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As consumer-focused Web 2.0 startups start to feel the pain, one might argue that there will be an increased focus on bringing Web 2.0 to the enterprise.

My favorite research firm, Forrester Research, has projected that enterprise spending on Web 2.0 applications for businesses, also called Enterprise 2.0, will reach $4.6 billion by 2013.

In its press release announcing this projection, Forrester stated:

"Forrester believes that Web 2.0 technologies represent a fundamentally new way to connect with customers and prospects and harness the collaborative power of employees. Large enterprises such as General Motors, McDonald's, Northwestern Mutual Life Insurance, and Wells Fargo have all made heavy use of these tools, and 56 percent of North American and European enterprises consider Web 2.0 to be a priority in 2008 according to a recent Forrester survey."

A friend of mine recently asked me to give my thoughts on the enterprise potential of Web 2.0 applications and I figured now is as good a time as any.

Enterprise 2.0: A Brief Overview

It's somewhat amusing that after several years, what constitutes "Web 2.0" is still somewhat debated.

From my perspective, Enterprise 2.0 encompasses social applications that are designed to be used by companies. These applications include employee social networks, blogs and wikis.

In most cases, these applications look a lot like their consumer-oriented sisters but have been tailored to the needs of companies. One might point out that collaborative tools are not new to the enterprise and this is certainly a valid point.

Be that as it may, the Enterprise 2.0 bandwagon has grown over the past several years. In addition to legions of startups trying to target companies with Web 2.0 applications, large companies such as IBM and Microsoft have entered the market.

Even Cisco, which is best known as a hardware manufacturer, has made several acquisitions of startups that sell Enterprise Web 2.0 software.

So What's the Benefit?

Clearly, a lot of people see a lot of potential in the Enterprise 2.0 market.

From a business standpoint, I think many have considered that making money in the consumer Web 2.0 market is a challenge not worth trying to solve. After all, even Facebook, which has raised over $500mn, may be on the brink of financial problems.

Although some Enterprise 2.0 vendors do offer their applications for free by leveraging an ad-supported model, most have a tried and proven business model - they license their software. Some use a traditional licensing model while others use a SaaS (software-as-a-service) model. In both cases, of course, they're getting paid directly by the end user. That's attractive for obvious reasons.

To hawk their wares, the pitches used to sell companies on Enterprise 2.0 usually revolve around improved employee collaboration, improved internal communication and improved employee productivity.

The belief is, obviously, that with the right social applications, companies can become more effective and efficient. This, of course, should have tangible (or intangible) impacts on the bottom line.

Why Enterprise 2.0 Won't Work

The theory sounds very nice - the same Web 2.0 applications that have been popularized by the consumer market can be very beneficial for companies.

Unfortunately, I don't believe this is the case. There are a number of reasons that Enterprise 2.0 will never "take off" in the enterprise market:

  • Not enough employees will use them. In the consumer Web 2.0 market, it has been established that the vast majority of users are not actively "participating" by producing content. Some suggest a general 1% Rule, where only 1% of the users in a community actively produce the content. In general, all the data I've seen confirms such a general rule - most users in a community are inactive or lurkers.

    In the enterprise environment, one must consider that average employees will have no interest or incentive to use Enterprise 2.0 applications.

    If you've ever worked at a company as it rolls out a new time tracking application that requires employees to enter detailed "time cards" so that project management, time allocation and expense analysis can be made easier, you'd be intimately familiar with just how hard it is to get employees to use new applications they're required to use.

    Whether they're already comfortable with the tools they already use, have too much on their plate to be interested in using new applications or are just lazy, there are lot of common sense reasons employees just won't use Enterprise 2.0 applications.

  • Poor communication is a human problem, not a technological one. Why don't employees collaborate and communicate effectively? This is not primarily due to a lack of the right technologies - it's because most employees lack the skills that are required for effective collaboration and communication.

    If an employee is not good at communicating, organizing, working with others, etc., giving him access to a social network, wiki or blog is not going to change that.

    The reality, in my experience, is that most people have weaknesses in some of these areas and we all have our quirks and flaws. Technology is not going to address that fact. 

  • Corporate structures aren't aligned with the ideals of Enterprise 2.0. Web 2.0 is often associated with the "wisdom of crowds" - the concept that decentralized groups (or "communities") are capable of making better decisions than the "leaders" or "experts" within it would be alone.

