Best Practices

Dr. Chen, Management Information Systems Q7: How Can Organizations Address SMIS Security Concerns? 1.Need a ______ ______ policy 2.Consider risks from non-________ user-generated content 3.Look at risks from employee use of social media 41 social media employee

Dr. Chen, Management Information Systems Managing the Risk of Employee Communication Develop and publicize a social media policy –Delineate employees’ rights and responsibilities Intel's Three Pillars of SM Policies 1.Disclose 2.Protect 3.Use Common Sense 42

Dr. Chen, Management Information Systems Intel’s Rules of Social Media Engagement 43 Fig 8-12 Intel’s Rules of Social Media Engagement

Dr. Chen, Management Information Systems Managing the Risk of Inappropriate Content User-generated content (UGC) Problems From External Sources –Junk and crackpot contributions –Inappropriate content –Unfavorable reviews –Mutinous movements 44

Dr. Chen, Management Information Systems 45 If the content posted on a social networking site represents reasonable criticism of an organization's products or services, the best response would most likely be to ________. A) leave it B) edit it C) delete it D) report it Answer: _____ A

Dr. Chen, Management Information Systems Responding to Social Networking Problems Leave it Respond to it Delete it ̶ “Never wrestle with a pig; you’ll get dirty and the pig will enjoy it.” 46

Dr. Chen, Management Information Systems Internal Risks from Social Media Threats to information security, increased organizational liability, and decreased employee productivity Directly affect ability to secure information resources Seemingly innocuous comments can inadvertently leak information used to secure access to organizational resources –Not a good idea to tell everyone it’s your birthday because your date of birth (DOB) can be used to steal your identity 47

Dr. Chen, Management Information Systems Internal Risks from Social Media (cont'd) Employees may inadvertently increase corporate liability when they use social media –Sexual harassment liability –Leak confidential information Reduced employee productivity –64% of employees visit non-work-related Web sites each day. –Tumblr (57%), Facebook (52%), Twitter (17%), Instagram (11%), and SnapChat (4%) 48

Dr. Chen, Management Information Systems 49 In the context of CRM, which of the following statements is true about the foreseen changes and developments by the year 2025? A) Vendors might lose control of customer relationship. B) Organizations might lose control over employees. C) The use of social media for managing employees will be static. D) The control over culturally-diverse customers would be lost. Answer: ______ A

Dr. Chen, Management Information Systems Q8: 2025? Chief Digital Officers (CDOs) responsible for developing and managing innovative social media programs Integrated mobile video, augmented by Google/ Facebook’s Whammo++ Star, have many features that enable employees and teams to instantly publish ideas in blogs, wikis, videos, etc. BYOD Need to harness power of employee and partners social behavior to advance company strategy Emergence in context of management means loss of control of employees –Employees craft own relationships with their employers Mobility + cloud + social media will create fascinating opportunities for your nonroutine cognitive skills in the next 10 years! 50