CASE STUDY - 1
VIRTUAL MEETINGS: SMART MANAGEMENT
Instead of taking that 6:30 A.M. plane to make a round of meetings in Dallas, wouldn’t it be great if you could attend these events without leaving your desktop? Today you can, thanks to technologies for videoconferencing and for hosting online meetings over the Web. A June 2008 report issued by the Global e-Sustainability Initiative and the Climate Group estimated that up to 20 percent of business travel could be replaced by virtual meeting technology.
A videoconference allows individuals at two or more locations to communicate simultaneously through two-way video and audio transmissions. The critical feature of videoconferencing is the digital compression of audio and video streams by a device called a codec. Those streams are then divided into packets and transmitted over a network or the Internet. Until recently, the technology was plagued by poor audio and video performance, and its cost was prohibitively high for all but the largest and most powerful corporations. Most companies deemed videoconferencing a poor substitute for face-to-face meetings.
However, vast improvements in videoconferencing and associated technologies have renewed interest in this way of working. Videoconferencing is now growing at an annual rate of 30 percent. Proponents of the technology claim that it does more than simply reduce costs. It allows for “better” meetings as well: it’s easier to meet with partners, suppliers, subsidiaries, and colleagues from within the office or around the world on a more frequent basis, which in most cases simply cannot be reasonably accomplished through travel. You can also meet with contacts that you wouldn’t be able to meet at all without videoconferencing technology.
For example, Rip Curl, a Costa Mesa, California, producer of surfing equipment, uses videoconferencing to help its designers, marketers, and manufacturers collaborate on new products. Executive recruiting firm Korn/Ferry International uses video interviews to screen potential candidates before presenting them to clients.
Today’s state-of-the-art videoconferencing systems display sharp high-definition TV images. The top-of the- line video conferencing technology is known as telepresence. Telepresence strives to make users feel as if they are actually present in a location different from their own. You can sit across a table from a large screen showing someone who looks quite real and life-size, but may be in Brussels or Hong Kong. Only the handshake and exchange of business cards are missing. Telepresence products provide the highest- quality videoconferencing available on the market to date. Cisco Systems has installed telepresence systems in more than 500 organizations around the world. Prices for fully equipped telepresence rooms can run to $500,000.
Companies able to afford this technology report large savings. For example, technology consulting firm Accenture reports that it eliminated expenditures for 240 international trips and 120 domestic flights in a single month. The ability to reach customers and partners is also dramatically increased. Other business travelers report tenfold increases in the number of customers and partners they are able to reach for a fraction of the previous price per person.
MetLife, which installed Cisco Telepresence in three dedicated conference rooms in Chicago, New York, and New Jersey, claims that the technology not only saved time and expense but also helped the company meet its “green” environmental goals of reducing carbon emissions by 20 percent in 2010.
Videoconferencing products have not traditionally been feasible for small businesses, but another company, Life Size, has introduced an affordable line of products as low as $5,000. Overall, the product is easy to use and will allow many smaller companies to use a high-quality videoconferencing product. There are even some free Internet-based options like Skype videoconferencing and ooVoo. These products are of lower quality than traditional videoconferencing products, and they are proprietary, meaning they can only talk to others using that very same system. Most videoconferencing and telepresence products are able to interact with a variety of other devices. Higher-end systems include features like multi-party conferencing, video mail with unlimited storage, no long-distance fees, and a detailed call history.
Companies of all sizes are finding Web-based online meeting tools such as WebEx, Microsoft Office Live Meeting, and Adobe Acrobat Connect especially helpful for training and sales presentations. These products enable participants to share documents and presentations in conjunction with audio conferencing and live video via Webcam. Cornerstone Information Systems, a Bloomington, Indiana, business software company with 60 employees, cut its travel costs by 60 percent and the average time to close a new sale by 30 percent by performing many product demonstrations online. Before setting up videoconferencing or telepresence, it’s important for a company to make sure it really needs the technology to ensure that it will be a profitable venture. Companies should determine how their employees conduct meetings, how they communicate and with what technologies, how much travel they do, and their network’s capabilities. There are still plenty of times when face-to-face interaction is more desirable, and often traveling to meet a client is essential for cultivating clients and closing sales.
