Sunday, January 13, 2013

Overview of a UX Design Process


Three colleagues and I worked on a project to design a portable interactive museum guide, which would enhance the experience of museum visitors. A design is only effective if it meets the needs of its intended users; hence our starting point was to develop an understanding of the needs of museum visitors. This was accomplished by going to museums and observing visitors and their activities, using Robson’s framework to provide structure. We gained insight into the physical environment, the variety of visitor profiles and the nature of their interaction with the museum exhibits as well as with each other. On a secondary note, we also gained insight into how current portable museum guides are used in order to identify what works well and what requires improvement. Our observation data were complemented by two sets of structured interviews, the second conducted with visitors either during their visit or at the end of it. We aimed to increase the validity of our data through triangulation: data triangulation was achieved by gathering data from the British Museum and the V&A Museum; investigator triangulation was achieved by gathering data independently; and methodological triangulation was achieved by using observation and structured interview techniques.

This yielded a variety of quantitative and qualitative data that had to be analysed and interpreted in order to define a clear set of functional and non-functional requirements for the guide. A hierarchical codebook was developed to pick out the key themes from the qualitative data and, along with the quantitative data, were collated and analysed in a spreadsheet, using graphical representation to identify dominant themes and patterns. The results of the analysis determined our primary and secondary personas as well as the requirements specification. The visitor attributes with the highest values were representative of a large section of surveyed users and therefore were used for the characteristics and goals of the primary persona. Similarly, the secondary persona was derived from recurring attributes. The functional and non-functional requirements were chosen to support the characteristics and goals of the personas, a deductive process of specifying requirements that enable the successful and satisfactory completion of a given goal. We accomplished this by drawing on our creative thinking, general knowledge and established principles of Interaction Design such as affordance, visibility and consistency. While these translated well into usability goals, addressing user experience goals was less certain as they are purely subjective; the degree to which our design was satisfying, enjoyable or helpful could only be determined in the evaluation phase.

Given the popularity of smartphones, and thus apps, among our personas, it was used as the interface metaphor for our design. It provided a familiar structure in terms of having a Main Menu, Search function and page navigation. This also extended to the Map and Navigation functions. A mixture of four interaction types were used in the design. These included instructing the guide by selecting menu options on a touchscreen, conversing by typing in search queries, manipulating by physically waving the guide when using the NFC function and exploring by using the map and navigation functions. The primary interface type considered for the guide was touch, with the ability to tap and swipe offering flexibility and intuitiveness. Although gestures may be interpreted differently from one culture to another, which is of particular significance given the different nationalities of the personas, we believe a gestural interface such as touch is sufficiently global in adoption to minimise the use of incorrect mental models that do not match the proposed conceptual model. A haptic interface was also considered but decided against because we believe vibrotactile feedback would not necessarily enhance the museum experience and might cause dissatisfaction if visitors that did not require the function had to take extra steps to turn it off.

The conceptual design involved placing each persona in a scenario and developing a storyboard to capture the sequence of events. The main focus of the storyboard was on the screen of the guide; as it was a portable touchscreen device carried about by each visitor, the interactions taking place on the screen were of greater relevance than environmental factors. However, the boards that captured the navigation activities focused on the environment, as it was necessary to consider the physical layout of the museum.

Based on our initial data gathering and analysis, the two most important activities carried out by the personas were making a selection from a curated list of the top exhibits in the museum and using a map with navigation for directions to a specific exhibit. Hence these two elements were more fully developed in the detailed design. We opted for a paper prototype, as it was an effective way of not only depicting the content and layout of each screen but also simulating visitors’ interactions with the guide by changing the sequence of the screens in response to a given input.

The low-fidelity nature of a paper prototype was ideal for our purposes as it was practically free and could be easily created and modified without requiring technical or artistic skills. Designing the prototype in PowerPoint as opposed to hand sketching enhanced our ability to visualise each screen and efficiently explore alternative ideas. In terms of functionality, detailed design emphasises depth over breadth and therefore the prototype was vertical as it modelled the complete sequence of activities for each element. Since an actual portable interactive museum guide was not being built, we did not have to formally consider if the prototype was throwaway or evolutionary; however we still viewed it as a throwaway prototype as it was only used for concept development and not the final product.

