Social Media the Tipping Point 1908447

8/12/2019 Social Media the Tipping Point 1908447

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Social Media at the Tipping Point:Why CFOs Must Get Social

A FSN & Oracle White Paper


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2Social Media at the Tipping Point -A FSN & Oracle White Paper

Contents Introduction 3

What is Social Media? 4

Leveraging Social Media:the external perspective 4

Leveraging Social Media:the internal perspective 5

Where is the ROI 7

The barriers to uptake of Social Media 8

How Oracle responds to the challenge 9

Summary 9


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Introduction According to a 2012 McKinsey survey of 1,500 Clevels worldwide, most say that three key trends in digitalbusiness namely, big data and analytics, digital marketing and social media tools, and new mobile and

cloud computing platforms are strategic priorities at their companies. Over a third of these executives

predict that these technologies will boost operating profits by 10 percent over the next three years.1 Yet

which of these emerging technologies should CFOs consider when looking to drive real business value?

Oracle and Financial Executives International (FEI) recently sought to answer that question by asking 90

North American CFOs and senior finance executives to rank the business value of key digital business

trends for their organization.

Figure 1. CFOs rank the value of key trends in digital business

Of these, which do you feel will deliver themost business value for your organization?

32 (46%)

Mobile technologies 46%

Cloud computing 33%10 (14%)

Social media Social Networking 6%23 (33%)

4 (6%) Big Data 14%

Source: FEIOracle webcast, August 7, 2012.

Mobile and cloud computing platforms ranked highest in terms of business value, earning 46 percent

and 33 percent of the ranking, respectively, followed by big data with 14 percent. CFOs only allocated

6 percent of their votes to social media and social networking technologies, reflecting the skepticism

many CFOs feel about the value of social business.

Most finance executives point to the difficulty of developing an effective ROI strategy for social business

initiatives, because traditional financial metrics used to evaluate the payback on IT investments arent

often applicable to social tools and technologies. Others are concerned with information security,

government regulations on data privacy, and the lack of a coherent management vision, strategy, and

structure around enterprisewide social initiatives.

Despite these risks, the risk of doing nothing when it comes to social may be greater than many CFOs

believe. Social networking sites now reach 82% of the worlds online population. Increasingly, online

consumers want a social relationship with the brands they are interested in, not only to learn more

about a companys products and services, but also to voice their opinions and experiences good

and bad. More than 75% of consumers have posted a negative comment on a social site after a poor

customer experience, and 89% have shifted to another brand after a bad customer experience. 2 Ignore

these consumers at your own risk, say social media consultants Barbara Giamanco and Kent Gregoire,

who advised readers of the Harvard Business Review that while social media selling has risks, sitting

on the sidelines is the greatest risk of all.3

Recent research points to the fact that Clevels arent sitting on

the sidelines, but rather ramping up their social business activities If you were a CFO back in

in pursuit of new growth. A 2012 study by MIT Sloan and Deloitte the early 1990s and I cameConsulting asked 3,500 executives from companies in 24 industries to you and said I wanted to

across 115 countries about the impact of social tools and implement e-mail, and youtechnologies on their businesses. Survey respondents agreed that asked, Whats the ROI?the primary role of social business tools and technologies is to Could you have gotten anenable customer service and help their companies innovate for

answer? Social media hascompetitive advantage.4 They also predicted that the importance of

become table stakes.social software will increase by 250 percent by 2015, as it becomes

integrated with enterprise applications, business processes and Nigel Fenwick, Forrester

systems to drive a fundamental social transformation of the Research Principal Analyst

enterprise. This includes changing Marketing, Sales, Service,

HR/Talent Management, and ERP by socially enabling these business processes.

Just as forwardlooking companies are already relying on social business strategies to innovate in areas

like customer service and competitive innovations, forwardlooking CFOs are using social business

tools such as crowdsourcing to drive knowledge management, collaboration, process improvement,

and innovation both within the finance function and more broadly inside the enterprise. Some use the


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What is SocialBusiness?

