The Business Value of Application Connectors

There are a number of terms for the approach to collaborative business enabled by the new breed of software tools such as enterprise 2.0 and social business.

Emphasizing connections, McKinsey uses the term, the networked enterprise when they reported on the economic benefits of using what they refer to in 2010 as “collaborative Web 2.0 technologies.”

They found many quantified benefits in 2010 (see The rise of the networked enterprise: Web 2.0 finds its payday) and more in 2011 (see How social technologies are extending the organization). I am sure their next results will show continued growth in benefits in 2012.

For example, in 2010,

  • 77% said the tools increased the speed of access to knowledge,
  • 60% said they reduced communication coats,
  • 52% said they increased speed of access to internal experts,
  • 44% found a reduction in travel costs, and 40% found increased employee satisfaction.

There were similar results in 2011.

A significant foundation for these benefits is connectivity between the rising number of new tools and the established ones. I think another useful term for the new wave of organizational change is the connected enterprise.

Without connections, the benefits are not possible.

I still like to go back to McKinsey’s 2006 paper, The next revolution in interactions, to reflect on two quotes:

In today’s developed economies, the significant nuances in employment concern interactions: the searching, monitoring, and coordinating required to manage the exchange of goods and services.

They said that traditionally the focus of business and IT investments has been on production rather than interactions and added the following.

Social media, with its focus on interactions, is ideal for the new economy based on the connections between these interactions. Six years later, enterprises are now starting to invest in supporting interactions with the new breed of social tools.

Currently, jobs that involve participating in interactions rather than extracting raw materials or making finished goods account for more than 80 percent of all employment in the United States. And jobs involving the most complex type of interactions—those requiring employees to analyze information, grapple with ambiguity, and solve problems—make up the fastest-growing segment.

However, as I wrote in Putting Social Media to Work, to be effective these systems that support interactions have to integrated with the systems of record that support transactions. The social tools also need to be integrated with each other or companies are simply creating more silos of disconnection and benefits are not realized.

Another interesting finding from the 2010 McKinsey study on the networked enterprise was that higher operating margins correlated with the “ability to make decisions lower in the corporate hierarchy and a willingness to allow the formation of working teams comprising both in-house employees and individuals outside the organization.” Connections are again the foundation for these cross-enterprise interactions.

Research from the Altimeter Group (see Social Business Readiness) points to the current need for the technology integration to enable these connections. Altimeter found that many companies have an inability to integrate social data into existing technology systems.

In the companies they looked at, 74% do not have a process in place to support these connections. They struggle with a fragmented technology.

Altimeter states that establishing proper connections is one of steps to becoming an advanced user of social tools. However, this can be a time consuming and costly customer project.

  • What not bypass this effort and bring forward the benefits of the connected enterprise by using out-of-the-box plug-in connectors?
  • Why invest in custom integration efforts to realize the benefits of social business when plug-ins offer a fast and low cost alternative?

Connectors are a major key realizing the business benefits of Enterprise 2.0 and off-the-shelf plug-ins can allow for a major breakthrough in establishing these connections quickly and efficiently.

This is one of the main focuses of this blog. We welcome your input to this conversation.


Post by Bill Ives of the Merced Group, and who also blogs at Portals and KM.

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