cognizant reports | october 2012

• Cognizant Reports

Executive SummarySocial computing has captivated the corporate world as organizations seek to engage with customers to build brand advocacy. The busi-ness world has begun using social technologies to achieve numerous goals, including recruit-ment, service innovation, brand management, corporate reputation and greater collaboration across the ecosystem of employees, partners and customers.

Insurance companies are using social computing for policy underwriting, while the manufacturing sector has successfully used it for project man-agement and compliance. Organizations across industries have also used social tools and tech-niques to decrease the overall time to resolution for technical services.

Companies tend to begin by deploying social tools and technologies as standalone systems. They then integrate these systems with enter-prise applications, such as customer relation-ship management (CRM), content management, compliance and search, to derive greater busi-ness benefits. To ensure usability and relevance,

Making the Case for Social ComputingExtracting the benefits from social tools and techniques requires an upfront understanding of business objectives, as well as an implementation plan that infuses traditional systems with greater collaboration capabilities to engage with internal and external stakeholders.

social technologies need to be integrated with the communications infrastructure and linked with specific business activities.

As with many IT projects, social initiatives must be business-driven. If they are championed only by the IT department, social projects tend to become one-off platforms, not business-wide solutions. Shifting the mindset from providing a platform to delivering a solution, our research shows, is crucial for social computing to succeed.

Social Computing Trends One of the key trends for social is that every orga-nization has embraced it in one way or another. Companies might start with a very small initiative, like opening a Twitter account, or they may take an enterprise-wide approach, such as developing a social strategy and supporting it with an enter-prise-wide employee collaboration application or a social platform to better connect consumers with their brands.

The enterprise-wide approach calls for a bet-ter IT policy environment and more collabora-tion between business units and the IT function.1

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Doing so will result in several benefits, including improved engagement with consumers and other stakeholders, better employee communications with internal and external business partners and a centralized place for external stakeholders to converse about the organization (see Figure 1).

While organizations have started finding new uses for social computing, enhancing the relationship with consumers is still the top priority.2 Increas-ingly, they are using this medium for recruitment, product or service innovation and brand manage-ment (see Figure 2).

The adoption of social technologies is becoming pervasive across diverse industries, from high technology to energy (see Figure 3, next page).

The use of social technology has both strategic and tactical imperatives. For instance, driving innovation is considered to be as important as locating experts and expertise. Other important objectives include corporate alignment and strat-egy, on the strategic side, and customer service, on the tactical side (see Figure 4, page 4).

Social Computing Trends

Organization

Marketing, communication, CRM,recruiting, employer branding,innovation, crowdsourcing

Employees using social mediaNews channels,

friends of employees,

external stakeholders

Target groups,

potential employees,fans

Pressure groups,

former employees,

customers and suppliersBusiness politics,certain products and services

Social Web

Internal socialcollaboration

1. Organization is usingsocial media channels

2. Employees are publicly communicatingvia social media platforms

3. External stakeholders arecommunicating about the organizationvia social media

Source: “Protecting and Strengthening Your Brand,” Ernst & Young, May 2012, http://www.ey.com/Publication/vwLUAssets/Protecting_and_strengthening_your_brand_Social_media_governance_and_strategy/$FILE/Insights_on_IT_risk_Social_media.pdf.

Figure 1

Source: “Going Social,” KPMG International, 2011, http://www.kpmg.com/GE/en/IssuesAndInsights/ArticlesPublica-tions/Documents/Going-social-survey-2011.pdf.

Figure 2

Expanding or Initiating Now

66%62%

59% 59% 58% 57%

0%

10%

20%

30%

40%

50%

60%

70%

80%Marketing and sales

Business development/research

Customer service (i.e., feedback,support, handling complaints)

Recruitment/alumni

Corporate brand andreputation management

Product and/or service innovation(i.e., coinnovation, crowdsourcing,knowledge resource)

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Social technologies today are deployed primar-ily in two broad areas: internally for employees and externally for customers, consumers and partners (see Figure 5, next page). The technolo-gies are used to better engage with various com-munities (employees, customers, etc.) and drive effective collaboration among stakeholders for a specific business process.

Social Computing Outside the Organization Customer-facing departments were the first to adopt social technologies, by creating a presence on Facebook, Twitter, Linkedin and blogs, since these were the channels where customers were spending the most time. These channels were an easy way for them to connect and engage with customers.3 For example, telecom companies began using Twitter to provide better customer service to their consumer base. Now, organiza-tions use social to fulfill end-to-end processes for customers, such as buying clothes directly from Facebook after consulting with their friends on the site, and posting a review after the purchase.

