Systems of Engagement

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JP Rangaswami:

Systems of Record

"The first layer of learning was about the differences between the enterprise world and the consumer world when it came to some of these systems. The thinking goes something like this:

  • For centuries firms were viewed as hierarchies of customers and products. Naturally, this view permeated into the way firms accounted for what they did; everything in a firm was recorded as relating to customers or products, under the broad headings of costs, revenues and overheads. More recently this perspective of the firm has changed: as Boston professor N. Venkatraman has been telling us for a decade, firms are now networks of relationships and capabilities. Human and social capital are therefore rising in prominence; the conventions and systems to recognise and value and account for them are, however, somewhat lacking.
  • The first “systems” to be computerised, comprising the processes, records and conventions underpinning what people actually did, these systems related to the ledgers and books of record that were being automated. So what we did was to enshrine the centuries-old way of looking at firms as hierarchies of products and customers. The way cost and profit centres were set up, the codes used, the way things were aggregated, “rolled up”, everything we did was redolent of the original thesis: firms were hierarchies of products and customers.
  • These first systems, over time, became the backbone of the firm, the “books and records” that were inspectable, auditable, audited and reported. As the years went by, people started calling them enterprise resource management or ERP systems.
  • The 1980s and 1990s provided firms with two shocks. The first shock was a real hard one. They discovered they had “customers”. Life did not actually begin and end within the walls of the organisation they worked for and often revered. So firms began to think of customers as something more than account numbers, and tried not to show their irritation when these “customers” actually wanted some help or advice or attention. Retail outlets actually began to think of the space they used for administration, in contrast to the space they reserved for “customers”. Utility service providers such as banks and water companies and transportation providers and telcos began their painful paths towards recognising the very existence of the customer, a path they continue to be on.
  • The second shock was not quite as hard, but it was a shock nevertheless. Firms discovered that they had “supply chains”, that vertical integration was no longer guaranteed, that they needed to partner with others, source from others, in order just to survive. [At this stage I shall resist the temptation to speak of the tremendous damage done to industry in general as everything in sight was "re-engineered", an age of some truly appalling waste in the context of misguided and suboptimal reorganisations and outsourcing.]
  • So during the decade between 1990 and 2000, the world of ERP had been joined by at least two more TLAs, Customer Relationship Management (CRM) and Supply Chain Management (SCM). [While I saw all three terms active in the mid-to-late 1980s, they were slow to come out of the gates from a computing perspective].
  • This ERP-SCM-CRM world was just beginning to toodle along as the Web emerged and grew, and as a result a fourth classification emerged, that of e-commerce or e-biz or sometimes just “fulfilment”. And this whole shebang begat a slew of forks and joins and renames as they evolved, and billing, payments, complaints, enquiries and so on all took their place somewhere within that pantheon. Some went the way of CRM, others disappeared into the ERP camp, yet others wormed their way into e-commerce.
  • And so the stage was set. These were the transactions of old, the full-grown equivalents of what started off as TP systems, laying out the books and records of the firm in all their glory. The Systems of Record were present, ready and accounted for.

Systems of Engagement

The second layer of learning dealt with the systems I’d become more familiar with over the past decade or so, in my post-Cluetrain state. [Note: I love The Cluetrain Manifesto, I think everyone who enjoys reading this blog should read that book at least once; I'm privileged to call the four authors my friends, and honoured to have been asked to submit a chapter to their 10th anniversary edition, now available in paperback as well.]

Cluetrain taught me many things, but three things stand out as the most important for me: one, that firms make money because their customers like what they stand for and what they do; two, that good firms have real, active relationships with their customers, they are in constant conversation with them, that the conversation is the way that values and needs and wants and aspirations and intentions are discovered and shared; and three, that for some reason firms keep forgetting this and morphing into command-and-control fortresses that “lock in” customers, “target” them and various other forms of corporate waterboarding.

