1. Chapter 8 Social Media Information Systems
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258

2. “She Said WHAT?—On Our Facebook Page???”
Negative customer comment on Fox Lake’s Facebook
User-generated content is double-edged sword
Deleting critical feedback problematic
Critical comments result from process problems
Learn to deal with negative feedback

3. 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 organizations use Web 2.0? Q6: How can organizations manage the risks of social media and Web 2.0? Q7: 2022?

4. Important Elements
1. What is a social media (SM) and social media information system (SMIS)?
2. Three organizational roles played by SMIS
Business Model vs. Revenue Model
3. Hyper-social Organization and its two kinds of communities: Defenders of Belief and Seekers of truth
SM in the Value Chain Activities
4. Three Types of business capital and How Do SMIS Increase Social.
5. SM and Web 2.0
Summary: Organizations in 1960s and 2022

5. Impact on Social Media Technology
The U.S. stock market crashed momentarily on Tuesday (April 23, 2013) afternoon after the Associated Press' Twitter account was hacked and a hoax tweet was sent out that suggested explosions at the White House had injured President Barack Obama.
The Dow Jones Industrial Average dropped about 150 points (more than $130 billion) in a matter of seconds before bouncing back when traders realized the tweet was false. And it wasn't just the stock market -- currencies, commodities and bond markets were also briefly shaken.
Twitter may have caused a flash crash, but the problem is not Twitter's. Any market so vulnerable to an errant tweet probably has bigger problems.

6. Q1: What Is a Social Media Information System (SMIS)?
Social media (SM)
Use of information technology to support sharing of content among networks of users
Social media enables people to form communities, tribes, or hives
Group of people related by a common interest
Social media information system (SMIS)
An information system that supports sharing of content among networks of users
Social media is the merger of many disciplines (see Fig. 8-1). We will focus o the MIS portion in this class

7. SMIS: Convergence of Disciplines
Fig 8-1: Social Media is a Convergence of Disciplines

8. Three SMIS Roles Three organizational roles played by SMIS:
________________
a natural human trait and is formed based on mutual interests and transcend familial, geographic, and organizational boundaries.
_________________
Companies and other organizations that choose to support a presence on one or more SM sites.
___________________
Companies that operate the SM sites (e.g., Facebook, Twitter, LinkedIn and Google create the features and functions of the site)
Free to users; Sponsors may or may not pay a fee
Most earn revenue through some type of advertising model
User Communities
Social Media Sponsors
Social Media Application Providers

9. Business Model vs. Revenue Model
Business model is the architectural configuration of the components of transactions designed to exploit business opportunities.
Revenue model refers to “the specific ways in which a business model enables revenue generation.”
Revenue mechanism is a key component of the business model because it provides a sustainable financial source for the business’ effort of innovation (Afuah, 2004).
Business Model:
A method of doing business by which a company can generate revenue to sustain itself.
describes the way in which a company enables transactions that create value for all participants, including partners, suppliers and customers.
3. The model spells out how the company is positioned in the value chain.
Revenue Model: can be realized through a combination of
-- subscription fees, -- advertising fees,
-- transactional income (e.g., fixed transactional fees, referral fees, fixed/variable commissions, etc) N

10. Business vs. Revenue Model
Business Model
Revenue Model
Value
Value
creation
appropriation
It can be realized through a combination of
- subscription fees,
- advertising fees,
- transactional income (e.g., fixed transactional fees, referral fees, fixed/variable commissions, etc)
It describes the way in which a company enables transactions that create value for all participants, including partners, suppliers and customers.
Issues in B2B Advertisement and Marketing
1.Finding and retaining business customers
2. Making them buy
3. Reaching organizational buyers (functional, corporate)
4. Building relationship marketing in B2B
5. Advertisement, mailing lists, strategies
6. Mailing lists: house, response, compiled
7. The role of the CD-ROM
8. Marketing databases and lists