Social Computing Within the Organization Organizations also use social technologies to connect employees with each other and with partners and suppliers. Those that do are more likely to be market leaders, gain more market share and boost profit margins.4

Social computing software that encourages enterprise-wide collaboration is predicted to grow at a CAGR of 61% from 2010 to 2016, according to Forrester Research, Inc., with the total market for social products and services estimated to reach $6.4 billion by 2016. Such products are expected to enhance employee productivity by evaluating and aligning processes, information and people with the needs of the organization.5

Social computing is also driving innovation at some companies by influencing or enabling new ways of working. For instance, video col-laboration is increasingly finding acceptance in organizations, with video-based conferencing implemented by more than a quarter of the orga-nizations surveyed by Forrester in a 2010 study (see Figure 6, page 5).

Social computing allows best practices to be shared across the organization to solve complex business problems by, for instance, enabling communities of experts to collaborate. For example, a U.S.-based midsize property and casualty insurance company is piloting an inte-grated social networking solution in its auto-mated policy underwriting system, in order to enable expert input.6 Another example is a lead-ing U.S.-based manufacturer of fastening systems for the aerospace industry, which implemented social software to increase the productivity of its

Base: 4,261

Adoption of Social Technologies Across Industries

Percent of respondents using at least one social technology tool

62

64

64

67

69

69

74

74

77

86

Energy

Financial services

Manufacturing

Healthcare, social services

Transportation

Retailing

Pharmaceuticals

Public administration

Business, legal, professional services

High-tech, telecommunications

Source: Jacques Bughin, Angela Hung Byers and Michael Chui, “How Social Technologies are Extending the Corpo-ration,” McKinsey Quarterly, November 2011, http://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2888.

Figure 3

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project team. Targeted areas for improvement were project management and compliance. As a result of the implementation, compliance time was reduced by 64% (see Figure 7, next page).

Social Benefits Organizations have reported market share gains when using social technologies.7 This is visible

in the statistically significant correlation among certain business processes and self-reported corporate metrics, such as the following:

• Market share gains.

• Operating margins compared with competitors.

• Market leadership.

Base: 262 senior-level IT decision-makers (multiple responses accepted)

Social Technology Drivers Vary from Tactical To Strategic“For which of the following activities is your firm currently using social technology?”

(Percent of respondents)

7%

19%

20%

23%

23%

25%

27%

29%

31%

32%

39%

42%

42%

45%

45%

54%

None

Recruiting internally for projects or initiatives

Driving corporate alignment and strategy

Building communities of interest or practice

Driving innovation

Locating experts and expertise

Making best practices easier to find and share

Foster collaboration within a division or group

Managing projects

Working with partners or suppliers

Capturing and sharing knowledge

Enabling more effective work amonggeographically dispersed teams

Communicating with employees

Reducing travel costs for meetings

Customer service activities

Marketing activities

Source: “Social Networking in the Enterprise: Benefits and Inhibitors,” Forrester Consulting and Cisco, May 2010, https://www.cisco.com/web/offer/gist_ty2_asset/SocMednInhib/SocNW_En_TLP.pdf.

Figure 4

Figure 5

Source: Cognizant Technology Solutions

Deployment of Social Technology

Network • Share • Collaborate

Customers

Consumers

Em

plo

ye

esP

artn

ers

Social

Enterprise

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Base: 262 senior-level IT decision-makers (”Decreasing,” “Removing” and “Not interested” responses not included)

Videoconferencing Apps On The Radar

Expand/upgrade existing implementation Implementing/implemented Piloting Interested/considering

“What are your firm’s plans to implement or expand its use of the following collaboration andcommunication technologies in the next 12 months?”

21

22

24

30

32

33

34

26

36

45

32

35

32

45

9

7

4

8

10

10

3

24

14

10

16

13

15

10

0 10 20 30 40 50 60 70 80 90 100

Desktop videoconferencing

Instant messaging

Calendar

Room-based videoconferencing(including telepresence)

Web conferencing

Team document-sharing sites(e.g., SharePoint, eRoom, Lotus Quickr)

E-mail

(Percent of respondents)

Source: “Social Networking in the Enterprise: Benefits and Inhibitors,” Forrester Consulting and Cisco, May 2010, https://www.cisco.com/web/offer/gist_ty2_asset/SocMednInhib/SocNW_En_TLP.pdf.