The final phase of the design process was the evaluation although in principle, the cycle of requirements gathering, design and evaluation is iterative until the final product is ready. To this end, we elicited the support of four test users whose profiles were close to the personas. The aim of the evaluation was to detect design flaws that conflicted with the desired usability and user experience goals, garnering feedback that could subsequently be used to improve the design or explore alternatives.

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Tuesday, May 22, 2012

Disruptive Innovation


Information technology is innately in a constant state of flux, both driven by research/ideas breakthrough and pulled by consumer demands. As such, technology companies who have been dominant in one generation are not guaranteed to repeat their success in subsequent generations. Clayton Christensen, Professor of Business Administration at Harvard Business School, calls this the innovator's dilemma, whereby companies are only able to make evolutionary changes to their products or services rather than revolutionary changes. This is because their knowledge and perspective are restrained by their current market and they are unable to perceive the relevance of newer technologies.

A current example is the decline of RIM's Blackberry smartphones in the face of the massive popularity of Apple's iPhone as well as Google's Android phones. Blackberry had enjoyed prime status as as the standard corporate mobile communications device. It earned the nickname 'crackberry' for its seemingly addictive email and messaging capabilities which were enhanced by its widely praised keyboard. It also had robust back-end security features, making it ideal for corporate IT.

In contrast, the iPhone was launched as a consumer device and initially dismissed as a contender in the corporate market. However the advent of the consumerisation of IT, whereby employees are allowed to bring their own preferred devices - without the cost being borne by their employers - and supported by the corporate IT infrastructure changed the tide in the iPhone's favour.

Due to the success of the Blackberry's keyboard, RIM were reluctant to develop a touchscreen-based smartphone even though the market was shifting in that direction. Its business focus also meant RIM did not emphasise Blackberry's multimedia and entertainment capabilities so as not to dilute the brand and alienate their established corporate market. In hindsight, this further eroded their market share.

In order to foster an environment of continuous innovation, successful companies have to adopt Steve Job's famous line, "stay hungry, stay foolish". Given the barriers highlighted in the innovator's dilemma, a starting point would be the creation of an entrepreneurial culture where employees are encouraged to develop new ideas and rewarded when such are feasible. This is exemplified by Google's 20 percent time, with engineers given time off their regular responsibilities to work on their dream projects, potentially leading to technological breakthroughs and/or new markets. Some of the better known products of the initiative include Gmail, AdSense and Sky.

Even where a company-wide culture of entrepreneurship is lacking, a separate unit could be formed and charged with researching and developing new products or services, such as Xerox PARC which developed the graphical user interface (GUI). Incidentally, Xerox PARC exemplifies the innovator's dilemma; the parent Xerox Corporation failed to recognise the disruptive potential of the invention because it was evaluated through the prism of their phenomenally successful photographic equipment business. They could not connect the dots to foresee the GUI/PC eventually eroding their traditional market in a matter of decades. Hence it is not enough to form separate R&D units; they need to be given commercial status in order to monetise their innovations, perhaps as a separate brand from their parent company.

Conversely, asset-rich companies could use their shares and/or cash to acquire newer, smaller companies in a new market. An example is SAP's acquisition of Success Factors to gain a foothold in the growing enterprise social network market, another product of the consumerisation of IT and which differs from their ERP and business analytics suite. Additionally, SAP Ventures have invested in Box (cloud storage) and Lithium Technologies (social CRM), bolstering their ability to compete against Salesforce.com's cloud services. Initially, Salesforce.com was a niche player being more suitable for SMEs, a market that was not very attractive to SAP. However as cloud computing and the software-as-a-service (SaaS) model has taken off, large enterprises such as Hewlett Packard have been forgoing expensive software licences and their associated infrastructure and personnel costs to adopt Salesforce.com's services, at the expense of SAP, Oracle and similar companies.

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Sunday, April 01, 2012

Social Banking Proposal for First Direct


BACKGROUND 

The growth in social media usage, particularly social networks, has presented First Direct with the opportunity to engage with customers in more personal ways than would be possible through their corporate website. As the leading social network, Facebook’s user base has grown from six million to eight hundred and forty-five million users in seven years (Facebook, 2012a) with four hundred and eighty-three million daily active users (Facebook, 2012b). Crucially users spend considerably more time on Facebook than any other website with research on the U.S. market, with which the U.K. shares several characteristics, showing each visitor spends six hours and fifty-one minutes per month on the site (Nielsenwire, 2012).