Leveraging SocialBusiness:

The External Perspective

consumer sentiment analysis they track on Facebook, Twitter, and other social websites to validate or

tweak product forecasts.

This white paper examines the transformational impact of successful social business initiatives,

both beyond and within the enterprise. It challenges CFOs to take a leadership role in helping the

organization achieve real value from social business by partnering with marketing, sales, and other

organizations to create new ways to measure and monitor investments in social activities. This white

paper also examines the organizational, technological, and human capital requirements CFOs need to

help make social business projects successful, and reviews the solutions Oracle has in place to support

social business efforts.

Social business is defined by the social networking platforms, social media, and social tools and

technologies that allow individuals, companies and other organizations to collaborate and communicate

in communities. Facebook, Linkedin, Twitter, YouTube, and Pinterest are prominent examples of external

social platforms, but social business also extends into the enterprise through social collaboration tools

built into enterprise applications, such as Oracle WebCenter and Oracle Fusion Applications.

The growth in the number of users sharing the best known social platforms such as Facebook andTwitter has been breathtaking. As of December 2011, Facebook claimed 800 million users worldwide,

with 50 percent logging on each day. Twitter reported an average of 460,000 accounts created per day

last fall, with an average of 1 billion tweets per week. As of November 2011, Linkedin had 135 million

members in more than 200 countries, with two new users joining every second. 7

User numbers of this scale and size cannot be dismissed as a fad. These technologies are deeply

embedded in peoples lives and intricately intertwined with each other. Today, consumers in the U.S.,

Europe, and Asia spend more than 2 hours daily socializing on their smart phones. Celebrities are

already adept at building their brand utilizing social networks and companies are beginning to follow

suit. As of December 2011, Starbucks had over eight million Facebook likes for its Frappuccino, and

CocaCola had around 32 million Facebook fans.7

But how do CFOs translate the popularity of social networks into bottom line impact and top line growth?

Despite the rapid rise of social business up the corporate board agenda, many businesses are only

just beginning to dip a toe in the water. While some uses of social media could be characterized as

experimental and opportunistic, other businesses have notched up notable successes on the back of

deliberate, welldefined social media strategies that support brand building, product innovation, and

creative new ways of delivering products and services.

Brand building

Take for example the case of McDonalds and the launch of its McRib a limitedtimeoffer sandwich.

According to Rick Wion, the companys director of social media, the product quickly established a loyal

fan base raving about the product in social media.

What happened next was inspirational. McDonalds identified and engaged with three super fans: one

had built a Facebook page for McRib; another had written a book chapter about McRib; and a third built

a Google map of McRib locations, so that other people could find the product in their vicinity. McDonalds

invited the three fans to a media launch, connected them with bloggers, and used them to tell the McRib

story through Facebook and Twitter. The combined efforts created a huge buzz not only in McDonalds

target audience, but also had an unexpected ripple effect. According to Wion, People were asking, what

is all this buzz about? Ive never had McRib before. Im going to try it. Im going to buy it. The buzz of

the core brought in a brand new audience.

The case of Procter & Gamble provides another compelling example of how social media can be used

to revitalize a tired brand as well as generate compelling returns. Sales of Procter & Gambles Pepto

Bismol had been flat or declining for several years when in 2010, P&G marketers noticed that social media

chatter about the pink indigestion reliever was occurring on Saturday and Sunday morningspresumably

after users had overindulged the night before. So P&G decided to try to lure potential customers before


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Leveraging SocialBusiness:

The Internal Perspective

their eating and drinking binges by touting the product on Facebook with the upbeat slogan Celebrate

Life. The result was an 11 percent marketshare gain in the 12 months through fall 2011.9

Crowd-sourcing innovation

Danish toy company Lego Group planned to launch a new product based on a popular video game.

But instead of conceptualizing the product internally via product development,(as it would have done

traditionally), the idea for the toy came from an adult Lego fan who submitted the idea through Lego.

