Web 2.0 and The Enterprise

TECHNOLOGY
Web 2.0 and The Enterprise

Its impact on business and strategies to maximize new opportunities By Victoria Furness
Victoria Furness
Victoria Furness is a freelance technology and business journalist who has published work in Marketing Week, Revolution Personnel Today Computer Business Review, Real Deals, Financial World and Information Age. Prior to her freelance career, Victoria worked for Marketing Week, and ComputerWire, where she wrote for its flagship magazine, Computer Business Review, the daily newswire Computergram and its research arm on her specialist area of enterprise applications. Victoria graduated with first class honors from Manchester University.
Copyright 2008 Business Insights Ltd This Manaement Report is published by Business Insights Ltd. All rights reserved. Reproduction or redistribution of this Management Report in any form for any purpose is expressly prohibited without the prior consent of Business Insights Ltd. The views expressed in this Management Report are those of the publisher, not of Business Insights. Business Insights Ltd accepts no liability for the accuracy or completeness of the information, advice or comment contained in this Management Report nor for any actions taken in reliance thereon. While information, advice or comment is believed to be correct at the time of publication, no responsibility can be accepted by Business Insights Ltd for its completeness or accuracy.
ii
Table of Contents
The impact of Web 2.0 on the enterprise
Executive Summary
What Web 2.0 means for your business The enterprise approach to Web 2.0 Why Web 2.0 matters Collaboration in a Web 2.0 world Web 2.0 marketing opportunities Vendors to watch Where next: Web 3.0
12
12 13 14 15 16 17 18
Chapter 1
Introduction
20
20 21 21 21 22 22 22 22 22 22 23 23 23 23 23 24 24
What is this report about Who is this report for? Definitions Blog Enterprise 2.0 Mash-up Podcast RSS (Really Simple Syndication) Social bookmarking Social network The long tail The wisdom of crowds User generated content Web 2.0 Web 2.0 company Widget Wiki
iii
Chapter 2
Summary
What Web 2.0 means for your business
26
26 27 27 32 32 33 34 35 36 37 37 39 39 39 39 40 40 41 41 42 43 44
The emergence of Web 2.0 A consumer-driven trend Defining Web 2.0 Web 2.0 applications and services Harking back to the past Looking into the future Drivers behind Web 2.0 Enterprise 2.0 A Web 2.0 workforce Improving business processes and advertising practices Barriers to Enterprise 2.0 Security Confidentiality Effectiveness Culture Enterprise 2.0 best practices Barriers to Web 2.0 Bandwidth Net neutrality Legal challenges to Web 2.0 Will the Web 2.0 bubble burst?
Chapter 3
Summary IT spending
The enterprise approach to Web 2.0
46
46 47 48 49 51 51 52 52 53 54 54 55 56 58
Enterprise adoption of Web 2.0 Return on investment Who is driving Web 2.0 in enterprises? Implementing Web 2.0 A vertical approach to Web 2.0 Government e-Democracy in Web 2.0 world Challenges in a Web 2.0 world The healthcare and pharmaceutical industry Financial services Challenges in a Web 2.0 world Barriers to adoption of Enterprise 2.0
iv
Misperception and confusion Culture IT security and management IT security Application integration Skills shortage Take-up Where next for Enterprise 2.0? Enterprise 2.0 recommendations Re-think traditional information flows and structures Establish policies for Web 2.0 usage Consider areas where new applications could be deployed Dont abandon offline communication altogether Avoid a disconnect between IT and business
58 59 60 60 62 62 63 63 64 64 64 65 65 65
Chapter 4
Summary Introduction Background
Why Web 2.0 matters
68
68 69 69 70 72 74 76 76 76 76 77 77 77 78 79 79 79 79 79
How much is Web 2.0 worth? The Web 2.0 business model Are Facebook and co. worth more than $15bn? Network effect Innovation Using the site as a platform Open architecture Lower infrastructure costs Online advertising is growing Flaws in the Web 2.0 business model The online advertising market isnt equal Theoretical valuations vs. actual revenue and profitability Web 2.0 isnt the only sector chasing VC funding Wheres the disruptive technology? Web 2.0 businesses are going bust Is Web 2.0 another dotcom bubble waiting to burst?
Chapter 5
Summary Introduction
Collaboration in a Web 2.0 world
84
84 85 86
The Web 2.0 opportunity
The benefits of Web 2.0 collaboration The wisdom of crowds The limitations of current communication methods Open, flexible and accessible Genuine knowledge sharing Barriers to Web 2.0 collaboration Losing control The unwisdom of crowds Enterprise scalability Appropriate content Securing the enterprise Information sharing Wikis in the workplace Pitfalls of using wikis in the enterprise Blogging in the workplace Pitfalls of using blogs in the enterprise Social networking in the workplace Pitfalls of using social networks in the enterprise Other Web 2.0 collaboration tools Mash-ups Twitter Virtual worlds Information retrieval Tagging in the workplace Tag clouds RSS feeds in the workplace Best practices in Web 2.0 collaboration
88 88 89 89 90 90 90 90 91 91 91 92 92 93 94 95 96 98 99 99 99 100 101 101 102 102 103
Chapter 6
Web 2.0 marketing opportunities 106