Right now my thinking is somewhere along these lines:

  • Systems of engagement make it easier for people to communicate with each other; the original telcos and post offices provided systems of engagement; as we added ways to communicate, these agencies had to change; Microsoft was the leading “system of engagement” provider for most of the last twenty-five years; facebook has now usurped their place.
  • Initially, systems of engagement start very open and informal for a given communication medium: post, telegraph, telephone, email, IM, SMS, twitter, video calling. Then, as critical mass forms, many things change, search costs increase and the need for directories emerges. Classification systems enter the fray. Better search tools evolve.
  • Each medium of communication comes with its own jargon, its short cuts, its conventions. Some of these fade away as a greater level of formality is afforded, others become a part of the furniture. [A friend and erstwhile colleague, Stu Berwick, used to remind me "It's polite to be silent" when talking about chat. What I've learnt since is that this is true for most new communications techniques. When I began using email, you didn't have to reply to every one. The same was true for chat, for SMS, for twitter. But now....]
  • In a digital world, as the “system of engagement” matures, something else happens. The process of communication gets embedded with objects. Attachments to emails: documents, presentations, spreadsheets to begin with, all kinds of files later. Attachments to SMS: just pictures and sounds to begin with, soon video. Attachments to twitter: links to begin with, then photographs and sounds, now all of the above, usually presented as a shortened link.
  • The internet changes the way systems of engagement work. All communication becomes at least two-way. Attachments disappear, to be replaced by everyone “looking” at the same object. The ability to comment on, enrich, amend, annotate is a powerful change agent, transforming the value of the embedded object. As a result, the tools change: digital social objects are editable, amendable, commentable, taggable. Archivable, searchable, findable. But in a new form, with a plethora of comments and other actions wrapped around the object."



From Systems of Record to Systems of Engagement

1 John Mancini, on a new report by Geoffrey Moore:

“We have spent the past several decades of IT investment focused on deploying ‘systems of record.’ These systems accomplished two important things,” notes Moore. “First, they centralized, standardized, and automated business transactions on a global basis, thereby better enabling world trade. Second, they gave top management a global view of the state of the business, thereby better enabling global business management. Spending on the Enterprise Content Management technologies that are at the core of Systems of Record will continue — and will actually expand as these solutions become more available and relevant to small and mid-sized organizations. However, there is also a new and revolutionary wave of spending emerging on Systems of Engagement — a wave focused directly on knowledge worker effectiveness and productivity. Social Business Systems are at the heart of Systems of Engagement.”

According to AIIM Chair Lynn Fraas, Vice President of Crown Partners, “Social Business Systems provide a means for organizations to build on their investment in content management solutions. Increasingly, Systems of Record have become a necessary but not sufficient prerequisite for business success. In the future, organizations will differentiate themselves based on how well they deploy Social Business technologies to improve organizational flexibility and better engage customers. These Social Business technologies are transforming customer engagement through such consumer facing tools as Facebook, LinkedIn, and Twitter. They are simultaneously creating new models of employee and partner collaboration, cooperation and conversation within organizations — models that will eventually replace e-mail as the primary means of internal collaboration.”

According to Moore, “The first wave of spending left knowledge workers mostly on their own. We gave our workers laptops, connectivity, email, and the Office suite, and told them to go be more productive. The world of consumer social technology has given our workforces a taste of what is possible beyond this kind of rudimentary e-mail driven collaboration. Given the pressures that global business models are putting on collaboration and coordination across enterprise boundaries, the demand for increased capabilities is escalating rapidly. The implications of this for IT organizations and CIOs are revolutionary — organizations need to quickly get in front of this curve or they run the risk of getting run over by it. We are on the cusp of a new wave of investment in Social Business Systems that will focus on providing knowledge workers with the tools to collaborate with a business purpose.” (

2. JP Rangaswami:

"Businesses are morphing from customer-product hierarchies to relationship-capability networks. This is placing intense pressure on enterprise systems bases, which have traditionally kept the Fort Knox-like “systems of record” distinct and separate from the somewhat more promiscuous “systems of engagement”.

Systems of record often dealt with private objects, hard to access, secure, confidential: unpublished trading figures from an accounting system, for example. Systems of engagement, on the other hand, often dealt with public objects, usually accessed via the web: a link to a blog post recommended by someone in your network, for example.

Systems of record were perceived to be secure and confidential in comparison to systems of engagement; however, as extracts from systems of record were usually embedded in documents, spreadsheets and presentations, and then sent as e-mail attachments, the true level of security is questionable. Witness what Bradley Manning did.

Systems of engagement are perceived to be open and “insecure”; yet, learning from the facebook model, it can be argued that the granular nature of the security of access is actually of a far higher order than that afforded to the systems-of-engagement-information-accessed-via-email-attachments." (

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