Videoconferencing figures to have an impact on the business world in other ways, as well. More employees may be able to work closer to home and balance their work and personal lives more efficiently; traditional office environments and corporate headquarters may shrink or disappear; and freelancers, contractors, and workers from other countries will become a larger portion of the global economy.
Sources: Joe Sharkey, “Setbacks in the Air Add to Lure of Virtual Meetings, The New York Times, April 26, 2010; Bob Evans, “Pepsi Picks Cisco for Huge TelePresence Deal,” February 2, 2010; Esther Schein, “Telepresence Catching On, But Hold On to Your Wallet,” Computerworld, January 22, 2010; Christopher Musico, “Web Conferencing: Calling Your Conference to Order,” Customer Relationship Management, February 2009; and Brian Nadel, “3 Videoconferencing Services Pick Up Where Your Travel Budget Leaves Off,” Computerworld, January 6, 2009; Johna Till Johnson, “Videoconferencing Hits the Big Times…. For Real,” Computerworld, May 28, 2009.
CASE STUDY QUESTIONS
Each question carries 5 marks / points.
1. One consulting firm has predicted that video and Web conferencing will make business travel extinct. Do you agree? Why or why not?
2. What is the distinction between videoconferencing and telepresence?
3. What are the ways in which videoconferencing provides value to a business? Would you consider it smart management? Explain your answer.
4. If you were in charge of a small business, would you choose to implement videoconferencing? What factors would you consider in your decision?
MIS IN ACTION
Each question carries 5 marks / points.
Explore the WebEx Web site (www.webex.com) and answer the following questions:
1. List and describe its capabilities for small-medium and large businesses. How useful is WebEx? How can it help companies save time and money?
2. Compare WebEx video capabilities with the videoconferencing capabilities described in this case.
3. Describe the steps you would take to prepare for a Web conference as opposed to a face-to-face conference.
CASE STUDY - 2
FACEBOOK: MANAGING YOUR PRIVACY FOR THEIR PROFIT
Facebook is the largest social networking site in the world. Founded in 2004 by Mark Zuckerberg, the site had over 500 million worldwide users as of October 2010, and has long since surpassed all of its social networking peers. Facebook allows users to create a profile and join various types of self-contained networks, including college-wide, workplace, and regional networks. The site includes a wide array of tools that allow users to connect and interact with other users, including messaging, groups, photo-sharing, and user-created applications.
Although the site is the leader in social networking, it has waged a constant struggle to develop viable methods of generating revenue. Though many investors are still optimistic regarding Facebook’s future profitability, it still needs to adjust its business model to monetize the site traffic and personal information it has accumulated.
Like many businesses of its kind, Facebook makes its money through advertising. Facebook represents a unique opportunity for advertisers to reach highly targeted audiences based on their demographic information, hobbies and personal preferences, geographical regions, and other narrowly specified criteria in a comfortable and engaging environment. Businesses both large and small can place advertisements that are fully integrated into primary features of the site or create Facebook pages where users can learn more about and interact with them.
However, many individuals on Facebook aren’t interested in sharing their personal information with anyone other than a select group of their friends on the site. This is a difficult issue for Facebook. The company needs to provide a level of privacy that makes their users comfortable, but it’s that very privacy that prevents it from gathering as much information as it would like, and the more information Facebook has, the more money it earns. Facebook’s goal is to persuade its users to be comfortable sharing information willingly by providing an environment that becomes richer and more entertaining as the amount of information shared increases. In trying to achieve this goal, the site has made a number of missteps, but is improving its handling of users’ privacy rights.
The launch of Facebook’s Beacon advertising service in 2007 was a lightning rod for criticism of Facebook’s handling of its private information. Beacon was intended to inform users about what their friends were purchasing and what sites they were visiting away from Facebook. Users were angry that Beacon continued to communicate private information even after a user opted out of the service. After significant public backlash and the threat of a class-action lawsuit, Facebook shut down Beacon in September 2009.
Facebook has also drawn criticism for preserving the personal information of people who attempted to remove their profiles from the site. In early 2009, it adjusted its terms of service to assign it ownership rights over the information contained in deleted profiles. In many countries, this practice is illegal, and the user backlash against the move was swift.