106 107 108 108 109 109 111 111 111 112 112 112 113 113 114 114
The Web 2.0 marketing opportunity The UK outlook The US outlook The social networking opportunity Benefits of advertising in Web 2.0 arena Measurability Cost Reach elusive 18-34 target audience in their environment Target niche audiences effectively Increased choice of channels Challenges of Web 2.0 advertising Intrusive or invasive advertising The next big thing For the sake of new
vi
Audience Control Marketing on social networks Case study examples Best practices Marketing on widgets Case study examples Best practices
114 115 115 116 117 119 120 121
Chapter 7
Vendors to watch
124
124 125 125 125 125 129 131 133 133 134 134 135 137 137 139 140
Which Web 2.0 companies are important? Internet companies Google Yahoo! Others The enterprise IT heavyweights IBM Microsoft Oracle Intel Cisco Newcomers The enterprise approach to buying Web 2.0 applications and services Sales strategies for success
Chapter 8
Summary Welcome to Web 3.0 Mobile The semantic web
Where next: Web 3.0
144
144 144 146 147 148 148 148 148 149 149 150
Second Life in real life? Barriers to Web 3.0 Computer and bandwidth limitations User reticence Vendor delay Embracing Web 2.0 Index
vii
viii
List of Figures
Figure 2.1: Figure 3.2: Figure 4.3: Figure 6.4: Figure 6.5: Categories accounting for the most time spent by UK Internet population June 2007 28 IT spending priorities in large, medium and small enterprises in 2007 47 Googles share of the US search market, April 2008 74 Digital vs. offline media, January June 2007 107 Digital media mix in the UK, January June 2007 108
List of Tables
Table 2.1: Table 2.2: Table 2.3: Table 2.4: Table 4.5: Table 4.6: Table 4.7: Table 4.8: Table 6.9: Table 6.10: Table 6.11: Table 7.12: Table 7.13: Table 7.14: Table 8.15: Categories accounting for the most time spent by UK Internet population June 2007 28 Web 2.0 mistakes 31 Web 1.0 vs. Web 2.0 34 Enterprise 2.0 in action 38 Amount invested in Web 2.0 companies ($m) 70 Most active Web 2.0 investors, globally 2006 71 Googles share of the US search market, April 2008 74 The Millennium dotcom bubble vs. Web 2.0 fever 80 Top 10 advertisers by estimated spending (US) 109 UKs most popular social media websites: Jan 2008 110 UKs fastest growing social media websites*: Jan 07 - Jan 08 110 Core traits of a Web 2.0 company 125 Would you be more interested in Web 2.0 technologies if offered by a major incumbent vendor? 139 Would you be more interested in Web 2.0 technologies if offered as a suite? 139 A view of the future Internet-driven world in 2020 145
ix
Executive Summary
11
Executive Summary
Technologies meant for consumers are being brought into the workplace. Consumer usage of Web 2.0 technologies has implications for how they expect to use technology and be trained to do so in the workplace. Web 2.0 is defined in this report as a term used to describe a group of Web-based technologies, applications and services that enable participation, the creation of online communities, easy collaboration, and sharing of content or services. Inside the workplace, Web 2.0 is delivering new ways in which employees can collaborate and communicate with one another more effectively and efficiently, and also reach out to customers through emerging digital platforms, such as widgets or social network applications. Web 2.0 is being driven by greater Internet access, an increasing number of broadband connections, more computing power and the network effect. Enterprise 2.0 defines the use of Web 2.0 technologies and services in a corporate setting. Barriers to the take-up of Enterprise 2.0 include security, confidentiality, return on investment and an organizations culture. Network traffic congestion could halt the wider roll-out of Web 2.0, as could arguments over who should pay for increased bandwidth usage and the threat of legal action online.
12

A survey carried out by Bournemouth University in the UK on behalf of IT services provider, Parity, found that only 32% of businesses had made any investment in Web 2.0. The McKinsey Global Survey found that companies were investing in back-end technologies that enable automation and networking such as web services (80%) and peer-to-peer networking (47%) rather than blogs (32%), podcasts (35%), wikis (33%) and other collaboration tools. In the same way that consumers are pushing for enterprise adoption of social software and other traditionally consumer-focused Web 2.0 applications and services in the corporate environment, it has tended to be non-IT departments leading the adoption of Web 2.0 in the enterprise. Most Web 2.0 implementations start as small pilot projects whether within a department or from grassroots e.g. a team wiki designed to test the viability of Web 2.0 in the enterprise. Over time, as Web 2.0 technologies become entrenched in the enterprise, it is inevitable that business processes for rolling out these applications and services will become more formalized. The main reason given by organizations in Bournemouth Universitys research for not using Web 2.0 was senior managements lack of understanding of the business benefits associated with these technologies. The challenge for CIOs in deploying Web 2.0 technologies is that many were not designed with the same security and performance features traditionally associated with enterprise software and services.
13
Why Web 2.0 matters

Internet-based companies such as Google, YouTube and Flickr have risen to prominence ahead of the carriers by taking advantage of cheap processing power and, above all, free bandwidth. The 2008 Predictions Survey from the National Venture Capital Association (NVCA) found that nearly three-quarters of venture capitalists were expecting moderate investment growth in 2008 of between $20bn and $29bn, on a par with 2007 investment levels. Web 2.0 businesses looking for funding could find that the venture capitalists they rely on are under pressure, with investment banks unable to provide the liquidity they need to realize their investments. Any slowdown in the IPO market could have an equally draining effect on mergers and acquisitions another source of funds for venture capitalists looking to offload their investments. Web 2.0 companies face very few barriers to market. It is relatively inexpensive to launch and run an Internet-based business: bandwidth is cheap and there are no expensive manufacturing costs associated with delivering their services. With services or products being offered for free, the Web 2.0 business model follows the publishing business model, with revenue coming from advertisers paying to reach people visiting the site. Competitive advantage in the Web 2.0 world doesnt come from locking out other platforms and applications; it comes from open standards that give consumers choice and control over how they manage their virtual world. In 2007, venture capitalists pumped a record $1.34bn into 178 Web 2.0 deals in the US, an increase of 88% on the previous year.
14