11. SMIS Organizational Roles
Fig 8-2: SMIS Organizational Roles

12. Community/Social Media Site Relationship
Fig 8-3: SM Communities

13. Social Media Sponsors
Fig 8-4: Not a Casual Commitment

14. Five Components of SMIS
Fig 8-5: The Five Components of SMIS

15. Q2: How Do SMIS Advance Organizational Strategy?
The relationship of IS to organizational strategy is (see figure below):
Strategy determines value chains, which determines (structured) business processes, which determines IS.
However, social media is by its very nature dynamic, its flow cannot be designed or diagrammed.
Therefore, we need to consider how value chains determine dynamic processes and thus set SMIS requirements.
(structured
& dynamic)
Fig 3-1: Organizational Strategy determines IS

16. Two Kinds of Communities in the Hyper-social Organization that Are Important to Commerce
1. __________________
Share a common belief and form their hive around that belief
Seek conformity and want to convince others
E.g. a group that believes that Google+ is far superior to Facebook will engage in behaviors to convince others that this is true.
Facilitate activities like sales and marketing
The communities are not effective for activities that involve innovation or problem solving.
Form strong bonds and allegiance to an organization
2. _________________
Share common desire to learn something, solve a problem, make something happen
Share a common problem, but not a common solution to that problem.
Such tribes are incredible problem solvers and excel at innovation.
Seldom form a strong bond
Defenders of Belief
(less on innovation or problem solving)
Seekers of the Truth
(more with innovation and problem solving)

17. Figure (Extra) Business Level: The Value Chain
Competitive
Advantage
(_____)
A company’s value activities fall into nine generic categories.
-- Primary activities are those involved in the physical creation of the product, its marketing and delivery to buyers, and its support and servicing after sale.
-- Support activities provide the inputs and infrastructure that allow the primary activities to take place.
IT can profoundly affect one or more of these activities -
- sometimes simply by improving effectiveness,
- sometimes by fundamentally changing the activity, and
- sometimes by altering the relationship between activities.
In addition, the actions of one firm can significantly affect the value chain of key customers and suppliers.
Operations: Boeing -- Lean Manufacturing
After-Sale Service - maintenance technology
Devices identify potential problems before the customer notices a difficulty and enable the service representative to fix the elevator before it breaks down, reducing repair costs and increasing customer satisfaction.
Corporate Infrastructure
- on-line links to integrate remote locations (27% sales growth)
MANAGEMENT CONTROL
- more sophisticated reward systems software (sales commission on each
product sold by its sales force; thus
(a) maximum incentive: sales force; (b) NO incentive: ensure the customer continued to be satisfied with the
services coordination of activities
- coordination of activities
airline, truck, railroad: optimizing schedule, fueling, cargoes by using , groupware, videoconferencing: a networked “workflow” system.
Technology Development
support for research and development; CHINA(SPARK MIS)
Procurement
market knowledge (purchase price, exert pressure on --> supplier N

18. SM in the Value Chain Activities
The figure summarizes how social media contributes to the five primary value chain activities and to the human resources support activity.
SM & Sales and marketing (Defender of beliefs): share common beliefs; social CRM is a dynamic, SM-based CRM process.
The relationships between organizations and customers emerge in a dynamic process as both parties create and process content.  share a common belief.
Customers search this content, contribute reviews and commentary, ask more questions, create user groups.
Amazon.com and other retailers also allow readers (customers) to rate the helpfulness of reviews.
Risks: MS’ example, advertising “negative” message  loss of creditability, Bad PR (public relationship)
SM & Customer service (Seeker of the truth): Share common desire to learn something (common problem), solve a problem
Product users are amazingly willing to help each other solve problems. Even more, they will do so without pay;
Organizations (SAP, MS) whose business strategy involves selling to or through developer networks have been the earliest and most successful at SM-based customer support.  solve problem (provide quality of customer support – peer-to-peer support)
Risks: loss of control as seekers of the truth will seek recommending another vendor’s product over yours (as your product is not satisfactory to customers).
Fig 8-6: Social Media in the Value Chain Activities