    Some Enterprise 2.0 vendors promote the notion that Enterprise 2.0 applications can address the problems that are often associated with top-down, bureaucratic organization structures.

    Yet, as Tom Davenport of Babson College pointed out in a 2007 article:

    "Such a utopian vision can hardly be achieved through new technology alone. The absence of participative technologies in the past is not the only reason that organizations and expertise are hierarchical. Enterprise 2.0 software and the Internet won't make organizational hierarchy and politics go away. They won't make the ideas of the front-line worker in corporations as influential as those of the CEO. Most of the barriers that prevent knowledge from flowing freely in organizations – power differentials, lack of trust, missing incentives, unsupportive cultures, and the general busyness of employees today – won't be addressed or substantially changed by technology alone."

     

  • It isn't all that important to companies and the ROI is unclear. While Forrester stated that "56 percent of North American and European enterprises consider Web 2.0 to be a priority in 2008," I'm skeptical. A "priority"? I have certainly seen evidence that Enterprise 2.0 is of interest to companies but as any salesman would tell you, companies are generally "interested" in everything. 

    Until I see major companies deploying Enterprise 2.0 applications and mandating their use on a widescale across their organizations, I take Forrester's survey with a grain of salt (just as I take most of their "research" around social media with a grain of salt).

    Now that the global economy has turned sour and companies are focused on cutting costs (including cutting staff), it seems highly-unlikely that applications whose tangible contribution to the bottom line is unknown are going to be a "priority" and frankly, I see few ways to realistically calculate an ROI for the use of Enterprise 2.0 applications in a fashion that won't take time and money.

Conclusion

Is it possible that Enterprise 2.0 offers some potential to benefit businesses? Sure. Just as there's a market for intranet applications, for instance, I'm sure there's some market for Web 2.0-like applications in the enterprise.

But just as the consumer Web 2.0 market hasn't revolutionized media and advertising (as promised), Enterprise 2.0 isn't going to revolutionize the way companies and employees interact because what drives the way companies and employees interact isn't all about technology.

There are very good reasons why employees fail to communicate and collaborate effectively and there are very good reasons why enterprises are typically structured in a top-down, hierarchal fashion.

Thinking that Enterprise 2.0 is going to change these things is naive idealism at its best.

Drama 2.0

Published 3 November, 2008 by Drama 2.0

237 more posts from this author

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Will Rowan

"56 percent of North American and European enterprises consider Web 2.0 to be a priority in 2008,"

Yep, define "priority"!

Did they mean... " sheesh, this Web 2.0 could be a really fast way to cut costs out of our business, improve communication internally & externally, and do a better job all round. We'd better look into it."

or... "Our people are wasting too much time on Facebook, eBay, and Instant Messenger. It's costing us a fortune. It has to stop. This is a priority for 2008."

New tech has often started out being a plaything, and in playing, folk have found ways to use it for work. My sense is that in 2008 E2.0 made the move from plaything to being something that many organisations recognised *could* be useful, but they haven't yet fully figured out the *how* & *why* of it yet.

Of course the pioneers are making headway - IBM on Secondlife, 10 Downing St giving front-row access to social media types. But they're still the exceptions.

Maybe 2009 will be the year that E2.0 goes mainstream, and it's normal for companies to have a social business plan.

Will

about 8 years ago

Stuart Greenfield

Stuart Greenfield, Director at Greenfield Strategic Marketing Consultants

The moment something becomes 'mainstream' enough for experts to start writing about why something will not work is a great moment to take it seriously. Web 2 is about interaction and true many people in the 30+ age bracket will never be comfortable with the idea of 'publishing' what they think. But Web 2 is more than this. Firstly it is a progression from web 1 and it is linked more to 'mobile' communications, cloud computing, SAAS, and creating a new level of communications. This new Web 2 world is already a reality for anyone less than say 23 years old and as these people become the managers in organisations the old 'Command and Control leadership style will look very outdated. Come on denial is so 'yesterday' !

about 8 years ago

Drama 2.0

Drama 2.0, Chief Connoisseur at The Drama 2.0 Show

Will: the how and why are important, as are the dollars and cents. I think there will certainly be some ways that Web 2.0 applications can be applied to enterprises, but IBM's Second Life nonsense is not it. :)

Stuart: your definition of Web 2.0 seems to include just about every technology you like. I hate to burst your bubble but mobile, SaaS, etc. all preceded "Web 2.0."

