The Role of Social Computing and Business Analytics

After some very bad and well-publicized business decisions drove a subprime mortgage meltdown and the near collapse of the auto industry, many would agree that methods for enhancing decision making are greatly needed. Findings in a recent MIT Sloan special report support this notion. Senior executives want their businesses run by data-driven decisions. They want to understand optimal solutions and take action quickly; but as the authors point out, this is no small task. They suggest that in order for insight to drive action, the insight must be closely linked to business strategy, easy for end users to understand, and embedded into organizational processes.

In addition, at a time when companies in many industries offer similar products and use comparable technology, many of the previous bases for competition are no longer viable. The bases therefore for future competitive advantage is innovation, execution and smart decision making. These business imperatives – innovation, execution and smart decision making – place a premium on excellence in two key areas: collaboration and the use of all available intelligence. Collaboration must expand to include the entire community that affects a business; including employees, partners, customers, consumers, citizens, government, universities, and other stakeholders. As business processes expand to incorporate the community and its collective intelligence, enabling technology becomes even more critical. Social computing technology represents an enabler for one of the biggest business challenges of the next decade. By expanding the community and effectively enabling collaboration, all three business imperatives are addressed. When the collective intelligence of a community is tapped, new forms of innovation emerge and the speed of that innovation forms the foundation for future competitive advantage. This networked enterprise will make great strides towards operational excellence (execution) and incorporate much more intelligence from an expanded base of data (smart decision making).

These two dynamics can be viewed on two axes: collaboration and intelligence. Successful enterprise strategies and architectures will move the enterprise forward on these two axes. They will move to create collaborative communities and expand from traditional business intelligence to advanced analytics that deal with both structured and unstructured data. The higher up the collaborative axes you go, the more critical the need to effectively gather and leverage the resulting intelligence – and the more challenging the task becomes.

In 2011, we will see more companies integrate social feedback into their decision-making process. These companies will use social data from both inside and outside the enterprise to inform strategic decisions, execute on organizational objectives, marketing plans, product road-maps, sales process, and more. We will see the continued growth of user generated content and corporate data. Companies will adopt more internal social technology to enable collaboration (beyond SharePoint) and that will accelerate data growth. 

Gartner predicts that Business Analytics, collaboration and social software will converge into decision-making environments. Gartner identifies this new emerging software category as collaborative decision making (CDM) and expects organizational CDM efforts to grow during the next 12 to 18 months in an effort to optimize decision processes and outcomes. Collaborative decision environments will drive investment in new analytic applications, particularly those that link with collaboration and social networking functions. Social media will become a key data source and the insight it delivers will reduce the time it takes to predict trends. Companies that successfully leverage analytics in social media to detect these trends and alter their strategy will differentiate in the marketplace more swiftly than their competitors. A great example is found in comparing two scenarios: the experience of Coca-Cola versus Gap. In 1985 Coca-Cola introduced a new formula, and it took them nearly three months to return to their original formula after a public outcry. On the other hand, Gap introduced its new logo, and the social media backlash was so pronounced that one week later they returned to their original logo.

There are two advancements that will help companies address the challenges of Innovation, Execution and Smart Decision making: Social Computing and Business Analytics. Social computing enables collaboration, while business analytics provide actionable intelligence from an overwhelming amount of structured and unstructured data. There is a significant paradigm shift under way. The past has been about operational excellence and cost optimization. The future is about value and revenue generation. Strategic technologies and the role of IT are on a collision course with customers and revenue generation. Social computing and business analytics are at the heart of future customer, value creation and revenue generation strategies.

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