Cuusoo.Com , a website where Lego enthusiasts submit and vote for new ideas. Within 24 hours, the

new idea received 10,000 votes and got the green light for production from Lego management within a

month.2

Delivering new products and services

American Express has started to put social at the forefront of everything that they do from a

communications standpoint. An example of that the Small Business Saturdays promotion American

Express launched after the Thanksgiving holiday in 2010, to help promote small businesses during the

holiday season. Card holders were given $25 gift cards to use at their local small business, and small

businesses were offered $100 in Facebook advertising credits. Small Business Saturday resulted in

increased sales for the small businesses that took part in the scheme by 27percent and grew over 1

million fans for the SBS Facebook Page.5

Small Business Saturday has now become what many would argue is the thirdlargest sales holiday

after Black Friday and Cyber Monday, in terms of return on investment. As a result, American Express

has seen usage of its card network grow from 1025 percent during the Small Business Saturdays,

helping generate substantial additional revenue for American Express and increased sales for small

businesses in local communities.

External uses of social media tend to dominate the headlines but enlightened CFOs are discovering

that the internal application of social media also provides rich opportunities for driving innovation,

productivity, and process improvement. Better still it can act as a low risk, low cost entry point into the

world of social, acting as a proof of concept before applying social tools to external interactions.

Because social business strategies rank lower among CFOs than other digital business trends, not

surprising that reported cases of the internal application of social tools in the finance function are

relatively scarce. However, issues of communication, collaboration and sharing best practice transcend

functional boundaries. There are many lessons that can be drawn directly from the early experiences of

pioneers in other disciplines even if the context is different. It may be instructive to consider first what

the context for social media in the finance function might be.

Communication challenges in the finance function

In the transactionoriented world of finance, the key to enhanced productivity has been the

standardization and automation of core financial processes; hence, the rise in popularity of ERP

systems, shared services, and workflow. For the last two decades, the ability to uneventfully process

transactions at the first attempt has steadily brought down the average cost of a transaction and

increased finance function productivity. Straightthroughprocessing has been a huge success. But

what happens when a transaction does not conform? When a dispute arises or an error occurs?

The cost of fixing a wrong transaction is about 80 percent more than one processed correctly at the first

attempt. When cracks appear in automated systems, workers resort to a variety of communications

methods such as email, telephone conversations, adhoc meetings, and walking the corridors of a

building to get the information they need to remedy a problem. On average, workers spend 25 percent of

their working day simply looking for information.

The same thing is true of core performance management processes such as financial reporting,

budgeting, planning and forecasting. Knowhow, creativity, professional judgment, persuasion,

negotiation and communication are the hallmarks of these processes, but these softer attributes are

not well catered to by traditional financial applications.

Adding to that problem is the fact that Generation Y workers the children of the Baby Boomers are

hitting the workforce right now. They are steeped in the immediacy of the internet, and the speed and


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variety of communications such as Twitter, Facebook, Skype, and Instant Messaging (IM). They have

instant everything, choose the information they want, and personalize the way that it is delivered. Their

leisure use of the internet bears no resemblance to the clunky and inert user experience which is

commonplace in the business world. CFOs may find that attracting and recruiting top talent into the

finance function will be a challenge without modern social tools.

So where is the big payoff for CFO who seek to deploy social collaboration tools in the finance function?

Although it is early days, the following six areas are ones that hold the most promise based on the early

experiences of first movers.

Crowd-sourcing ideas and innovation

Strategy development, enhancing business performance, setting accounting policies, process

improvement and delivery of value to internal customers in the organization are all areas that require

creativity and professional judgment. The ability to draw on the skills of the whole finance function is a

worthy prize. Imagine for example, crowdsourcing ideas for the acceleration of the financial reporting

process, improving margins in underperforming business units, standardizing processes, reducing

inventory and managing risk.