Web 2.0 technologies such as wikis, social networks, blogs and microblogging sites like Twitter, have the potential to drive higher productivity gains by enabling employees to communicate with one another more quickly and frequently, and share their knowledge throughout the organization more easily. In the enterprise, Web 2.0 technologies like wikis, blogs and social networks can be used for information and knowledge sharing, while RSS feeds, tags and folksonomies assist in the process of retrieving information from the increasingly large amounts of digital content organizations have created, not to mention the collective wisdom of crowds inside the enterprise. The benefits of Web 2.0 collaboration include tapping into the wisdom of crowds, bypassing email as a communications method, flexibility in creating Web 2.0 applications on an ad hoc basis and genuine knowledge sharing. Holding Web 2.0 collaboration back, however, are organizations fears of losing control, the idea that majority rule doesnt always produce the best results, scalability issues, and concerns for intellectual property and security. Wikis provides a Web 2.0 alternative to groupware applications, like Lotus Notes. Blogs can be an effective channel for broadcasting information to a wide audience, such as company results, and collecting feedback to help refine existing products, services or promotional methods, for example. In many ways, blogs are the Web 2.0 equivalent of a newsletter or email. Ad hoc social networks can improve project management or foster a community around a research idea or topic, for example. In some instances, an organizations social network could evolve into an intranet for the Web 2.0 era.
15
Web 2.0 marketing opportunities

In the first half of 2007, the UK online advertising market was valued at 1.3bn, an increase of 41.3% on the same period the previous year. This was at a time when the advertising industry as a whole only managed growth of 3.1%. Morgan Stanley predicts an equally favorable outlook for Internet advertising in the US, with a CAGR of 20% from 2005 to 2010 and an estimated 13% cent market share by the end of the period. The necessity for brands to move to a Web 2.0 presence is highlighted by a finding from the Ketchum/USC study. It identified a disconnect between consumers lack of reliance on corporate websites for information (very much a Web 1.0 phenomenon) and marketers strong use of them to convey corporate information compared to other channels. Benefits of advertising in the Web 2.0 arena include measurability, cost, the opportunity to reach the 18-34 age group and niche audiences effectively, and a variety of channels. Challenges to advertising in the Web 2.0 arena, however, include being seen as too intrusive, following the next big thing, targeting an audience effectively and ceding control to users. Marketing on social networks can take the following forms: display ads, corporate group pages, viral marketing, applications or widgets, and branded content or advertising within entertainment content. In 2007, eMarketer predicted around $900m would be spent on advertising through social networking sites in the US and $335m elsewhere. For marketers, widgets represent a new advertising opportunity. Rather than simply piggybacking on an existing piece of content, the widget becomes the piece of advertising, combining a brand message with a useful function. Alternatively,
16
advertising can be run inside a widget, in the same way an ad might appear on a web page or social network page.
Vendors to watch
Googles business model is predominantly advertising based 99% of revenue over the last few years has come from online advertising and it has several Web 2.0 products and services, including Google Reader, Orkut, Blogger, Google Sites and YouTube. Yahoo! increased revenue in 2007 to $6.9bn. However, year-on-year growth was only 8% (compared that to Googles 54% increase) and advertising revenue from affiliate sites actually fell five%, despite a buoyant online advertising market. Shareholders are now looking to see how the company will turn itself around and challenge Google. In 2007, Yahoo! indicated it was moving into offering web-based office tools with the acquisition of Zimbra, a provider of email and collaboration software. Zimbra should help Yahoo!s push into the enterprise particularly in SMEs or costconscious organizations because it is built on open source software. For enterprises, Twitter offers the possibility of collaborating with one another quickly via the web or a mobile device. Web 2.0 Goes to Work is the name of IBMs Web 2.0 campaign to help enterprises adopt social media and Web 2.0 technologies inside their organization. Microsofts Web 2.0 strategy revolves around its Office SharePoint server. Intel has embraced Web 2.0 through a series of partnerships to create SuiteTwo, a business Internet suite. As a networking company, its little surprise that Ciscos approach to Web 2.0 is to combine collaboration with communications.
17
Unsurprisingly, a range of enterprise software start-ups have jumped into the Web 2.0 space, with corporate tools based around social networks and other Web 2.0 technologies. What these start-ups have in expertise and innovation, however, they lack in scale and resources.
Where next: Web 3.0

Mobility might have been cited as the next big thing for the last five to ten years, but new developments in the sector mean that the humble mobile handset and anytime communications could drive the next wave of innovation in the enterprise. In the semantic web, computers can extract more contextual meaning from information on a document, web page or other online content. For users, it will make the experience of finding information and interacting on the web far more intuitive. It may not happen in the next evolution of the Internet, but virtual reality will inevitably play a bigger role in the future. Barriers to Web 3.0 include limited processing power and bandwidth, user reticence to new technology, incumbent vendors blocking market developments and organizations failure to embrace Web 2.0 properly yet.
18
CHAPTER 1
Introduction
19
Chapter 1
Introduction
What is this report about

The phrase Web 2.0 has come to stand for a new wave of Internet applications, technologies and services that have emerged over the last few years. While there is much debate in the industry about the nature of Web 2.0 and an exact definition of the term, there is no denying that the services and technologies it has engendered are becoming deeply entrenched in the consumer world. Indeed, many of todays Internetsavvy consumers particularly in the 18-34 age bracket are as comfortable with social networking, blogging and twittering as they are with using the telephone or writing an email.
The focus of The impact of Web 2.0 on the enterprise report is how the underlying concepts behind Web 2.0 and the technologies and services it enables are filtering into the corporate world (or Enterprise 2.0, as some people prefer to refer to it). The report begins with an exploration of how Web 2.0 has disrupted the Web 1.0 way of doing things, such as selling and advertising online, or communicating and engaging with employees. In the third chapter, the opportunities and threats Web 2.0 presents to the enterprise are examined in more detail, along with enterprise take-up of the various Web 2.0 technologies and services available so far.
Later chapters analyse the impact of Web 2.0 on the enterprise namely the collaboration opportunities Web 2.0 tools such as blogs, podcasts, wikis and social networks offer enterprises in communicating more effectively; and the new digital marketing opportunities driven by social networks and widgets. The final chapters in The impact of Web 2.0 on the enterprise report examine the vendors offering Web 2.0 services and provide some insight into what Web 3.0 might deliver.
20
Who is this report for?

