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.
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.
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