Following the creation of their Facebook page, First Direct’s fan base has grown from August 2011 at a monthly average of 45 percent, currently peaking at 13,600. Similarly, the number of fans who actively engage with their page has grown at a monthly average of 40 percent (Facebook, 2012c). The most popular age group is the 35-44 years old range (Facebook, 2012d), which is in line with their customers’ average age of 43 years old, as identified by Garrett et al. (2007, p.16).





CURRENT POSITION 

The ICDT Model (Angehrn. A, 1997, p.362) can be used to evaluate First Direct’s current social media strategy and plot the course for the next stage of its development.



At its most basic level, the Facebook page extends their corporate website as a platform for informing existing and potential customers about new products and services. It is particularly effective because updates are ‘pushed’ to fans’ news feeds even when they have not made the effort to search for information on their website.

However they are making a more strategic use of the platform by cultivating a vibrant community of users who interact with First Direct as well as with one another. The quality of their communication with existing and potential customers lies at the heart of their success and as Communications Manager Matthew Higgins, quoted in Garrett et al. (2007, p.7), said “we are really a communications organisation first, and a bank second”. The rapport contributes to the building of positive relationships with the users. Their sense of ownership of First Direct’s products and services, shaped by their opinions, makes users more likely to recommend the bank to others in their social network. Since 33 percent of First Direct’s customers come from personal recommendations (Garrett et al., 2007, p.6), this holds a high strategic significance.


FUTURE DIRECTION

As their customer engagement on Facebook matures, there is an impetus for First Direct to steer their activities towards the third and fourth quadrants of the ICDT Model, delivering downloadable products to customers and facilitating their financial transactions. I term this ‘social banking’.

Li and Bernoff (2011, l.1109), of Altimeter Group and Forrester Research respectively, devised the POST method for planning an effective social media strategy. It is a framework for analysing the people, objectives, strategy and technology which an organisation’s social media efforts will revolve around.

PEOPLE 
The fundamental question is, are customers ready to move beyond posting updates on Facebook to engaging in commercial transactions? Anderson et al (2011, p.4) estimate that the global market for social commerce in hard goods, excluding services, will grow from US$5 billion in 2011 to US$30 billion by 2015. The key to unlocking the potential of this market will be to focus on the relational dimension of commerce rather than approaching it as a regular e-commerce channel, a point highlighted by Cecere et al (2010, p.14). This is underscored by U.S. retailers such as Gap and Gamestop who have closed their floundering Facebook storefronts (Lutz, 2012). Conversely the CEO of 8th Bridge, a social shopping software provider, countered with the examples of Ticketmaster and Delta Airlines’ integration of a social experience into their Facebook storefronts (Gerten, 2012).

It is equally important to understand how customers currently use social media in order to align the bank’s strategy with their tendencies. Forrester’s Social Technographics Profile of the age range of First Direct’s core customers (Empowered, 2012) shows 77 percent use social networking sites, ranging from maintaining a profile to regularly generating content (Li and Bernoff, 2011, l.794), with overlaps between the different groups. Paul Say, Head of E-Marketing, has further observed that “the pipeline of new customers is increasingly dominated by…digital natives” as quoted in Garrett et al. (2007, p.2). Hence a large percentage of their customers are conceivably on Facebook and there is the potential to deliver relevant social banking services to them.



OBJECTIVES
Li and Bernoff (2011, l.1118) identified five primary objectives of companies’ use of social media which centre on communications and marketing: listening, talking, energising, supporting and embracing. For First Direct’s purposes, I suggest a sixth objective: transacting. The goal is to move into the distribution and transaction spaces by delivering banking products and services on Facebook, where customers are investing their online time. This is particularly desirable given the competitive threats posed by products including Facebook Credits (Facebook, 2012e) and PayPal Send Money (Facebook, 2012f) or a potential Facebook app for Barclays Pingit (Barclays, 2012).