The impact of Web 2.0 on the enterprise report will have relevant findings for both enterprises wanting to understand and use Web 2.0, and those vendors wanting to sell Web 2.0 technologies and services to them, as the report is focused on the business and commercial opportunities afforded by Web 2.0 rather than the IT requirements of delivering Web 2.0 applications and services.
For that reason, this report is of interest to any vendors of Web 2.0 technologies, applications or services, not to mention more traditional software vendors such as Microsoft and IBM that have incorporated Web 2.0 features into existing and new products and services. In addition, system integrators, managed service providers and value-added resellers will also be interested in The impact of Web 2.0 on the enterprise report to identify ways of refining their sales pitch. The final chapter on Web 3.0 might also be relevant to mobile application providers and network operators interested in finding out how Web 3.0 could influence future services.
Definitions
Blog A weblog (better known as a blog) was originally used to describe an online diary entry, with the option for readers to post their own comments and links. In the corporate arena, an analogy might be an online memo, which other employees or people outside the organization can contribute to (provided they have the necessary permissions and access).
21
Enterprise 2.0 The application of Web 2.0 applications and technologies in the corporate environment.
Mash-up A new application or tool created from combining two or more existing data sources. The first mash-ups combined Google Maps with other sources of data, such as crime statistics or houses for sale.
Podcast An audio file distributed online, often by RSS (see below) or another type of data feed. It differs from a webcast in that podcasts like blogs tend to be updated regularly and are available for automatic download via an XML newsfeed.
RSS (Really Simple Syndication) An XML feed that notifies subscribers every time a web page has been updated (whether a new blog post, podcast, Twitter update or wiki contribution, for example).
Social bookmarking Tagging blogs, photos, videos or articles using sites such as Digg, Del.icio.us or StumbleUpon. Combined into a tag cloud, these tags provide an insight into what is popular online by arranging tagged words according to size (the larger the word, the more people are tagging articles with that term).
Social network A community of online users, often replicating a members offline social network.
22
The long tail A phrase coined by Chris Anderson, editor-in-chief of Wired magazine, in 2004. In statistics, mathematicians use the phrase long-tailed distribution to describe a chart where the line runs to infinity but never reaches zero. Anderson created the noun the long tail to describe the economic model behind successful online businesses such as Amazon and Netflix, where value comes not just from selling the blockbusters or top 20 films (the head) but collectively from the millions of people buying small amounts of what might previously have been considered niche or back catalogue items (the long tail).
The wisdom of crowds A phrase coined by James Surowiecki in his 2004 book, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. In his book, he argues that the collective intelligence of groups can result in decisions that are often better than those made by any single member of the group.
User generated content As its name suggests, content created by consumers and uploaded to the Web whether a video posted to DailyMotion, a photo uploaded to Flickr or a user uploading a book review to Amazon.
Web 2.0 A term used to describe a group of web-based technologies, applications and services that enable participation, the creation of online communities, easy collaboration, and sharing of content or services.
Web 2.0 company Any company whose products or services are based on an aspect of Web 2.0, from social networking to user-generated content and more.
23
Widget A widget is a bit of code that can be embedded into another website, without requiring users to have coding knowledge.
Wiki A web page that users without HTML experience or author rights can contribute to, edit or link content to. The most famous example is Wikipedia.
24
CHAPTER 2
25
Chapter 2
Summary
Technologies meant for consumers are being brought into the workplace. Consumer usage of Web 2.0 technologies has implications for how they expect to use technology and be trained to do so in the workplace. Web 2.0 is defined in this report as a term used to describe a group of Webbased technologies, applications and services that enable participation, the creation of online communities, easy collaboration, and sharing of content or services. Inside the workplace, Web 2.0 is delivering new ways in which employees can collaborate and communicate with one another more effectively and efficiently, and also reach out to customers through emerging digital platforms, such as widgets or social network applications. Web 2.0 is being driven by greater Internet access, an increasing number of broadband connections, more computing power and the network effect. Enterprise 2.0 defines the use of Web 2.0 technologies and services in a corporate setting. Barriers to the take-up of Enterprise 2.0 include security, confidentiality, return on investment and an organizations culture. Network traffic congestion could halt the wider roll-out of Web 2.0, as could arguments over who should pay for increased bandwidth usage and the threat of legal action online.
26
The emergence of Web 2.0

