Thought of the Day: February 1, 2010

Web-based consumer software has taught enterprise software developers much in the last few years, most notably how to create applications and environments that are more interactive and transparent. But enterprise software developers are just beginning to learn the most valuable lesson from the public web — the importance of user experience design (UXD).

This new-found knowledge will be applied to externally-facing Web initiatives first, but will eventually become a critical part of internal work support efforts as well. Within an organization, good UXD can boost productivity, reduce business process cycle time, and improve employee satisfaction — all highly sought-after goals.

A major upshot of the new focus on UXD will likely be the consolidation of currently distinct software categories — Enterprise Portal, Web Content Management, Digital Asset Management, and Collaboration, among others — into a single category and tool set that supports the design of user experiences. This merging of functionality is already occurring and should accelerate in the next year or two.

FINRA Affirms Regulation of User-Generated and Social Content

In a Regulatory Notice released earlier today, the Financial Industry Regulatory Authority (FINRA) opined that brokerage firms and their registered representatives must retain records of all communications related to the broker-dealer’s business that are made through public blogs and social media sites, such as Facebook, LinkedIn, and Twitter.

“Every firm that intends to communicate, or permit its associated persons to communicate, through social media sites must first ensure that it can retain records of those communications as required by Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934 and NASD Rule 3110. SEC and FINRA rules require that for record retention purposes, the content of the communication is determinative and a broker-dealer must retain those electronic communications that relate to its “business as such.”

Brokerage firms will now be required to archive and make discoverable business-specific content produced by their employees. They will also have to establish and maintain procedures that ensure a supervisor has either approved an interactive electronic communication before it is posted, or that a “risk-based” method of post-communication review exists and is exercised.

“While prior principal approval is not required under Rule 2210 for interactive electronic forums, firms must supervise these interactive electronic communications under NASD Rule 3010 in a manner reasonably designed to ensure that they do not violate the content requirements of FINRA’s communications rules.

Firms may adopt supervisory procedures similar to those outlined for electronic correspondence in Regulatory Notice 07-59 (FINRA Guidance Regarding Review and Supervision of Electronic Communications). As set forth in that Notice, firms may employ risk-based principles to determine the extent to which the review of incoming, outgoing and internal electronic communications is necessary for the proper supervision of their business. “

In addition, FINRA’s guidance states that all organizations under its purview must establish and communicate social media usage guidelines for their employees, and that those individuals must also receive employer-provided training on those guidelines.

“Firms must adopt policies and procedures reasonably designed to ensure that their associated persons who participate in social media sites for business purposes are appropriately supervised, have the necessary training and background to engage in such activities, and do not present undue risks to investors. Firms must have a general policy prohibiting any associated person from engaging in business communications in a social media site that is not subject to the firm’s supervision. Firms also must require that only those associated persons who have received appropriate training on the firm’s policies and procedures regarding interactive electronic communications may engage in such communications.”

FINRA’s guidance marks the beginning of a new era for financial services companies and their use of external social media. However, the Financial Services sector is not the only one that will be subject to regulation of communications made via blogs and other types of social software. An IBM Senior Product Manager related last week at Lotusphere that IBM customers in the Healthcare and Utilities industries were also beginning to ask about the management of user-generated and social content.

If your organization is currently required to comply with regulations pertaining to the use of email and instant messaging for business communication, expect to see similar requirements placed on your management of external blog and social media site posts in the near future. At some point, it is likely that these regulations will also be applied to internal communications conducted via enterprise social software.

Receiving Recognition Also Provides Benchmarks for Improvement

I have been an industry analyst covering collaboration practices, software, and markets since 1999, with the exception of a four year stint as a collaboration consultant at IBM, during which my expertise and opinions were available only to teammates and clients. I returned to a more public analyst role in March 2009 and have been working diligently since then to re-establish the visibility of my thoughts on collaboration, as well as my personal reputation and client base.

In the last three weeks I have received two signs that the hard work is paying off and that I am on the right track. First, I was recognized as one of 21 influential bloggers in an Enterprise 2.0 All-Star Blogger Roster, compiled by Mark Fidelman, VP Sales at MindTouch. While there were several others that I would have suspected to be more influential than me, I was honored to see my name alongside those that were included. I am fortunate to find myself in good company and pleased to be recognized as a thought leader on the topic of Enterprise 2.0.

The second sign that I am making progress toward my personal goals was my inclusion in the Top 50 on the Technobabble 2.0 list of Top Analyst Tweeters. Technobabble 2.0 took the SageCircle Analyst Twitter Directory, which includes the names of over 750 registered analysts, and ran it through a ranking tool established by Edelman called TweetLevel. The tool’s underlying algorithm assigns scores for Influence, Popularity, Engagement, and Trust — all key ingredients for success as an industry analyst. I was ranked as the 48th most influential analyst and received a higher score for Engagement than nine out of the top ten analysts. What makes this so meaningful to me is the comprehensiveness of this list, not only in terms of the number of analysts covered, but also in the breadth of areas of specialization represented. To be ranked that highly among this broad set of peers is an accomplishment of which I am very proud.

I do not intend to rest on my laurels after receiving this recognition. Instead, I will use the inclusion on these lists as a benchmark from which I can set new goals and raise my performance as an industry analyst. There is definitely room for improvement in terms of Influence and, especially, Trust, which is the one attribute that matters most to me. If my readers and clients trust me, then I will be able to influence them in a positive manner. Trust is built by repeated engagement with readers and followers that provides them with valuable, unique insights about collaboration, enterprise social software, and content management. Some of my related goals for 2010 are to increase the number of people who regularly read my analysis and to more actively engage in open discussions with them. By doing that, I will earn their trust and the privilege of helping them.

I congratulate all my peers that were included in one or both of these lists. These analysts — mostly working at small firms, or as sole practitioners — have demonstrated that blogging, tweeting, and other Web-based forms of self expression can influence the producers and buyers that comprise software markets. The power of larger analyst firms that charge customers high prices for subscriptions to research, or purchases of individual reports, has been eroded by free (or low-cost), Web-based content channels. Market information should be available to everyone, not just those that can afford it. I am glad that my work, and that of my peers, is helping to make it so.