The advent of social commerce mirrors that of e-commerce in the nineties, with its related opportunities and threats. As Wenninger (2000, p.3) noted, “e-commerce would create opportunities for banks to strengthen their relationships with customers, sell additional services, and prevent encroachment on their business activities by the technology companies and other nonbank financial service providers…” and “[banks] will be caught off guard by the changes, unable to anticipate new forms of competition…”. Although social commerce can currently be characterised as a sustaining technology (Christensen, cited in INM354, Session 8, s.8), which maintains the performance trajectory of e-commerce, it possesses future disruptive potential by changing the method and process of payments.

First Direct could develop an app for sending and receiving money between Facebook friends, paying for products on ‘liked’ storefronts and making in-app purchases. The app would operate as a digital wallet which can either be linked to users’ current accounts or preloaded with cash. Its unique selling points would be payment security, the confidence inspired by a regulated financial institution, speed and ease-of-use. While product purchases on Facebook is a nascent market, there are immediate opportunities for peer-to-peer transactions including personal lending, gifts and international money transfer. These can be processed using the bank’s existing infrastructure and therefore at minimal cost to users.

Breaking into the in-app purchases market would be a significant challenge, particularly with Facebook Credits as the monopoly virtual currency. However it is weakened by its inability to be converted to cash or exchanged with other users, as noted by Cyran (2011). This provides an opportunity to link the credits to offline transactions, which can be achieved through partnerships with app developers or directly with Facebook. American Express pioneered this strategy by allowing customers to redeem their Membership Rewards points to purchase virtual goods from Zynga (American Express, 2010), the largest social games publisher and Facebook’s biggest single source of income (Nuttall, 2012). First Direct could bulk-purchase credits from Facebook and offer it as a benefit on the First Directory product (First Direct, 2012a) as well as a reward for using the virtual wallet.

Traditional products could be repackaged with social features. Taking a step beyond customers recommending First Direct to their friends through their Facebook page, a version of the Regular Saver Account (First Direct, 2012b) offered on Facebook would allow friends to pool their monthly savings together and earn a higher interest rate on a pro-rata basis. A secure app would enable them to monitor transactions and balances without having to log on the Internet banking website (First Direct, 2012c). The concept is an adaptation of rotating credit associations such as the ‘Esusu’ traditionally practised in Nigeria, where members make regular contributions to a fund which they all take turns to benefit from (Microfinance Nigeria, 2010). Successfully implemented within applicable guidelines of the Financial Services Authority, this would be a revolutionary transformation of First Direct’s business network, based on the Venkatraman Framework of IT-enabled business transformation (cited in INM354, Session 1, s.7). It would expand their customer categories from individuals (personal and corporate) to communities with associated economies of scale while creating a new social network channel in addition to telephone, mobile and Internet banking. 

STRATEGY
Blanchard (2011, p.16) emphasised that social media does not exist in its own silo but rather plugs into the business. Hence the effect of these innovations on First Direct’s relationships with customers must be aligned with their corporate strategy. The success of their push into social banking will rest on every employee, from executive management to customer sales representatives.

First Direct’s products, services and innovations are geared towards one outcome – offering customers what the bank knows they want (First Direct, 2012d) and what their customers want on Facebook is to build relationships and interact with others in their network. The provision of distribution and transaction services which empower these social interactions will make First Direct a valued partner in customers’ everyday life, further realising their vision of being ‘more than just a bank’ (First Direct, 2012d).

In order to measure the success of the social banking strategy, they will need to establish key performance indicators (KPI) that will be used to determine their return on investment (ROI). The Balanced Scorecard (BSC) developed by Kaplan and Norton (cited in Hung-Yi, 2012, p.307) is an ideal framework for the exercise as it combines four financial and non-financial measures: Finance, Customer, Internal Process and Learning and Growth. A study on constructing a strategy map for banks using KPIs grouped into the four BSC perspectives (Hung-Yi, 2012, p.316) identifies Customer as the central BSC perspective and Customer Satisfaction and Customer Retention as the central KPIs. Success in key nonfinancial measures precedes success in key financial measures, that is, they will increase ROI by knowing what their customers want and giving it to them.

The study further reveals that “increasing the sales volume of products and services by promoting both efficiency and effectiveness of sales tends to drive the retention of existing customers, the enhancement of customer satisfaction and the improvement of sales performance” and sales performance “receives the strongest influence from management performance”.