Web 2.0 is one of the clearest examples to date of a trend for consumers to lead innovation in the workplace. Previously, it used to be the military or the enterprise that had the technology headstart; the US Department of Defense created one of the first iterations of the Internet, for example, while the workplace has driven widespread uptake of networked computing.
But in the last decade, it is consumers and their increasing uptake of Internet services from instant messenger to social networks and sites such as Twitter that has left the enterprise playing catch-up, whether in deciding how to manage the use of such consumer technologies in the workplace or how to implement their own corporate interpretation. Issues of speed, uptime and security previously distinguished enterprise computing environments from their inferior consumer counterparts, but now web-based services hosted by vast data centres, faster Internet connections and usage-based pricing models give consumers and small businesses the same computing power, access and security as larger corporates have enjoyed for decades. The Web 2.0 trend for usergenerated content highlights another important change in consumer/enterprise relationships. Today, consumers have a more important role to play in producing and creating content, while organizations tend to look retrospectively to identify future successes based on what has worked in the past.
A consumer-driven trend The community and participatory aspects of Web 2.0 brought to life through social networking services, blogging and other communication tools have proven extremely popular with consumers. UK Internet visits to social networks such as Facebook, Bebo and MySpace overtook visits to Web-based email services, such as Hotmail and Yahoo! Mail for the first time in October 2007, according to Hitwise, which tracks Internet searches. With the opportunity for consumers to use social networks to communicate with other people and share photos, information and news feeds, email is
27
no longer seen as the most important communication source online. A separate study from Nielsen Online put instant messenger ahead of both social networks and email in accounting for the majority of time Britons spend online (see Table 2.1).
Table 2.1: Categories accounting for the most time spent by UK Internet population June 2007
Rank 1 2 3 4 5 6 7 8 9 10 Category Instant messaging Member communities Email Classifieds/auctions Games Software manufacturers Search General interest portals and communities Multi-category entertainment Adult % of total time 12.7% 9.4% 7.8% 5.1% 4.8% 4.4% 4.2% 3.7% 3.4% 2.6% Total time (bn minutes) 3.4 2.6 2.1 1.4 1.3 1.2 1.1 1.0 0.9 0.7
Business Insights Ltd
Source: Nielsen Online
Figure 2.1: Categories accounting for the most time spent by UK Internet population June 2007
Multi-category entertainment Adult General interest 6% portals and 4% communities 6% Search 7% Software manufacturers 8% Games 8% Member communities 16% Email 13%
Instant messaging 23%
Classifieds/auctions 9%
Source: Nielsen Online
28
The Internet in Britain: 2007 study from the Oxford Internet Institute found that Against expectations since women are (stereotypically) assumed to be more interested in communication men undertake more communicative activities on average than do women. It also found that: all communication, and especially the social networking activities, are most popular amongst students and younger people. The latter finding is not surprising, especially given that many social networks were borne out of school and college leavers wanting to stay in touch with one another (such as Friends Reunited and Facebook).
Viviane Reding, member of the European Commission responsible for Information Society and Media, summed up the younger generations propensity for Web 2.0 in a speech to the Youth Forum at ITU Telecom World in Hong Kong in December 2006, when she said: Young people are open to new technologies. It is also often young people who invent the new business and social paradigms, who fully exploit the new possibilities, that ICT offer. The Information Society has repeatedly been built by young and dynamic people: Sergey Brin and Larry Page, founders of Google, are today only 32 and 33, the Dane, Janus Friis, co-founder of Skype is still only 30 and Linus Torvald created Linux in 1991, when he was only 22.
Research from the Institute for Public Policy Research found that UK teenagers between the ages of 13 and 18 spend more than 20 hours a week using Web 2.0 sites such as Bebo, Myspace, Facebook and YouTube which is three times higher than previous official estimates. This has implications for the future workplace in how employees versed in Web 2.0 will expect to use technology and be trained to do so not to mention their relationships with older generations, who may be considerably less technology savvy.
Our work at the Pew Internet Project shows that an American teen is more likely than her parents to own a digital music player like an iPod, to have posted writing, pictures or video on the Internet, to have created a blog or profile on a social networking web site like MySpace, to have downloaded digital content such as songs, games, movies, or software, to have shared a remix or mash-up creation with friends, and to have
29
snapped a photo or video with a cell phone, says Lee Rainie of the Pew Internet & American Life Project.
Inevitably, the consumer push for enterprise adoption of technologies they use outside the workplace, has caused some friction between senior management and employees, not to mention the IT department which is responsible for delivering, supporting and maintaining such technologies. Many large organizations have banned outright access to websites such as Facebook, Blogger and Skype. Others have opened them only for limited periods of time (e.g. outside 9am to 5pm office hours).
In the area of Web 2.0 services, there have been several high-profile examples of employees and their employers falling out over the use of such Web 2.0 applications in the workplace (see Table 2.2).
30
Table 2.2: Web 2.0 mistakes

Employee/employer Heather Armstrong Technology Blog Implications
A former web designer, Armstrong was fired from her job after writing about her co-workers on her blog www.dooce.com. Her firing was one of the first highprofile cases of employees facing repercussions for what they write online. Her advice now is Never write about work on the Internet unless your boss knows and sanctions the fact that YOU ARE WRITING ABOUT WORK ON THE INTERNET. Ellen Simonetti/ Blog Simonetti was fired from her job in 2004 after posting Delta Air Lines pictures on her Queen of Sky blog that her employer deemed inappropriate. Simonetti has since filed a legal complaint against her former employer. Jan Pronk/ Sudanese Blog A former United Nations envoy to Sudan, Jan Pronk Government was asked to leave the country by the Sudanese Government after launching what the army called psychological warfare after he wrote in his blog that morale was low in Sudans army having suffered defeats in the Darfur region. Reckitt Benckiser Blog This was a lesson not so much in how not to blog, but how not to respond to others blog postings. One of the agencies that works with Reckitt Benckiser to promote Cillit Bang responded to a personal blog posting by Tom Coates using the fictional marketing character Barry Scott that appears in ads to promote its cleaning product. Coates was understandably aggrieved and publicly sought out the source of the posting via his blog www.plasticbag.org Mark Jen / Google Blog Jen was fired from Google only a few weeks into his job after writing about the company. Despite claiming not to have written anything he deemed inappropriate, his employment was terminated. He now works at Plaxo and still blogs at http://blog.plaxoed.com/ Farm Boy employees Social networks A group of employees at the Canadian grocery store, Farm Boy, were fired after comments they made on the I Got Farm Boyd group on Facebook. Vodafone, Halifax Social network Pulled their ads from Facebook after they appeared Virgin Media and others by a BNP-related page Automobile Club of Social network Fired employees from one of its San Diego offices after Southern California some colleagues claimed of feeling harassed by messages posted on MySpace. Argos Social network A disgruntled employee was fired after creating a group on Facebook that criticised the retailer.
Source: Business Insights Business Insights Ltd
31
Defining Web 2.0

