Can Enterprise Social Networks Lead to Stronger Results for Businesses in 2016?

ESN adoption graph
Author: Richard
Posted: February 10, 2016

Forward-thinking companies have been using Enterprise Social Networks and Enterprise 2.0 tools for data management and collaboration for more than a decade now, so what do we know?

McKinsey Global Institute tracked 1,500 companies and their use of social technologies between 2006 and 2015. We found the results of that study particularly interesting and have added some observations of our own.

Click here to go straight to the infographic or read on for a fuller explanation of the data and what it means.

From Humble Beginnings…

In 2006, a mere 10% of businesses had adopted an Enterprise Social Network (ESN). This had doubled by 2008 and doubled again by 2011. In 2012, almost half the companies surveyed were using an ESN.

ESN adoption started to level off after 2012, increasing by only 10% by 2014 and flattening further since. 70% adoption is forecast by the end of 2017 and that appears to be the saturation point.

Plot it on a graph and you’ll see a noticeable S-curve pattern of adoption.
Enterprise Social Networks adoption graph

Drilling Down into the Data

Of the available Enterprise 2.0 tools, social networking and blogging saw the most substantial increase – from 15% to 65% adoption. Video sharing was a close second, increasing from 20% to 60% between 2006-2012. Wiki and podcast usage also increased between 2006-2012 (from 20% to 40%) before levelling off.

Prediction markets are the only enterprise social tool that has seen a steady increase in adoption between 2006-2015 (from 5% to 25% approx.).
Enterprise 2.0 tools

Imitation Vs. Innovation

Businesses using Enterprise 2.0 tools have reported an average increase in productivity of 15% and improved collaboration has netted a 10% increase in revenue growth.

Organisations that have adopted an ESN generally resolve problems faster and increase time-to-innovation by 31% on average. Enterprise Social Networks foster 2-way conversations, which tap into collective expertise and spread innovation more quickly.
ESN innovation gains
If innovation is the effect, it appears imitation is often the cause. More than a third of companies surveyed said they decided to adopt an Enterprise Social Network because their competitors had. Likewise, a quarter of employees said they use an ESN because their colleagues do.
ESN imitation game

Investment Vs. Added Value

With Enterprise 2.0 adoption appearing to level off, is there a strong business case for increased investment?

McKinsey’s research suggests businesses that deploy the more advanced technologies extensively and with greater diffusion (“power users”) achieve much stronger results than those dipping their toe in.

ESN adoption has been compared to the rise of personal computing in the 1990s and the impact of big data technologies more recently, with comparable value gains. ESN power users saw a 5% increase in value added in 2010 and 6.5% in 2014 – value was doubled if they were using more than one Enterprise 2.0 tool.
Enterprise Social Network value gains chart
You get out what you put in – an adage that rings particularly true with regard to Enterprise Social Networks. Companies with 100% adoption boast a 6% increase in value added, whereas 25% adoption only yields a 0.6% gain.

ESNs also help boost employee engagement. Companies with 9 engaged employees for every disengaged employee experience 147% higher earnings and a 20% increase in staff retention.

Hardware, software, storage, licensing, maintenance and upgrade costs can also be reduced – by as much as 80%.
ESN tech savings

Chaos Vs. Collaboration

Enterprise 2.0 tools do come at a cost, however. Strategy, structure and processes are required where social, mobile, analytics and cloud converge.

IT departments will be increasingly involved in deployment and integration to ensure Enterprise Social Networks meet security, compliance and IP protection requirements. This could inhibit revenue growth and further adoption, but it seems the improvement to enterprise-wide collaboration far outweighs any potential costs.

ESNs enable employees to stay up-to-date with relevant information and share knowledge more easily. This makes discovery and retrieval more personal and reduces the amount of time spent looking for information from 20% to 13%.