The conclusion is that in order to empower customers’ social interactions with social banking, thereby improving the bank’s capacity to satisfy and retain them, the executive management need to implement measures to maximise the performance of customer sales representatives. Hence while customer satisfaction and retention attributable to the social banking app will be the primary indicators of success, the strategic improvement path (Hung-Yi, 2012, p.317) to their achievement starts with implementing the right management mechanisms to train, equip and motivate the sales representatives who will be promoting the product to customers and supporting them in its use.


  
TECHNOLOGY
The question of which platform to use is already answered – Facebook’s uniqueness over other popular social media sites such as Twitter, LinkedIn and YouTube is its provision of tools for sharing more than just information and knowledge; users can share their life journeys and experiences in a rich format and this accounts for its market dominance. Consequently First Direct’s core customer demographics of 35-44 year olds are already active on this platform. Furthermore the interactivity and security features necessary for the social banking app require the technological robustness of Facebook for its deployment.

What need to be determined are the technology partners that will design and build the social banking app. Li and Bernoff (2011, l.1207) caution against selecting the company with the lowest bid or the most features. It is of greater importance to choose a company with a suitable track record of app development, vision to stay ahead of the rapidly changing technological landscape and clear understanding of the First Direct brand as well as their objectives.

It will be important to get the user experience right, ensuring the app’s interface maintains consistency and seamlessly integrates with those of the mobile, Internet and telephone channels (Bussmann et al., 2011) while blending with the underlying Facebook architecture.

The degree of sophistication (exploiting the specific characteristics of Facebook) and customisation (providing individualised services to users of the app) will also need to be considered (Angehrn and Meyer, 1997).  The app should deeply integrate with such core Facebook Platform technologies as Social Plugins (Facebook, 2012g), Graph API (Facebook, 2012h) and Platform Dialogs (Facebook, 2012i) for it to make the most of the social network site. This would have the added benefit of giving users individual control over how it is used and shared, enhancing its value proposition.


CONCLUSION

The growth rate of Facebook users and the length of time spent on the site not only underscore its preeminent position over other social media destinations but also its successful weaving into the fabric of society.  As First Direct’s Generation X customers are actively using social media professionally and personally, the ranks of Generation Y professionals who have grown up with the Internet and social technologies (cited in INM354, Session 9, s.4) will continue to swell. Given that they are the pool that their new customers are drawn from (Garrett et al., 2007, p.2), it is imperative that the bank continuously innovates to ensure their products and services are adapted to customers’ lifestyle and technological competence.

They have an opportunity to define a new era of social banking that could revolutionise the sector and establish First Direct as the bank for the ‘social generation’. To be more than just a bank, they must benchmark themselves against their customers and not just their competitors.


REFERENCE LIST 
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Wednesday, February 22, 2012

RareList


RareList (http://www.rarelist.co.uk/) is a classified ad website, a platform for uniting buyers and sellers of rare books and similar items. As such, it stands or falls on its ability to provide a user-friendly listing process, powerful search tools, smooth trades and a thriving community of like-minded enthusiasts.

The wide range of information that can be completed for each listed item could help potential buyers evaluate its quality and suitability. However completing all the details could also be a daunting task, making the Book Wizard a useful feature. It simplifies the listing process into four short steps which cover the essential information while giving sellers the option of adding more details at a later point. On the other hand, the use of inconsistent names on different sections of the website, such as Book ID versus RareList Ref or Category versus Item adds an element of confusion for users.

Potential buyers are able to fine-tune their search criteria to find specific items or conversely, use a title keyword to generate a result of loosely matching items. While the search tools offer an efficient way of finding desired items, they might be more effective if they provided the ability to search the text in item descriptions. This would enable potential buyers who do not have enough information to locate listed items with keywords, even if those words are not contained in the title.

The trading process is brief, with an email automatically generated to notify a seller of a buyer’s interest and actual trades settled outside the system boundary. Replying a message without logging into RareList reduces the activity cycle required to begin the payment and delivery process. 

The building of the RareList community starts with membership registration, which only requires a valid email address and username. However the inability to search for members by User ID makes it difficult to find those who have changed their usernames. More significantly, the unavailability of a tool to delete membership profiles could discourage potential users from registering in the first place.