Figure 6

Monthly Compliance Hours & Wiki Creation

Cumulative creation Pre-Wiki Post-Wiki Trendline Pre-Wiki Trendline Post-Wiki

Wiki C

reation

sC

om

plia

nce

Ho

urs

Jan. ‘07

700

600

500

400

300

200

100

0

5,000

4,000

3,000

2,000

1,000

0

Sept. ‘07May ‘07 Sept. ‘08May ‘08 Sept. ‘09May ‘09Jan. ‘08 Jan. ‘09 Jan. ‘10 May ‘10

Source: “Social Software for Business Performance,” Deloitte Development LLC, 2011, http://www.deloitte.com/ assets/Dcom-UnitedStates/Local%20Assets/Documents/TMT_us_tmt/us_tmt_%20Social%20Software%20for %20Business_031011.pdf.

Figure 7

The impact of social is also seen in self-reported corporate performance metrics (see Figure 8, next page).

ChallengesAlthough adoption of social computing within the organization is growing rapidly, companies

have also encountered challenges along the way. For starters, organizations are finding it is more beneficial to pursue social initiatives as an end-to-end business strategy instead of a stand-alone project within a business function such as sales, service and marketing. It is, therefore, impor-tant to identify processes and apply social as an

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enabler of improved effectiveness, efficiency and collaboration among stakeholders.

In this spirit, and to achieve maximum benefits, it is important to consider the technology aspects of integrating social technologies with enterprise-wide core applications to fulfill an entire process. Companies should begin by focusing on one process in which social computing is used, such as CRM. After the initial foray is successful, they can gradually extend social computing to all processes in the organization.

Moreover, social computing today often revolves around just touching base with individuals. Instead, this initial contact could and should be further utilized for innovation. Lastly, many

employees fear that their statements on social media could be used by their employer to analyze their behavior, making them reluctant to express their opinion even on intra-company platforms. There must be a concerted and visible effort to allay such fears. And, as noted earlier, once social computing has been tested in one process within an organization, it should be integrated across lines-of-business.

One reason for the lack of integration is that many social initiatives are launched to serve a specific need at the grassroots level, or they are driven by top management. When initiated at the grassroots level, the tool selected may not be appropriate for the larger organization, resulting in the loss of any knowledge that is generated.

Processes that significantly correlate with self-reported corporate performance metrics

Correlation coefficient (higher = greater correlation)

P-value (less than 0.05 = statistically significant)

Market share gains Using social technologies to scan external environment

0.263 0.007

Using social technologies to match employees to tasks

0.422 0.002

Positive change in level of social technology integration into day-to-day work (2010-11)

0.254 0.001

Operating margin compared with competitors

Level of social technology integration into day-to-day work

0.130 0.016

Share of employees using intranet to conduct transactions

0.007 0

Using social technologies to assess employee performance

-0.325 0.035

Positive change in level of social technology integration into day-to-day work (2010-11)

0.276 0.007

Market leadership (i.e., first in industry share)

Fully networked -0.616 0.019

Externally networked -0.444 0.001

Percent of employees using social technologies

-0.014 0

Share of online sales 0.004 0.044

Level of social technology integration intoday-to-day work

0.135 0.005

Share of employees using intranet to conduct transactions

0.003 0.021

Correlations with Corporate Performance

Source: Jacques Bughin, Angela Hung Byers and Michael Chui, “How Social Technologies are Extending the Corpo-ration,” McKinsey Quarterly, November 2011, http://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2888.

Figure 8

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When implemented from the top, the business impact may not be visible to all employees. For example, employees may not be aware of met-rics for measuring ROI on social media, such as “media equivalent value.”8

Also, when social computing policies are implemented from the top without consideration of employee opinion, the impact might be dissi-pated. Business needs may not be understood at the time of implementation, or employees might game the system to meet the requirements, for example, by creating fake testimonials.9

Another consideration is employee education. Companies need to educate employees on how to engage in social media without opening security gaps. A basic step is to caution them about divulg-ing corporate plans on social networks, even by simply relaying cautionary tales.

An example is a large manufacturing company, whose executives announced its major expan-sion plan on Facebook and Twitter. The idea was to improve shipping times by launching a state-of the-art warehouse.