The purpose of this report is not to debate an absolute definition of Web 2.0 but to examine the impact of Web 2.0 on the enterprise. However, it is important to make clear what we mean by the phrase in the context of later chapters. Therefore, we have come up with the following definition for Web 2.0: a term used to describe a group of Web-based technologies, applications and services that enable participation, the creation of online communities, easy collaboration, and sharing of content or services.
The Web 2.0 world is less about observing or passively visiting websites; it is about canvassing opinions, participating in producing content or using the Internet to share photos, data and more. In the workplace, Web 2.0 provides a platform for harnessing the collective intelligence of the organization more effectively, sharing data and contacts more easily, and collaborating with peers more quickly.
No definition of Web 2.0 would be complete without referring to the man credited with coining the phrase, Tim OReilly. In an article he wrote on the subject, What is Web 2.0 Design Patterns and Business Models for the Next Generation of Software, he says: Companies that succeed will create applications that learn from their users, using an architecture of participation to build a commanding advantage not just in the software interface, but in the richness of the shared data.
Web 2.0 applications and services Web 2.0 comprises a wide range of applications and services from: Social networking services such as MySpace, Bebo and Facebook; Photosharing sites such as Flickr; Social bookmarking sites, such as Del.icio.us, StumbleUpon and Digg, which enable users to tag articles according to their own criteria that others can then view and search;
32
Interactive two-way communication via blogs, comments, podcasts and microblogging sites such as Twitter (which asks users to define what are you doing right now in 140 words or less); RSS feeds and dynamic web services, so users can receive new content whenever it is updated or create new applications based on existing data and services (otherwise known as mash-ups); User generated content sites such as YouTube, Wikipedia and TripAdvisor where users can upload, contribute to and edit content.
Harking back to the past In many areas, Web 2.0 draws on established Internet and social principles. Users were establishing social networks offline before Facebooks youthful founder Mark Zuckerberg was born, and even online before he was at secondary school (Geocities, an early community, began operating in 1994). Likewise, groupware applications have been letting people work together from disparate locations since the pre-Web 2.0 days.
Another trend common to Web 2.0 and Web 1.0 businesses is their reliance on the network effect. So just as eBay, one of the first successful Internet businesses, grows the more buyers and sellers it attracts, so too do social networking sites depend on users inviting friends to sign up to their network and draw in existing members to their own network.
That said, there are some clear differences between Web 1.0 and Web 2.0 applications and services, as highlighted in Table 2.3, and the following section.
33
Table 2.3: Web 1.0 vs. Web 2.0