New members are credited with one pound which can only be used within the system, that is, a virtual currency. This encourages members to explore aspects of the system that might have been otherwise ignored, such as upgrading to a premium membership in order to use the auction facility or list a larger number of items. 

Participation is further encouraged by rewarding members whose forum posts are deemed valuable with ten pence while those introducing a new member who subsequently upgrades to premium are credited with three pounds. With payments made in virtual currency, the earnings can only be spent within the system thereby generating a virtuous cycle of transactions which enhance the user community. On the other hand, the option of withdrawing the credits in real currency using PayPal would have a wider appeal and provide a stronger incentive.

As a connector of buyers and sellers, RareList is an effective tool but tweaking its underlying system would increase its value to its users. 


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Wednesday, November 16, 2011

The Strategic Role of IT at the Financial Times


The Financial Times Limited (FT) is a business news and information organisation. Its objective is to provide news, comment, data and analysis to the global business community (Financial Times, 2011b). Although the FT is incorporated as a newspaper publisher (Companies House, 2011) and its object includes the printing, publishing and circulation of newspapers (Memorandum of Association of The Financial Times Limited, 1st December 1981, clause 3(B)), its products are not newspapers. Rather, the newspaper is a vehicle used to deliver its products, which are business news and information. Hence I will be analysing the extent to which IT plays a strategic role in the FT’s delivery of business information to its global audience as opposed to the strategic role of IT in its publication of newspapers. The impact of IT on advertising will also be included in the analysis, as subscribers and advertisers are the FT’s sources of revenue.

Hindle (2010, l.6229) described strategy as ‘matching external demands with internal capabilities.’ Recent or ongoing IT projects which impact external stakeholders indicate the FT’s strategic focus, a deductive process discussed by Robson (1997, p.5). Since launching a paid meter access model for FT.com in 2007, the FT has been developing additional digital circulation channels including a mobile website, smartphone apps and tablet apps (Financial Times, 2011, e). The realisation of the financial and technical resources required to support multiple mobile devices has led to a tactical change and a HTML5 web app is being developed for all platforms (Financial Times, 2011, d). Editorially, the newsroom has been integrated to ensure all journalists work in print and online (Barber, 2011). Thus it can be inferred that the FT views the digital distribution of its content as a strategic growth area. The competitive context of this strategy can be examined using Porter’s five forces framework, cited in Avison and Fitzgerald (2006, p.57), and five corresponding questions proposed by Applegate et al. (2007, p.41).

Laudon and Laudon (2011, p.38) claimed that newspaper readership is declining as online news consumption expands and Standage (2011, a) asserted that newspaper ‘readers have shifted their attention to other media, quickly followed by advertisers.’ In 2008, the Internet surpassed newspapers as Americans’ source of news (Standage 2011, b) and a severe drop in advertising revenue since 2006 has sharply reduced profits at U.S. newspapers (Pressure on the Presses n.d.). Business news providers need to develop their digital distribution channels to remain competitive and sustain revenue from subscribers and advertisers. It is necessary for business survival due to industry-level changes (Laudon and Laudon, 2011, p.46). The FT’s industry rivals include the Wall Street Journal (WSJ), Reuters and Bloomberg. Figure 1 presents the latest audience statistics[1] for the firms, indicating competitors have significantly larger online readership than the FT. Hence digital distribution does not differentiate the FT from its rivals and therefore does not change the basis of competition.
Figure 1
Average Daily Global Audience
On the other hand, the FT’s reputation for authority, integrity and accuracy (Financial Times, 2011, b) could be a source of competitive advantage. Online and mobile access to premium content which users are willing to pay for increases entry barriers for news distributed through social media and aggregators such as Twitter and the Huffington Post. Barber (2011) described the FT’s response to new entrants as commitment to journalistic quality, development of online subscription business by charging for content and restriction of aggregators’ access to proprietary information. IT is used to erect a ‘paywall’ which compels business users, who value accurate information and authoritative analysis, to subscribe to the FT digitally and this strategy contributed to a nine percent growth in audience from May 2010 to May 2011 (Financial Times, 2011, a).