19. Crowdsourcing Definition:
1) Taking a task traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people, in the form of an open call
2) The dynamic SM process of employing users to participate in product design or product redesign.
E.g. eBay often solicits customers to provide feedback on their eBay experience.
Other examples?
Wikipedia and PSY Horse Dance
Used by companies to increase productivity, lower production costs, and fill skill gaps.
Can be used for a variety of tasks.
Companies do not have control over the people doing the work.
Has cost more than traditional methods.
SM & Manufacturing and Operations (Seeker of the truth):
Operations and manufacturing activities are dominated by structured process.
Cons: The flexibility and adaptive nature of social media would result in chaos if applied to the manufacturing line or to the warehouse.
Pros (w/ innovation): SM does play a (active/positive) role to product design as well as in employee knowledge sharing and management (e.g., crowdsourcing)
RISK: Quality of dynamic process as Enterprise 2.0 result from emergence, there is no way to control for either effectiveness or efficiency. 19

20. Social Media and Manufacturing and Operations
Crowdsourcing
The dynamic SM process of employing users to participate in product design or product redesign.
E.g. eBay often solicits customers to provide feedback on their eBay experience.
Other examples?
Wikipedia and PSY Horse Dance
Enterprise 2.0
The application of SM to facilitate the cooperative work of people inside organizations.
Folksonomy
A content structure that has emerged from the processing of many user tags. (tags are organized into structures)
SLATES (see Fig. 8-7)
Workers want to be able to search for content inside the organization just like they do on the Web.
SM & Manufacturing and Operations (Seeker of the truth): Share common desire to learn something (common problem), solve a problem
Operations and manufacturing activities are dominated by structured process.
Cons: The flexibility and adaptive nature of social media would result in chaos if applied to the manufacturing line or to the warehouse.
Pros (w/ innovation): SM does play a (active/positive) role to product design as well as in employee knowledge sharing and management (e.g., crowdsourcing)
RISK: Quality of dynamic process as Enterprise 2.0 result from emergence, there is no way to control for either effectiveness or efficiency.

21. Fig. 8-7: McAffee's SLATES Enterprise 2.0 Model

22. Q3: How Do SMIS Increase Social Capital?
is defined as the investment of resources for future profit (Karl Marx)
Types of business capital
_________ capital (traditional definition): investment into resources such as factories, machines, manufacturing equipment etc.
_________ capital: investment in human knowledge and skills for future profit.
_________ capital: the investment in social relations with the expectation of returns in the marketplace.
Physical
Human
Social

23. What Is the Value of Social Capital?
Social capital adds value in four ways (from the relationships in social networks):
______________
Provide information about opportunities, alternatives, problems, and other factors important to business professionals.
_____________
Provide an opportunity to influence decision makers in one’s employer or in other organizations who are critical to your success.
Social credentials: a group of contacts
Personal reinforcement (professional’s image)
Value of social capital add to business (in three factors)
1) number of relationships, 2) strength of relationships, and 3) resources controlled by those related.
Information
Influence

24. How Do Social Networks Add Value to Businesses?
Historically
organizations created social capital via salespeople, customer support, and public relations.
Today, progressive organizations:
Maintain a presence on Facebook, LinkedIn, Twitter, and other SN sites.
Include links to their social networking presence for customers and interested parties to leave comments.
To understand how social networks add value to businesses, consider the following elements:
1) number of relationships, 2) strength of relationships, and 3) resources controlled by “friends”.

25. Fig. 8-8: Social Media (SM) Communities – Using Social Networking to Increase the Number of Relationships
Network effects
What term is related to?
Network __________

26. Network Externalities
Definition - The phenomenon whereby a service becomes more valuable as more people use it, thereby encouraging ever-increasing numbers of adopters.
Network effects
While the word-of-mouth method is often more influential in the beginning, analysis may play a significant role later in the cycle. In other words, you may adopt a service initially because someone you know uses it; later, you may adopt a service because "everyone" uses.
Network Externality offers a reason for value derived from plentitude
IT Role?
IT Roles: SM technology

27. Using Social Networks to Increase the Strength of Relationships
Strength of a relationship is the likelihood that the entity (person or other organization) in the relationship will do something that benefits the organization.
Ask them to do you a favor
Frequent interactions strengthen relationships
Size of assets controlled by those in relationship

28. Connecting to Those with More Assets
There is no formula for computing social capital, but the three factors would seem to be more multiplicative than additive.
Stated in the mathematical terms, the value of social capital is more in the form of:
Social Capital = Number of Relationships x Relationship Strength x Entity Resources
Than it is:
Social Capital = Number of Relationships + Relationship Strength + Entity Resources
This multiplicative nature of social capital means that a huge network of relationships to people who have few resources may be lower than that of a smaller network with people with substantial resources.
Furthermore, those resources must be relevant to the organizations. For example, students with pocket change are relevant to Pizza Hut; they are irrelevant to a BMW dealership.