Web 1.0 DoubleClick Ofoto Akamai Mp3.com Britannica Online Personal websites Evite Domain name speculation Page views Screen scraping Publishing Content management systems Directories (taxonomy) Stickiness
Source: OReilly Media Inc.
Web 2.0 Google AdSense Flickr BitTorrent Napster Wikipedia blogging upcoming.org and EVDB search engine optimisation cost per click web services participation wikis tagging (folksonomy) syndication
Looking into the future For a start, by opening up their APIs to developers, many of todays commercial social networks have enabled the creation of new (although not admittedly, necessary) applications for users to download. Users have also become producers of content on a far greater scale whether producing a Wikipedia entry, writing a book review on Amazon or rating an article on Digg.
Todays Web 2.0 applications are also based on richer technologies that do not typically fall over as soon as users scale up (and in the Web 2.0 world, they tend to scale up extremely rapidly if/when take-up takes off). The network effect discussed earlier also means that Web 2.0 services become more effective the more users that sign up to them. Two recently launched search engines, Mahalo and Wikia Search, for example, depend on users rating and creating content for different keyword searches to improve the relevancy of results; therefore, the more people that contribute, the more relevant the results become to users.
34
Drivers behind Web 2.0 Web 1.0 was driven by greater broadband Internet access, the growth in search engines and offline brands establishing their presence online. Some of these factors have also been behind the growth in Web 2.0, but, significantly, several new drivers have also emerged:
Internet access In 2007, 7% more households in the UK had access to the Internet, taking the total to 15m households and 61% of the population. In the US, The Pew Internet & American Life Project estimates that 75% of adults are online.
Broadband connections An increase in the number of Internet users accessing the Web through a broadband always-on connection has made it much easier for users to access video and other bandwidth-intensive services. In 2007, 84% of UK households with Internet access had a broadband connection in 2007, up from 69% in 2006. This compares to 47% of adult Americans (The Pew Internet & American Life Project). This gives users access to richer content, such as video, online TV programs, music and more. We anticipate the next wave of innovation online to come from the growing number of users accessing the Internet using mobile devices (see Chapter 8).
Computing power Not having a fast Internet connection certainly stopped people from enjoying a good user experience in the Web 1.0 world, but a lack of readily accessible and cheap computing processing power also held back the rollout of social networking and communication services. Site crashes might not have been entirely eliminated witness the recent downtime from some Web 2.0 sites after Amazon Web Services suffered an outage but they arguably happen a lot less infrequently in the Web 2.0 compared to Web 1.0 world. Likewise, the memory and processing spec of even below-average computers today surpasses that of most high-end machines five to ten years ago.
35
People power The network effect mentioned above has made the people-centric vision originally associated with the Internet and Web 1.0 finally possible in the Web 2.0 age. Indeed, it is rare to find a Web 2.0 site that does not flourish, the more people that use the service. The reverse would have been true in the early days of the Web.
Enterprise 2.0
Inside the workplace, Web 2.0 is delivering new ways in which employees can collaborate and communicate with one another more effectively and efficiently, and also reach out to customers through emerging digital platforms, such as widgets or social network applications.
Many brands have also incorporated Web 2.0 features into their websites, whether by re-building their site on AJAX technologies which enable the creation of rich Internet applications or incorporating customer reviews, RSS feeds, blogs, podcasts or mashups, as Thomson UK has done on its site combining Google Earth with data on its holiday destinations. Similarly, TripAdvisor, an online travel guide, offers a wiki-based service called TripAdvisor Inside, which enables users to edit and add their own content, free from the restrictions that apply to its hotel reviews.
The use of Web 2.0 technologies and services in a corporate setting despite being orginally designed for mainly consumer and social use has led to the emergence of a new phrase in the industry: Enterprise 2.0. The practice of prefixing an industry or business with 2.0 is hardly new or limited to the enterprise, but in the case of Enterprise 2.0, many commentators believe Web 2.0 has a valuable and long-lasting role to play inside the corporate arena.
36
A Web 2.0 workforce Many graduates and younger generations entering the workforce today are as familiar with blogging, wikis and social networking, as they are with using email or SMS services. Inevitably, this will have an impact on their employers, with many new entrants pushing for the adoption of Web 2.0 services in the workplace. Even if their company doesnt adopt them, expect many to continue using them on the sly as initially happened with Instant Messenger. It could even impact recruitment and retention: if younger employees feel frustrated enough about not having access to Web 2.0 tools and services they consider essential, they might prefer to work for an employee that values their expertise in this area.
Improving business processes and advertising practices Organizations that do adopt Enterprise 2.0 applications and services will find it does more than aid recruitment and retention of younger generations, if properly implemented. Corporate blogs, podcasts and webcasts offer organizations more effective ways of communicating with shareholders, the public and employees. Internally, wikis and tags offer the opportunity to collaborate on documents more easily. Furthermore, social networks and other emerging digital platforms such as collaborating with online producers, in the case of Cadburys Creme Egg and the fictional Kate Modern drama shown on Bebo also offer new and innovative ways of marketing products and services to the hard-to-reach 18-34 age group in particular.
In addition, theres the opportunity to use Web 2.0 in areas of the enterprise previously untouched by the consumer phenomenon such as product development, market research and sales leads. Table 2.4 highlights some examples of how Enterprise 2.0 can be applied and examples of where it is being used by leading edge organizations, such as IBM, Dell and Honeywell.
37
Table 2.4: Enterprise 2.0 in action

Use of Enterprise 2.0 Corporate adopter Project Patent manifesto Tech investment research Catalogue Internet and intranet Content Partners helping with Visual Studio documentation Share financial highlights, Progress of internal projects Collate and broadcast crime-fighting information Communicate directly with customers on a blog Video-sharing site with company and user videos Nascent threats and situation monitor Share raw data on type two diabetes to kickstart research Net-connecting computers used to find extraterrestrial intelligence Answers questions about XPS 700 computers Information sharing about shipping rates, fraud protection Used as innovation tool Amateur photos at tiny prices Marketplace of ideas and Projects Used to estimate metrics, such as when offices should be open Prediction markets in several Business units Users product and feature Requests voted on Uses Digg-like voting for customer feedback Ads for Chevy Tahoe Innovation jams
Knowledge sharing and management Collaborative doc production IBM All-purpose teamware Nokia Knowledge management Honeywell Knolwedge broadcast Microsoft Intel Western States Intelligence Network Jonathan Schwartz, Sun Bob Lutz, General Motors StudioDell Problem solving War room for fast-changing situations Sharing computing power and brainpower
Defense Intelligence Agency Novartis Seti@home
Answering questions
Dell eBay Wiki
Innovation Broadcast search Crowdsourcing Expressing collective Judgment Collecting customer feedback
Colgate-Palmolive iStockphoto Cambrian House Google HP Dells IdeaStorm Yahoo!
Collaboration Customer relations Transformative ideas
General Motors IBM
Source: KPMG International Research
38
Barriers to Enterprise 2.0 Security As with any adoption of new technology or services, there are some security risks associated with bringing Web 2.0 technologies and services into the enterprise. We will examine these threats in more detail in the next section.
Confidentiality When Cadburys allowed its new graduates to blog about working at the company, it decided to put in place a moderation process that saw these blogs checked by a senior employee, as many were so excited about the new product area they were working on they didnt realise a lot of information they were releasing was not yet in the public domain.
Bloggers or contributors to wikis and social networks need to realise that rules surrounding corporate disclosure, discrimination and other regulations apply as much here as in any other document, email, memo or speech created. In particular, organizations need to ensure that when an organization is in its quiet financial period, nothing is disclosed that could put it in breach of financial legislation.
Effectiveness Employees and customers are extremely cynical nowadays of anything that they suspect might be false or sales speak. Therefore, any organizations embarking on a corporate blog, wiki or other collaboration project needs to plan its strategy very carefully. As with any project, proper attention needs to be paid and a sound business case given as to why this technology or service should be used. This will also assist in achieving senior management buy-in.
Bear in mind too, that Web 2.0 technologies and services are an ongoing effort; a corporate blog needs to be updated regularly to be effective (more often than the corporate website) and a podcast is just another webcast if it is not broadcast regularly.
39
Organizations might have a different agenda to consumers in their use of Web 2.0 applications and services, but they need to abide by the same rules that govern these technologies and their usage.
Culture Changing peoples habits is often a bigger challenge than changing established business processes. Writing in Enterprise 2.0: Fad or Future? The Business Role for Social Software Platforms, Gary Matuszak, Global Chair for Information, Communications & Entertainment for KPMG International, says: Just as damaging are institutional cultures or norms that work against sharing information, either because of concerns about confidentiality or because of hierarchical structures. It is telling that it was the most senior and the most junior officers who were in favor of Intellipedia at the Defense Intelligence Agency, while the bureaucrats in the middle were resistant. One of the reasons for their concern, as Harvards Weinberger pointed out, is that intelligence analysts are graded on the basis of their report writing. If you cant tell who edited the wiki or who added the key fact that pointed to a terror cell, then how do you allocate credit?
Likewise, employees need to understand why they should share their knowledge with others through collaborative Web 2.0 application. In a Web 2.0 environment, the phrase knowledge is power should apply to the group rather than the individual.
Enterprise 2.0 best practices Writing in Enterprise 2.0: The Dawn of Emergent Collaboration, Andrew P. McAfee, the Harvard Business School associate professor credited with creating the term Enterprise 2.0, has four recommendations for organizations that want to capitalise on Web 2.0 technologies and tools without sacrificing credibility or opening their enterprise to risk: Create a receptive culture in order to prepare the way for new practices; A common platform must be created to allow for a collaboration infrastructure;
40
An informal rollout of the technologies may be preferred to a more formal procedural change; Managerial support and leadership is crucial.
Barriers to Web 2.0

