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5/5/2011
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Social Media At Peak Of Hype Cycle

While expectations may be overinflated, social software still offers significant advantages to small and midsize businesses, says Gartner analyst.

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Of all the overhyped technologies in the market today, social media and social software are a couple that small and midsize businesses (SMBs) should pay particular attention to, Gartner's Jackie Fenn said at the Midsize Enterprise East conference in Orlando Thursday.

Fenn is the Gartner VP and fellow who created the technology analysis firm's "hype cycle" model to describe how even technologies that are successful in the long run go through a boom-and-bust cycle of inflated expectations. In the latest versions of the model, most of the social technology enterprise applications are at or near the "peak of inflated expectations" while virtual reality is in the "trough of disillusionment or "the stage where the problems are more apparent than the benefits; speech recognition has passed through that phase and is on "the slope of enlightenment," meaning that it's steadily improving; and smartphones have reached the "plateau of productivity" as an accepted and clearly useful technology.

While an aggressive social media strategy may mean taking some risk, it's an area where "so much is happening and happening in a way that lets you get advantage over the big guys," Fenn said. While bigger, more conservative organizations are carefully studying the opportunity, those that are "a bit more nimble" can seize the initiative, she said.

Her comments underlining the importance of social media to the midsize enterprise audience came at the end of her talk discussing a range of emerging technologies, from augmented reality to robotics. Her general advice was that organizations should be creating their own hype cycles (a process Gartner is happy to help its clients with) and evaluating which hyped-but-promising technologies to take a chance on. "We call it being selectively aggressive, and it's a best practice," she said.

By now, most organizations have grasped the relevance of "being part of the conversation" in public social media and engaging with customers and professional customers there. The social technologies that are little more bleeding edge involve "thinking of it as an analytic source," Fenn said. With so many people participating on Twitter, Facebook, blogs, and message boards, "people somewhere are probably talking about your organization," she said. "So using the new tools that are available like sentiment analysis ... becomes a very valuable source of market research." Instead of convening traditional focus groups, you can use the Web as one big focus group, she said.

Another trend that's rising up the hype cycle but has great potential is crowdsourcing, Fenn said. She cited the example of Netflix, which offered a $1 million prize to anyone who could produce a recommendation engine that was 10% better--according to some very clearly defined metrics--than what its own software engineers had delivered. "Within days, they had several entrants who had improved the recommendation by several percent," she said. Netflix posted a leader board so participants in the competition could see how they were doing against each other. It took two years, but finally two different teams of developers broke the 10% barrier, and following a bake-off competition between the two, Netflix awarded the prize to the one with the better score.

"Now, $1 million is a lot of money to the team that won that," Fenn said, but it's not a lot of money for a major corporation compared with what it might have spent on consultants to solve the same problem. It may also be that a team of consultants would never have come up with as good a solution as Netflix achieved by cleverly playing into the social dynamics of an open competition, she said.

Next to social media, Fenn also mentioned cloud computing as a technology that midsize enterprises may be in the best position to exploit. Gartner shows cloud computing in general as being at the peak of its hype, although some subcategories like software as a service for salespeople are recognized as more mature.

It was really in the area of cloud computing as infrastructure that Fenn saw the greatest opportunity. By tapping into public cloud servers, SMBs can "do the same thing as someone that has massive, massive investments in data centers." Done right, cloud infrastructure can meet the needs of even applications that require high standards for performance, transaction throughput, and security, she said.

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