Digital channels enable users to engage with one another. Christie, quoted in Behling (2011), states “there is an appetite for FT readers to talk to other FT readers,” and this is being harnessed to build a user community. The loyalty engendered by an online community could create a barrier for competitors, as claimed by Applegate et al. (2007, p.45). The FT has embedded user interaction in its website by integrating reader comments at the end of each article. The ability of the audience to exchange opinions directly on the website increases the immediacy of their communication and thus the vibrancy of the community. On-site interactions are complemented by the use of third-party sites to build its community. The Social Media Hub, comprising Facebook, LinkedIn, Twitter, YouTube and Flickr channels, expands membership of the FT community beyond active subscribers and drives traffic to FT.com. Reuters makes similar use of external social media and on-site user comments to engage its audience, seventy-nine percent of whom do not visit rival financial websites (Reuters, 2011a). However interacting on third-party sites with varied content from several sources potentially makes users more likely to divert their attention away from the FT.

The nature of the relationship between the FT and its sources of news and data could be transformed by social media. Fortune Global 100 companies’ use of Twitter, Facebook and YouTube stands at sixty-five percent, fifty-four percent and fifty percent respectively (Burson-Marsteller, 2010, p.3). Laudon and Laudon (2011, p.38) mentioned that businesses are increasingly using social networks to engage with their customers. The direct communication between companies and stakeholders potentially bypasses news organisations, shifting the balance of power to corporations. However corporations’ use of social media could be a source of raw information on which news organisations build their analysis and commentaries. As Standage (2011, b) reported, ‘non-journalists are acting as sources for a growing number of news organisations...’ The FT ‘follows’ organisations including the European Commission, NASDAQ and Research In Motion (Twitter, 2011) which gives it instant access to official news updates.

The interactive features of the Internet add value to the FT’s news, comment, data and analysis while enabling the creation of new products or services. The IT infrastructure deployed to give users digital access to content also transform the FT into a research tool. The indexing and storing of data enable users to search information archives and retrieve relevant results, extending the financial value of its markets data and news analysis beyond the shelf life of newsprints. Furthermore, twenty-five percent of FT readers take six or more international flights a year and sixty-seven percent conduct business internationally (Financial Times, 2011a). Globally mobile customers are able to derive maximum value from their subscriptions by having digital access to FT content from foreign countries.  

Data on customer preferences and behaviour is a valued resource which could be sold to market research firms, as discussed by Applegate et al. (2007, p.48), or used for targeted advertising. The FT creates a profile of each customer by analysing his/her registration data, preference data, behaviour on FT.com, behaviour on other FT group websites, behaviour across the web and broader profiling. The profile is used to attract advertisers to target their campaigns at specific audiences, a strategy claimed to be almost four times more effective than un-targeted advertising (Financial Times, 2011c). Additionally, the audience demographics inform the development of specialist products such as FT Alphaville and MBA Newslines.

The use of non-proprietary Internet technologies lowers customers’ switching costs, a postulation made by Applegate et al. (2007, p.47). Although it aids market penetration, the ability to use the same technology to access content from the FT’s competitors reduces the potential to lock in customers, unlike proprietary technologies such as Bloomberg Terminal. Conversely, subscribers can construct a customised investment portfolio on FT.com, using markets data to track performance, follow related news, create interactive charts, build equity screens and configure market alerts. This raises the switching costs for customers who have invested time and effort in creating their portfolio. However, the feature is not compelling enough to lock in customers as websites such as Reuters, Yahoo Finance and MSN Money offer comparable, free services.

The FT’s competitive advantage lies in the quality of its business news and information rather than its use of IT for content delivery. Digital distribution is not a differentiator yet it increases the FT’s capacity to meet the current and future needs of its customers. The industry-level changes require the development of online and mobile channels to reach customers and attract advertisers. Nevertheless the statistics in Figure 1 reveal that the FT newspaper has 1.4 times the circulation and 2.8 times the readership of FT.com while subscription-based WSJ newspaper has 1.3 times the readership of free Bloomberg.com. Even as digital distribution gains momentum, the larger subscription and advertising revenues of newspapers underline their continued importance. Thus newspapers are unlikely to be completely replaced after the penetration of smartphones and tablets, as well as users’ reading habits, reaches critical mass. As Barber (2011) stated, the FT’s “task is to ensure the newspaper evolves in step with the mobile and digital products.”


REFERENCE LIST
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