29. Q4: What Roles Do SMIS Play in Hyper-social Organization?
Social capital is an economic perspective on social media.
According to hyper-social organization model, using social media in an old-style organization-centric manner is ineffective.
The true value of social media can only be achieved when organizations use social media to interact with customers, employees, and partners in a more humane, relationship-oriented way.
It means that rather than sending messages that attempt to manage, influence, and control, hyper-social organizations create relationships in which both parties perceive and gain value.

30. Four Pillars of Hyper-Social Organizations
Hyper-social organizations is an organization that uses social media to transform its interactions with customers, employees, and partners into mutually satisfying relationships (marketing-oriented) with them and their communities.
become
Consumers 
Humans
(defending beliefs or seeking the truth)
Market Segments 
Tribes
Channels 
Networks
(Channels transmit data, Networks transmit knowledge)
Structures & Control 
Messiness
(structured process to dynamic process, SEAMS) See next Slide
by Gossieaux and Moran

31. SMIS and SEAMS Activities
SMIS play a key role for implementing the SEAMS process.
1. Sense: determine what communities and identifying their structure, goals, and dynamic
2. Engage: engage with those communities by creating relationships
3. Activate: design applications according SOA principles greatly facilitates this task
4. Measure: do not overlook the active lurker
5. Store Tell: develop stories about their interaction with the communities.

32. Q5: How Do Organizations Use Web 2.0?

33. Web 2.0 and Beyond
Is Web 2.0 a “Technology Evolution” or “Business Evolution”?
Web 2.0 (5:19)
The Future Internet: Service Web 3.0 (5:47)
Eric Schmidt, Web 2.0 vs. Web 3.0 (1:51)
Web 1.0 vs. Web 2.0 (2m20s)
What is Web 2.0? (3m)
Social Networking Sites Own You (1:36)
The dark side of social networking (2:03)

34. What is Web 2.0?
"Web 2.0" refers to the second generation of web development and web design.
It is characterized as facilitating communication, information sharing, interoperability, user-centered design and collaboration on the World Wide Web. It has led to the development and evolution of web-based communities, hosted services, and web applications.
Examples include social-networking sites, video-sharing sites, wikis, blogs, mashups and folksonomies.
Web 2.0 is the business revolution (rather than technology revolution) in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform.
What Is Web 2.0
Design Patterns and Business Models for the Next Generation of Software
by Tim O'Reilly The bursting of the dot-com bubble in the fall of 2001 marked a turning point for the web. Many people concluded that the web was overhyped, when in fact bubbles and consequent shakeouts appear to be a common feature of all technological revolutions. Shakeouts typically mark the point at which an ascendant technology is ready to take its place at center stage. The pretenders are given the bum's rush, the real success stories show their strength, and there begins to be an understanding of what separates one from the other.
The concept of "Web 2.0" began with a conference brainstorming session between O'Reilly and MediaLive International. Dale Dougherty, web pioneer and O'Reilly VP, noted that far from having "crashed", the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What's more, the companies that had survived the collapse seemed to have some things in common. Could it be that the dot-com collapse marked some kind of turning point for the web, such that a call to action such as "Web 2.0" might make sense? We agreed that it did, and so the Web 2.0 Conference was born.
Source:

35. Web 2.0 is a loose grouping of capabilities, technologies, business models, and philosophies that sets e-commerce apart from traditional software processing. This chart compares the two.
Note that in this text, Web 2.0 and SM are considered to be different because SM, and especially hyper-social organizations, represent a difference in the structure of the relationship between organizations and humans.
SaaS
Fig 8-12 Comparison of Web 2.0 with Traditional Processing

