Just been reading through a presentation by Gartner on the future of media with respect to social networks. In this the article categorises users in terms of Creators, Critics, Collectors, Joiners, Spectators.

The presentation then focuses on various age groups. In this it highlights that the younger generation is more focused on creating content, whereas the older generation are far more passive and are either inactive or just browse information. I wondered what the reason for this is? Is it the natural habit of one generation to use social networks? Or is there an alternative driver which forces this behaviour?

One example would be that the younger groups are more switched on to social networking and it is more natural for them to promote themselves via social networks as this is how they would naturally communicate to their friends and family through Facebook, Bebo, MySpace etc…

Conversely, it may be that the older groups have spent many years developing their own personal social networks based on their experiences through their working life. They have less of a need to promote themselves through an electronic social network. Whereas younger people have not had time to develop their personal network and therefore rely on business focussed social networks such as Linkedin, Plaxo or Xing as a form of self promotion.

These are just guesses at the reasons for the skew in behaviour. I guess the question is, why does this distinction matter? Well, if I were considering my social networking strategy, I would seriously consider who my target market was, and that would help to determine the most effective use of social networking. For example, if I were running SAGA who’s target market is the over 50′s, according to this study you should consider pushing information out through blogs to engage with your market. However if your target market is more youth based, then you perhaps want to look at more informal social networks like facebook and consider techniques such as understanding sphere of influence to help drive  your message.

So what is my point? Don’t just go head first into all aspects of social networking. Look at your target market, consider their online habits and then adopt a strategy that is aligned to those habits.

Oh and here is the link to the presentation, draw your own conclusions.

http://www.slideshare.net/jeremiah_owyang/the-future-of-media-in-the-social-era-presentation

Yesterday ASOS beta launched ASOS Life .

In a move that reminds me very much of the Zappos model for online retailing + social media, ASOS have created an online destination and platform to ‘visibly’ host blog, forum, comment, tag, photo and story baased content.

On the ‘invisible’ side of course they are building relationships, assessing customer behaviour and building their community.

In terms of their brand I can only think this will lead to positive brand interaction, consistency, credibility, authenticity, trust and loyalty.  A very nice move.

So what does Web 2.0 mean to Retailers?

Well the term ‘Web 2.0’ means very little.  But what Web 2.0 enables is having significant bearing on retail in 2009 and beyond.   Inventory management, store systems, logistics and CRM will all be affected in one way or another. And in eCommerce, it is already having an impact.

A few weeks ago I wrote a post about taking advantage of cloud services, SAAS and other online services to help accelerate a new business. Rightly so David Deans, from the Business Technology Roundtable, posed the question ‘how does this affect scalability?‘ When should you consider a dedicated managed service (internal/external)?

Scalability is an interesting term as it has a different context depending on the person you are speaking to. I’ll put other articles up in the next few weeks to consider different perspectives, however I’ll start with probably the one that is key to a lot of new businesses and that is COST!

In order to understand the operating cost of an environment you would look at possibly the lowest factor which is the cost per transaction. This figure is commonly made up of the following costs;

• hardware infrastructure (servers, storage, backup devices)
• network infrastructure (telecoms, security)
• support overheads (backup, performance optimisation, user support)
• software overheads (license, vendor maintenance & support)

Note: I’ve not taken into account the cost of the person actually executing the transaction, as this is required no matter where the solution is hosted.

In a new business venture, the cost per transaction tends to be extremely high for an internally managed infrastructure, as the costs cannot be absorbed efficiently across a transaction. When a cloud service provides a business with a cost per transaction, they are charging you for all of the above factors, but they are spreading the cost over many customers and hence obtaining an economy of scale.

Let’s take a very simplistic scenario. A new business is considering the most appropriate infrastructure. They’ve got 2 different options, 1 is a SAAS product and the other is a dedicated managed service.

The managed service will charge around £360k for build of infrastructure, and then an annual charge of £230k for annual maintenance and support. The hosted service is offering a £30k setup fee and £1.50 per transaction fixed for 5 years. Based on 100,000 transactions and an annual growth rate of 20%, you can see that by year 4 the managed service is actually more cost effective.