Financial services giant Capital One showed how using just a private Facebook group allowed it to

facilitate twice as much interaction between team members, as well as share articles and insights muchmore effectively. And because Facebook is connected to employees social lives, the Facebook group

promoted connection throughout the day. For Tom Poole, managing vice president of mobile and social

media at Capital One, the Facebook initiative surpassed his expectations: When you have an idea you

share it and youre hearing back an hour later. This is lightening in a bottle.4

Knowledge Management

According to John Hagel III, cochairman of Deloittes Center for the Edge, success in todays digital

economy increasingly lies with those who know how to manage the flow of knowledge. Increasingly,

the ability to succeed hinges on participating in a broader and more diverse range of knowledge flows,

both internally and externally to the enterprise, noted Hagel in the MIT Sloan/Deloitte study on social

business.4

Finance professionals are highly qualified knowledge workers but how much of that knowhow is

shared? Using social tools, a CFO can encourage the even distribution of best practice and ensure

that accounting policies and interpretation of new accounting standards is rolled out completely and

consistently. Hewlett Packard CEO Lew Platt hit the nail on the head when he said, If only HP knew

what HP knows, wed be three times more productive.4

Enhanced Communication and Collaboration

CFOs responsible for managing distributed finance functions operating in different time zones can draw

inspiration from the experience of Craig Herkert, CEO of SUPERVALU a retailer, who used a social tool

Yammer in this case to drive up store revenue.4

Like many distributed organizations, Herkerts management team struggled to get visibility of the

business and share best practice. Communications between store managers were adhoc and meetings

only occurred once a year at SUPERVALUs annual conference. Using Yammer, some store managers

began sharing ideas and photos of successful merchandise displays and specials. An experiment runduring the holiday period demonstrated that that stores taking part in the Yammer initiative had 13

percent more revenue than nonparticipating stores.

Another example is how social business tool can streamline key processes like reconciliations or the

monthly close process. A general accounting manager or supervisor looking at how account balances

have changed over time can drill down to see which employee recorded the journal entry, then reach out

to that employee through the social networking tools embedded in Oracle Fusion Financials to verify its

accuracy. If the entry happens to be a payables invoice, you could see and contact the supplier direct for

that information, saving time and speeding up the reconciliation and closing processes.

Enterprise Search

Social tools embedded in ERP and other financial systems raises the possibility of greatly improved

access to information and problem resolution when things go wrong. Most social media encourage

users to follow an individual or to be followed. This can be taken a step further in a finance setting by

allowing accounting and finance personnel to follow a piece of metadata say a product or a customer


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Where is ROI?

to retrieve vital information in a less structured way. A finance

user, for example, could receive a constant feed (automatically) Sixty to seventy percentof everything that is said or done about that individual customer of headcount time in mostor product within the system and then share it with colleagues, functions is consumed byin the way that other social media allow information to be handling exceptions, i.e.distributed to relevant groups.

things that get thrown outof automated processes.

Deeper InsightJohn Hagel III, Co-chairman,Sentiment Analysis provides fascinating opportunities for CFOs toDeloitte Center for the Edgeimprove the accuracy of business forecasts, by combining opinion

harvested from social media with established approaches to financial

forecasts.

It works by sampling external views of a company and its products directly from sentiments expressed

in comments posted in social networks such as Facebook and Twitter. A variety of specialized search

engines allow simultaneous searching of multiple sources of social media commentary and use

sophisticated algorithms to convert natural language (I like this product or this product is really not

bad) into quantified expressions of sentiment.

This kind of analysis of forwardlooking information can shed light on whether a newly launched productis being well received or rejected, and can therefore be used to improve the accuracy of profit forecasts.

It is the beginning of a very interesting journey. The search tools are relatively primitive, the databases

are truly massive, and the algorithms are complex but the possibility of capturing and utilizing sentiment

in business forecasting is potentially very rewarding.