36. Software as a (Free) Service (SaaS)
Software as a Service, part of the Web 2.0 movement, changes traditional thinking about how software is created, provided to users, and used to create value.
Its characteristics include:
Uses thin-client programs in browsers
Bulk of processing occurs on servers throughout the Internet
Companies rely on advertising or revenue rather than license fees.
Perpetual beta software because features and functions constantly changing
SaaS companies clash with traditional software vendors that rely on traditional software programs to provide the bulk of their revenue.
Relies on viral marketing. Users spread word about its virtues rather than the company that provides it.
More a Web 2.0-based site is used, the more value it attains

37. Testing of New Features, Web 2.0 Style

38. In the Web 2.0 World No traditional marketing  viral marketing
Value of site increases with users and use
Organic user interface and mashups (e.g., Google My Maps) – an output from two or more Web sites is combined into a single user experience).
Participation and ownership differences
Traditional Web sites are about publishing
Web 2.0 is about participation
Traditional Web site lock down all legal rights to content
Web 2.0 sites lock down only some rights

39. Example of a Mashup: Google’s My Maps

40. How Can Businesses Benefit from Web 2.0?
Advertising is specific to user interests. Two popular programs from Google are:
AdWords in which advertisers pay for particular search words.
AdSense in which Google inserts ads on a Web site that match content on site. When someone clicks on the ad, Google pays site owner a fee.
Mashups
Mashing content of multiple products
Providing social networking services that connect people with similar interests
Providing mashups between a business and its partners which combine content of their products. Watch a movie, see a piece of jewelry you like, click on a link, and purchase the product.

41. Two risks are from this participation:
Q6: How Can Organizations Manage the Risks of Social Media and Web 2.0 Applications?
Social media and Web 2.0 represent a revolution in the way that organizations communicate.
Twenty years ago, most organizations managed all public and internal messaging with the highest degree of control.
Today, the new model in progressive hyper-social organizations is that employees are encouraged to engage with communities and, in most organizations, to identify themselves with their employer while doing so.
Two risks are from this participation:
Risks from employee communication
Risk from nonemployee, user-generated content (UGC)

42. Managing the Risk of Employee Communication
Hyper-social organizations should develop and publicize a social media policy, which is a statement that delineates employees’ rights and responsibilities.
Intel’s six guiding principles to employees:
1. Stick to your area of expertise.
2. Post meaningful, respectful comments.
3. Pause and think before posting
4. Respect proprietary information and content, and confidentiality.
5. When disagreeing with others, keep it appropriate and polite.
Know and follow company code of conduct and privacy policy.

43. Fig. 8-15 : Intel’s Rules of Social Media Engagement
Two major elements in the list: 1) Transparency and truth, 2) Open and above board
That is, if you make a mistake, don’t obfuscate; instead correct it, apologize, and make amends. The SM world is too open, too broad, and too powerful to fool.

44. Managing the Risk of User Generated Content (UGC)
User Generated Content (UGC) is the essence of SM relationships.
Major sources of UGC problems:
Junk and crackpot contributions
Inappropriate content
Unfavorable reviews
Mutinous movements

45. Responding to Social Networking Problems
Once such content is found an organization must have a plan for creating the organization’s response. Three possibilities are:
______ it
If problematic content represents reasonable criticism of the organization’s products or service.
________ to it
If the problematic content has caused the organization to do something positive as a result.
_______ it
If the problematic content is obscene or inappropriate
Leave
Respond
The first task in managing social networking risk is to know the sources of potential problems and to monitor sites for problematic content.
Delete
A sound principle in business is to never ask a question to which you do not want to answer. To extend that principle to SN:
“Never set up a site that will generate content for which you have no effective response.”

46. Q7: 2022? GPS devices in consumer products?
How to harness employee social behavior and partners to foster company strategy
Employees craft their own relationships with their employers
Employers provide endoskeleton to support work of people on the exterior

47. Summary Organizations 1960s Employees 2022 Organizations Organizations
Organizations were the exoskeleton around employees.
1960s
Organizations
Employees
Organizations
In the 1960s, organizations were the exoskeleton around employees.
By 2022, they will be endoskeleton, supporting the work of people on the exterior.
Organizations will be endoskeleton, supporting the work of people on the exterior..
2022

48. End of Chapter 8