Now this is an extremely simplistic scenario, and in real terms the benefit of the managed service may be realised sooner or later depending on how you absorb the cost of the initial platform or add functionality. The key for me is in the growth rate, as this will determine the point whereby a business will realise economies of scale through controlling their own infrastructure.

This leads me onto my next article in considering the value-add of a cloud service or SAAS solution and how you should factor this into your decision process.

When speaking to friends who work in different sectors recently, it became apparent that their view of eCommerce and the on-line world is pretty shallow.

They see web sites as basically nothing more than a bunch of pretty pictures, designed, developed and operated by a troupe of digital interactive artists, shuffling about in un-ironed clothes with hair pointing in all directions and an iPod blocking any attempt at conversation.

Frankly I was a bit offended.

Design skills are necessary for sure, but if I were looking for a partner to help design, build and support an eCommerce site, I’d want someone with experience of running large-scale sites taking over £1M each day, an understanding of enterprise systems integration issues (SOA), solid commercial skills and a good grasp of the sector I’m operating in.

Where your average accounting, payroll or CRM system is concerned, change is often considered a bad thing. In strategic terms these are ‘operational’ systems where change is minimised wherever possible to reduce risk and keep a lid on costs. The life expectancy of such a system is often around the 8 to 12 year mark – although we know that some will become entrenched and live for 20 years or more as successive IT managers on 4 year job-change cycles duck the issue of replacing them for fear they’ll lose their job, reputation and future if it all goes a bit pear shaped on their watch.

But web sites are a bit different. To remain competitive they acquire new features on a frequent basis and are more akin to living breathing things in that they evolve in response to market developments. For websites, change is constant and there isn’t the luxury of a fixed quarterly or even biannual release cycle favoured by centralised IT departments. The outcome is that large scale eCommerce sites have a complex code base with multiple code streams requiring outstanding configuration management skills.

The systems infrastructure is intricate too. Managing peak load intra day and shifting demand throughout the year isn’t a trivial task. Frequently a dozen or more application servers will be required. And web servers, database servers, firewalls, routers, load balancers, etc. And they all need configuring and monitoring to make sure the site is up and stays up because – in financial terms – a site outage may be equivalent to shutting the doors on ten or more physical outlets. Now that’s the kind of thing that gets the CEO’s attention!

Integration wise, whether an eCommerce site is small or large there is a significant amount of ‘plumbing’ required to integrate with back-end systems and third parties. Data about products, pricing, offers, discounts and stock positions has to be sourced from somewhere. Orders need to be sent to fulfilment systems. Then we have to consider fraud detection, payment gateway integration (not forgetting 3D secure), image hosting, address verification, and mapping services too. We shouldn’t forget the bunch of data feeds required for affiliates and price comparison sites either. Or email and SMS communications.

I could go on with Web 2.0, social shopping, product reviews, RSS feeds, blogs, Google checkout, etc. but you’ve got the idea now, right? All of this integration work requires traditional Systems Analysis skills as well a detailed understanding of contemporary IT architectures and approaches such as Service Orientation. Experience suggests the more third party integration is required on a project, the more risky it is because of the dependencies involved. I’d want people that have done this before, lots of times and in the large.

In addition to the technical, there is also much to be gained from a partner that understands the business sector too. Any hard-fought for trust engendered by your website will either be reinforced or smashed to bits when the delivery promise made on the website is kept or not by the fulfilment operation that follows, so an understanding of the reality of the distribution centre and store environments is key to providing realistic information to on-line customers. A second site with separate branding probably means different packaging to be used in the DC. Is there physically room for another bench? How will the packers know which brand the order relates to? And let’s face it, Retail is a seasonal business and if you’re not ready for the Xmas peak, January is a lousy time to be looking for alternative employment as nobody has budget until April.

So sure, design and designers are important; an understanding of the psychology of the purchasing process and translation of that into slick browse and checkout processes will undoubtedly do wonderful things to conversion rates. But all in all eCommerce is a whole lot more complicated than pretty pictures.

I just wish my friends could see the big picture.