Stakeholder engagement

Social networking can be used to promote better engagement with investors and other interested readers

of financial information. In the social media frenzy that has erupted over the last few years it is no longer

possible for organizations to exert the same level of influence over their brand, for example, to ensure

that communications are accurate and fair. Bulletin boards, investor groups and news sites often contain

erroneous information posted by individuals. Rather than standing idly on the sidelines, CFOs and Investor

Relations professionals can use social media as a tool to engage with investors and other stakeholders to

clear up misunderstandings and provide more information about their company, its products, sustainability

policies, green credentials, community efforts and employees, to give a balanced view.

CFOs looking for quantitative ways to measure their social investments may need to rethink how they

evaluate the payoff from those investments, whether its through the use of social media to lower call

center and customer service costs, to create brand awareness for a new product, or to interact with

consumers in new ways. Calculating an ROI on Social Business investments (social networks and social

marketing) is a contentious area. One school of thought suggests that it is inappropriate to attribute an

ROI at such an early stage of social media development. After all, many endeavors are experimental.

Objectively, there is no doubt that identifying cause and effect is a challenge, but the notion that

businesses should abandon ROI does not sit well with CFOs who tend to view investments in social

media through the lens of traditional investment appraisal techniques. However, not all social mediainitiatives lend themselves readily to this kind of scrutiny.

The American Express and Proctor and Gamble examples given earlier illustrate clearcut returns, but

the McDonalds and Lego cases are perhaps more typical of the social media genre. There is no denying

that they created value, but what exactly was the return on investment? How does an organization

quantify the return on crowdsourcing an idea for a new product? And in the case of McDonalds how

much of the revenue attributable to sales of McRib was down to WordofMouth rather than eWord-

ofMouth? All this suggests that the way CFOs evaluate ROI needs to change to more accurately take

account of the unique characteristics of social business.

One characteristic that is specific to social networks and well illustrated by the McDonalds and Lego

examples, is the significance of commentary, reviews, Facebook likes and Twitter follows. In

particular, the McDonalds McRib campaign vividly illustrates the ability of individuals to influence

readers via a social network on a truly massive scale.


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The Barriers touptake of Social

Business

Indeed, 20 percent of online consumers are considered High Sharers. They are typically younger, more

active on social media sites, use multiple devices to access the Internet, and are prone to create original

online content. High Sharers are often loyal to specific brands and are almost three times more likely to

recommend products/services to others through social media.9

Industry analysts note that 60 percent of people who use social media also post reviews on products and

services.7 Similarly, 55% of buyers turn to social media when they are searching for information before

making a purchase.3 Given those facts, the metrics by which CFOs gauge the success of social media

initiatives need to change. Even trusted measures associated with the internet age (page impressions,

clicks and unique visitors) are rendered less potent in the era of social media which frequently combines

the complex interactions of several social networks running in parallel within a single campaign. New

measures of social business will need to recognize community engagement as a central plank of success

and include measures such as number and percentage of fans or followers, number and percentage of

positive customer mentions, and number and percentage of Twitter mentions.

Justifying social media endeavors inside the enterprise can be just as difficult, although there are bright

spots as illustrated by the SUPERVALU experiment mentioned earlier which led to concrete returns.

One helpful feature is that social media is relatively inexpensive. For example, the Capital One case

illustrates that the benefits of sharing knowledge and internally crowdsourcing ideas and innovation is

available for as little as the price of setting up a Facebook group for the finance function.

But CFOs need to be aware that there are also risks to ROI on the horizon. Although consumers around

the world seem increasingly willing to divulge more personal data to companies through social media

platforms, companies which invest in expanding their access to social media could find themselves

increasingly at odds with governments. Draft European Union Law is expected to come into force by

2015 which will increase consumers rights to move their data between vendors or to sell their personal

data to third parties.8 For instance, a consumer could sell the detailed content of their utility bill to an

intermediary, who could then match their usage with a competitors lower tariff. Similarly, downloading

medical treatment records could encourage incentives to transfer between health insurers. In a

nutshell, companies could spend a considerable amount of money and effort collecting social data only

to find it sold onto a competitor. Calculating ROI looks set to become even more challenging for CFOs.