In response, Facebook’s chief privacy officer, Chris Kelly, presided over a total overhaul of Facebook’s privacy policy, which took the form of an open collaboration with some of the most vocal critics of the old policies, including the previously mentioned protest group’s founders. In February, Facebook went forward with the new terms after holding a vote open to all Facebook users, 75 percent of whom approved. The site now allows users either to deactivate or to delete their account entirely, and only saves information after deactivation.
In late 2009, tensions between Facebook and its users came to a head when the site rolled out new privacy controls for users, but had adjusted those settings to be public by default. Even users that had previously set their privacy to be “friends-only” for photos and profile information had their content exposed, including the profile of Zuckerberg himself. When asked about the change, Zuckerberg explained that the moves were in response to a shift in social norms towards openness and away from privacy, saying “we decided that these would be the social norms now and we just went for it.”
The fallout from the change and is still ongoing, and more privacy problems keep cropping up. In October 2010, Facebook unveiled new features giving users more control over how they share personal information on the site with other users and third-party applications. These include a groups feature allowing users to distinguish specific circles of “friends” and choose what information they want to share with each group and whether the groups are public or private.
Shortly thereafter, a Wall Street Journal investigation found that some of the most popular Facebook applications (apps) had been transmitting user IDs— identifying information which could provide access to people’s names and, in some cases, their friends’ names—to dozens of advertising and Internet tracking companies. Sharing user IDs is in violation of Facebook’s privacy policies.
All these privacy flaps have not diminished advertiser interest. Facebook serves ads on each user’s home page and on the sidebars of user profiles. In addition to an image and headline from the advertiser, Facebook ads include the names of any user’s friends who have clicked on a button indicating they like the brand or ad. A Nielsen Co. study found that including information about individuals a person knows in an ad boosted recall of the ad by 68 percent and doubled awareness of a brand’s message. To determine what ads to serve to particular people, Facebook abstracts profile information into keywords, and advertisers match ads to those keywords. No individual data is shared with any advertiser.
However, it’s still unclear how much money is there to be made from advertising on Facebook. The site insists that it doesn’t plan to charge its users any kind of fee for site access. Facebook’s 2010 revenue was expected to approach $1 billion, which is a far cry from a $33 billion private market valuation. But the site has already become a critical component of the Web’s social fabric, and Facebook management insists that it’s unworried about profitability in 2010 or the immediate future.
Sources: Emily Steel and Geoffrey A. Fowler, “Facebook in Privacy Breach,” The Wall Street Journal, October 18, 2010; Jessica E. Vascellaro, “Facebook Makes Gains in Web Ads,” The Wall Street Journal, May 12, 2010 and “Facebook Grapples with Privacy Issues,” The Wall Street Journal, May 19, 2010; Geoffrey A. Fowler, “Facebook Fights Privacy Concerns,” The Wall Street Journal, August 21, 2010 and “Facebook Tweaks Allow Friends to Sort Who They Really ‘Like,’” The Wall Street Journal, October 5, 2010; Emily Steel and Geoffrey A. Fowler, “Facebook Touts Selling Power of Friendship,” The Wall Street Journal, July 7, 2010; Brad Stone, “Is Facebook Growing Up Too Fast?” The New York Times, March 29, 2009; and CG Lynch, “Facebook’s Chief Privacy Officer: Balancing Needs of Users with the Business of Social Networks”, CIO.com, April 1 2009.
CASE STUDY QUESTIONS
Each question carries 5 marks / points.
1. What concepts in the chapter are illustrated in this case?
2. Describe the weaknesses of Facebook’s privacy policies and features. What management, organization, and technology factors have contributed to those weaknesses?
3. List and describe some of the options that Facebook managers have in balancing privacy and profitability. How can Facebook better safeguard user privacy? What would be the impact on its profitability and business model?
4 Do you anticipate that Facebook will be successful in developing a business model that monetizes their site traffic? Why or why not?
MIS IN ACTION
Each question carries 5 marks / points.
Visit Facebook’s Web site and review the site’s privacy policy. Then answer the following questions:
1. To what user information does Facebook retain the rights?
2. What is Facebook’s stance regarding information shared via third-party applications developed for the Facebook platform?
3. Did you find the privacy policy to be clear and reasonable? What would you change, if anything?