This information can be integrated with other enterprise systems more easily, which can reduce the need for meetings by 25%.
ESN productivity gains graph

Enterprise Social Networks Vs. Social Intranet

Social intranets have largely replaced the strictly-controlled, one-way static website intranets most of us will be familiar with. A social intranet facilitates enterprise-wide conversations and includes tools for document management, blogging, calendar management, wiki creation and other forms of knowledge sharing and collaboration.

An Enterprise Social Network, on the other hand, is a more free-flowing news and activity stream, designed to encourage social sharing and communication in a more open, agile way. An ESN fosters dialogue and conversations between people and enables those people to build relationships with content and information within a broader network.

Social intranets are more all-encompassing workflow and communication tools, offering more functionality than a conventional ESN, but for how much longer?

What Does the Future Hold for ESNs?

Facebook at Work will almost certainly disrupt the status quo when it’s launched later in the year. Organisations, like banking giants RBS, are currently beta testing the platform and have reported that 90% of employees who tried it remained active – impressive for a non-compulsory piece of software.
Enterprise Social Networks employee engagement
Players like Microsoft (Yammer) and buzzy newcomers Slack are also expected to launch next-gen Enterprise Social Networks in 2016, which will no doubt boast enhanced functionality, content analytics and information governance tools – effectively becoming an interactive social intranet and extranet.

This should give the ESN market a boost, especially in terms of diffusion and permeation, but only time will tell if increased ESN adoption will spell the end for social intranets. It will depend on how feature-rich and customisable they are. More information about the future of interactive intranets and ESNs can be found in this excellent ebook from Jive Software.

In 2015, annual revenue for Enterprise Social Networks had risen to $1.7 billion from $1.46 billion in 2014. The latest forecast predicts 19% average year-on-year growth, which means annual revenue will hit $3.5 billion by 2019. North America currently dominates the market with a 67% share of revenue, however, a 2015 study of worldwide ESN adoption by the International Data Corporation (IDC) predicts far more aggressive growth in the EMEA and APJ regions (based on a number of economic and technological assumptions).
ESN revenue growth chart
The North American market will retain a good growth rate over the next 3 years (rising from $1.25bn to $1.55bn – 25% growth approx.), but APJ revenue is expected to grow by more than 40% (from $84m to $119m) and EMEA revenue will increase by more than 150% (from $700m to $1.8 billion) – passing North America in terms of revenue share (52% vs 44%).

This might sound impressive, but 42% year-on-year growth was predicted in 2012, which would’ve meant annual worldwide revenue of more than $8 billion by 2019! This offers further proof of how much the market has levelled off since 2012 and shows how badly it needs an injection of game-changing innovation.

In Conclusion

Despite their massive potential, Enterprise Social Networks have yet to become the intersecting point of People, Process and Information.

Last year, 20% of the networked enterprises surveyed accounted for 50% of all social media usage. However, within those companies, only 20% of employees were using an ESN in a meaningful way with any degree of regularity. Company adoption may be high, but internal diffusion still has a way to go.
ESN 2015 stats
IBM Connections (market leader for 6 years running), Salesforce Chatter and Jive Software dominate the ESN landscape, but no single platform has broken out and gone mainstream. This may change when Facebook at Work launches.
ESN 2015 market share
The online communities formed by enhanced Enterprise Social Networks are likely to become marketplaces in their own right and businesses with the heaviest adoption and diffusion will benefit most. Improved ESN workflows will allow users to work wherever they choose, facilitating an ‘always on’ approach.

ESNs promote dialogue and it’s widely acknowledged that communicating, rather than simply responding, enables brands to quickly build trust with customers, employees and suppliers.

ESN adoption might have peaked a few years ago, but few companies appear to have reached “power user” status – where the stronger results are achieved.

In 2016, we fully expect Facebook at Work (and other advanced Enterprise Social Networks) to increase ESN diffusion by offering a more complete workflow and communication toolset – proving a more connected workplace is a more productive workplace!
ESN research conclusions
Please contact our expert consultants today if you’d like to discuss how a cloud-based Enterprise Content Management (ECM) solution can help your business reduce costs and improve productivity.

 

Click here for the infographic.