The main impediments to rolling out a social business initiative, whether inside or outside the

organization, revolve around management disagreement, lack of an agreed vision, competing initiatives,

and the difficulty of demonstrating an ROI. Unlike the other big technology trends such as Big Data and

Analytics, Mobile, and Cloud Computing, technology infrastructure issues appear to be less of a concern.

Because surveys point to significantly different levels of enthusiasm for social media between CEOs,

CFOs and CIOs, it not surprising that many organizations struggle to develop a cogent social business

strategy. The perceived lack of measurable ROI is a drawback, especially in the face of competing

Cloud, Mobile and Big Data projects which can be easier to measure a return. It is also early days for

social business, and unlike todays Generation Y youth, many business leaders are unfamiliar with the

workings of social networks and are not sufficiently informed to lend direct support to new initiatives.

Culturally, social networking can be viewed as a threat to organizations or managers that are lessopen or insecure about sharing information. There are also legal and other risks (libel, defamation

and reputational risk) that can potentially stifle the use of social media in interactions with

employees, customers and suppliers. Some organizations have misguidedly banned social media in

the workplace altogether.

But these barriers to progress are ephemeral. As experience of social media grows the means to

measure ROI will fall into place, senior managers will become more familiar with the benefits and social

media will enter the mainstream of business strategy.


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Another challenge is maintaining brand consistency across social business initiatives which cross

multiple networks on a global scale. Fortunately, new tools such as Oracle Vitrue that combine

publishing activities, promote social business and provide important monitoring and reporting capability

are now available to help manage multinational campaigns.

Overall there is considerable optimism surrounding social business. It is firmly on the board agenda

of leading companies and although it is early days, the store of knowledge around how to capitalize

on social tools is growing all of the time. Most compellingly, the rate of social network growth is so

dramatic and pervasive that businesses which fail to get involved risk getting left behind in the race for

both profits and talent.


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Bibliography

FSN

Oracle

Disclaimer ofWarranty/Limit of

Liability

Note 1 McKinsey Global Survey, Minding Your Digital Business,McKinsey & Company, 2012.

Note 2 RightNow 2011 Customer Experience Impact Report: Getting to the Heart of the Consumer and Brand Relationship.

Note 3 Giamanco, Barbara and Ken Gregoire, Tweet Me, Friend Me, Make Me Buy,Harvard Business Review, JulyAugust 2012.

Note 4 MIT Sloan/Deloitte Global Study,Social Business: What Are Companies Really Doing?2012.

Note 5 Oracle/Wall Street Journal CFO Roundtable, June 2012.

Note 6Nagy, Jennifer, How to Increase the ROI of Social Media Marketing,Huffington Post.com, July 26, 2012.

Note 7 Rosenbaum, David, Whos Out There?CFO.com, February 1, 2012.

Note 8 Shameless Self-Promotion,The Economist, September 1, 2012.

Note 9 ColemanLochner, Social Networking Takes Center Stage at P & G,BusinessWeek.com, March 29, 2012.

FSN Publishing Limited is an independent research, news and publishing organization catering forthe needs of the finance function. This white paper is written by Gary Simon, Group Publisher ofFSN and Managing Editor of FSN Newswire. He is a graduate of London University, a Fellow of theInstitute of Chartered Accountants in England and Wales and a Fellow of the British Computer Societywith more than 27 years experience of implementing management and financial reporting systems.Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information

management assignments for global enterprises in the private and public sector.

[email protected],.uk

www.fsn.co.uk

Oracle Corporation (NASDAQ: ORCL) is the worlds largest enterprise software company. Withthe marketleading Hyperion enterprise performance management suite, world class financialapplications, and integrated governance, risk and compliance solutions Oracle helps financeexecutives maximize potential and deliver results for their organizations. For more informationabout Oracles Big Data Solutions, visit us at http://www.oracle.com/us/technologies/bigdata/index.

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Whilst every attempt has been made to e nsure that the information in this document is accurate and complete some typographical

errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of

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Social Media the Tipping Point 1908447