On the day of the move to the new location, sev-eral individuals wearing the uniforms of a large logistics company drove off with more than $1 mil-lion worth of equipment.10 The lesson: Think twice before broadcasting strategic business plans on social media, as you have no control how far the message is being spread, nor what people might do with that information.

A Roadmap Organizations need to consider social comput-ing not as a one-off technology or business solu-tion but as an enterprise-wide initiative. They can achieve this by focusing on the following:

• Begin with a clear strategy and roadmap for social engagements, based on overall business objectives. Define specific use cases that would be deployed in social, along with a selection of technology solutions. For example, if the business goal is to improve overall cus-tomer service, identify which social engage-ments would better achieve that — opening a Twitter account or creating a knowledge man-agement system? Based on these various busi-ness use cases and the technology options, prioritize based on cost and business impact.

• For social to succeed internally as well as externally, obtain support and participation from top management. As part of the road-map, it is important to establish clear buy-in and active participation to ensure the orga-nization is ready to connect and collaborate with its stakeholders using social. Today, many CEOs have started to use social themselves in the role of brand ambassador and are looking to connect in a social way with customers and employees.

• Consider social from a process standpoint. Identify an end-to-end process and evaluate how social can help improve it. For this to hap-pen, social technologies need to be tightly integrated with their core enterprise applica-tion so that, from a customer or stakeholder viewpoint, it is a seamless experience instead of two different channels.

• From an ongoing operations standpoint, clearly define the social media policy, along with a dedicated team and structure to effec-tively manage the initiative.

These are some of the key points to keep in mind from a long-term strategy perspective. Remember, social is just another channel of analytics or unstructured data; however, it is also an increasingly important part of how business is done today.

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Footnotes1 IT Consumers Transform the Industry: Are You Ready?” IDC, May 2011, http://www.ca.com/~/media/

Files/whitepapers/signature-research-idc-whitepaper-final.pdf.

2 “Going Social: How Businesses Are Making the Most of Social Media,” KPMG International, 2011, http://www.kpmg.com/GE/en/IssuesAndInsights/ArticlesPublications/Documents/Going-social- survey-2011.pdf.

3 Michael Stelzner, “Social Media Marketing Industry Report, 2011,” Social Media Examiner, April 2011, http://www.socialmediaexaminer.com/SocialMediaMarketingReport2011.pdf?9d7bd4.

4 Jacques Bughin and Michael Chiu, “The Use of Web 2.0 in Businesses,” McKinsey & Co., Dec. 13, 2010, http://www.mckinsey.com/insights/mgi.

5 “Enterprise Social Software to Become a $6.4 Billion Market in 2016,” Forrester Research, Inc., December 2011, http://www.pcworld.com/businesscenter/article/245375/forrester_enterprise_social_software_to_become_a_64_billion_market_in_2016.html.

6 “Social Networking in the Enterprise: Benefits and Inhibitors,” Forrester Consulting and Cisco, June 2010, https://www.cisco.com/web/offer/gist_ty2_asset/SocMednInhib/SocNW_En_TLP.pdf.

7 Jacques Bughin, Angela Hung Byers and Michael Chui, “How Social Technologies are Extending the Organization, McKinsey Quarterly, November 2011, http://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2888.

8 Media equivalent value is the equivalent, in money terms, of the impressions that have been generated through social computing that would otherwise have been acquired through paid media.

9 “Social Software for Business Performance: The Missing Link in Social Software: Measurable Business Performance Improvements,” Deloitte Development LLC, 2011, http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/TMT_us_tmt/us_tmt_%20Social%20 Software%20for%20Business_031011.pdf.

10 Minda Zetlin, “Unintended Consequences: How to Keep Social Media from Becoming a Security Risk,” Inc., Jan. 11, 2011, http://www.inc.com/internet/articles/201101/unintended-consequences-how-to-keep-social-media-from-becoming-a-security-risk.html.

About Cognizant

Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 145,200 employees as of June 30, 2012, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world.

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Credits

Authors and AnalystSanjay Fuloria, Ph.D., Senior Researcher, Cognizant Research CenterYuvaraj Velusamy, Researcher, Cognizant Research Center

Subject Matter ExpertAmit Shah, Manager, Cognizant Social

DesignHarleen Bhatia, Creative DirectorSuresh Sambandhan, Designer