If you think a large company with 30,000 employees and $10 billion in revenue is going to run itself in a "decentralized" fashion, I think it's likely that you've never had real-world exposure to such a company. Here's a thought: the top-down management approach has not just randomly adopted by companies, businesses, armies, etc. throughout history. There's a purpose and a reason.

By the way, if I had received a dollar everytime someone told me something wouldn't work and it didn't and had to give back a dollar everytime someone told me something would work and it did, I'd be ahead by a substantial amount.

The reality is that just as the vast majority of the new species nature has ever created have failed, most new ideas and companies fail.

There's a great book, Why Most Things Fail: Evolution, Extinction and Economics, that's well worth a read for those interested in this subject.

about 8 years ago

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Adi

I'm not really sure on the need for the Enterprise 2.0 tag. What you've described above sounds like the bog standard knowledge management that companies have been using for years. Things like employee 'yellow pages' have been around for around a decade and as they are essentially user profiles they surely did much of what Facebook and LinkedIn do now but without all the hooplah.

about 8 years ago

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victorseo

Enterprise 2.0 - Yes we can. (lol) ERP will be built on media rich social networking type platforms. Internal corporate email will be obselete (because I will just drag and drop the warranty documents I just drafted into the profile of someone in the legal department who must review it and sign off) CSR reps will be able to drill down into "exploding" views of information that more quickly and precisely deliver the information the customer is seeking. Supervisors will no longer be called to workstations to assist, the meet me now button will enable them to "be there" virtually with a click of the button. Enterprise 2.0 is not an addon - it is a "total Platform" that captures every keystroke in the organization. Enterprise 2.0 is not meant to change tried and true top down management. It is meant to give management the data they need in realtime, 24/7. Enterprise 2.0, like Social Media 2.0, is evolution, it is inevitable, it is here. And it is pretty dang cool.

about 8 years ago

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Daria

Enterprise 2.0 usually penetrates into the companies from the bottom-up. People just start using the tools they use at home for business. Take Facebook for example. It all started as a group of college friends, now thousands of people think of it as an important business tool

"way companies and employees interact isn't all about technology" >> There's no doubt about this. But technology can help them interact more efficiently. Technology opens new opportunities and some people are smart enough to use them. BTW, technology plays a vital role in collaboration of distributed teams. The existence of these teams became possible thanks to new technologies.

"there are very good reasons why enterprises are typically structured in a top-down, hierarchal fashion" >> first of all, why don't you name this reason?
Second, Enterprise 2.0 does not destroy a hierarchy. It makes it more flexible. The best Enterprise 2.0 tools, like Wrike, in fact, combine top-down and bottom-up benefits and give companies an opportunity to become more agile keeping tight control over operations.

about 8 years ago

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Mark

As some of the other commenters have alluded to, I think you are being rather narrow in your interpretation of what Enterprise 2.0 involves. Yes, a lot of it is about the technology, and no, technology by itself can't solve problems.

There is however a lot to be said for providing easy and simple tools that enable communication. It won't work for everyone, and there will always be lazy people, but the platform, community and attitude can do a lot to help communication. victorseo's comments are little out-there, but they are in the right direction - it's not just the tech, it's the approach. There most likely will be very slow changes, where the actual technology used does not matter, it's the atmosphere and realisation that there are perhaps more effective ways to do particular things.

Adi above also makes a good point, that "Enterprise 2.0" can be added like building blocks, and in some cases can simply replace existing features with slightly more functional ones. Again, the exact way this is done does not matter, the important part is the new options and possibilities enabled by the technology.

I wonder what you mean by "the consumer Web 2.0 market hasn't revolutionized media and advertising"? If you mean a complete change to a whole new direction, then no, it hasn't. But these days to really make an impression, at least on a younger market, the methods of advertising have shifted significantly.

Drama, your comment seems contradictory: it is true that "mobile, SaaS, etc. all preceded "Web 2.0."", but they are very important building blocks of Enterprise & Web 2.0. The attitudes and perspectives that are evolving could not exist without things like mobile devices, SaaS, cloud storage, etc.

over 7 years ago

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