In addition to the enterprise concerns highlighted in the previous section, organizations need to bear in mind some challenges to the future of Web 2.0.
Bandwidth Web 2.0 applications and services are far more bandwidth-hungry than previous Web 1.0 technologies. As more users download videos and games or communicate with others via Skype, IM and email, the Internet is becoming increasingly congested with traffic. Doomsayers have gone so far as to proclaim the death of the Internet as Internet speeds slow down.
Its not just one-way traffic (downloads) either; users are uploading more content to the Internet, whether photos to Flickr like the Library of Congress (see next chapter) or press releases and corporate images to a social networking page like Ernst & Young on Facebook. This is good news for the likes of Cisco and Juniper Networks, which are seeing an increase in demand for Internet access equipment.
Providers of the Internet backbone such as BT, AT&T and Verizon have promised or are already in the process of upgrading their networks, but users will not see the benefit of this immediately. Bear in mind too, that while the Internet continues to cannibalise traditional markets, such as telecommunications, one possible scenario is that telecommunications providers fail to continue their investment in the next generation networks that will deliver future Internet services, as their traditional revenue streams fall. Admittedly, this is a highly unlikely scenario as many carriers
41
have launched new services to meet changing user demands (for example, BT offers BT Vision, its on-demand TV offering, and BT Fusion, its combined mobile and VoIP service) but the possibility cannot be ignored.
Net neutrality Bandwidth-intensive services have also thrown up another potentially far greater challenge: should the net remain neutral? One future possibility is that network providers prioritise traffic to minimise congestion. This could give their own entertainment-based services an unfair advantage or, as is more likely, result in a fee on Internet-based service providers (i.e. many Web 2.0 companies) for the amount of traffic they generate.
For the network providers, this would be more favourable than levying higher prices directly onto consumers. But it would also remove the entrepreneurialism the Web has so far enabled, where businesses run on a shoestring budget are able to challenge established offline businesses. As the editors of Scientific American (July 24, 2006) wrote in an Op-Ed piece on the subject: AT&T, Verizon, Comcast and other companies that own the backbone lines for the Internet would like to prioritise data streams to make the traffic flow more rationally. If they have their way, the Internet's next slogan might borrow from George Orwell's Animal Farm: All animals are created equal, but some animals are more equal than others.
Prioritising traffic inevitably could have other repercussions too. For example, in the UK, some Internet service providers such as Virgin Media and BT have said they will work with the police to help stamp out customers accessing pirated material through their Internet connection. If they are monitoring traffic in order to prioritise it, they will have much greater insight into what each user is downloading or uploading. At the moment, there are data protection implications from seeing this, but if the UK governments draft proposals come into effect that forces Internet service providers to take action against customers who illegally download content, this could significantly change the role of the Internet service provider.
42
Legal challenges to Web 2.0 The Internet has long been seen as a champion of free speech, but the announcement in February 2008 that a website called Wikileaks.org had been forced to come offline following a California court ruling, could signal the start of a new wave of litigation online. Wikileaks was set up as a whistleblowing site by dissidents, journalists, mathematicians and technologists from the US, Taiwan, Europe, Australia and South Africa. Users can post government and corporate documents anonymously.
In February a court ruling forced Dynadot, which controls the sites domain name, to remove all traces of Wikileaks from its servers and put in place a host of other rules preventing the site from running on another domain registrar. The case was brought by a team of lawyers working on behalf of Swiss banking group, Julius Baer, which wanted some documents removed from the site.
Much in the same way that the UK Government is considering proposals that would make Internet service providers enforce its legislation, lawyers in the US are turning to the hosts and domain name registrars that provide Internet services to act as their law enforcement officers.
Web 2.0 also brings with it potential legal challenges from the creation and consumption of online content. The record industry estimates that almost 20bn songs were illegally downloaded in 2005. The problem is that many younger people do not want to pay for content. The Tech Tribe 2007 report from Face, a youth marketing agency in the UK, found that 57% of the 2,859 16-25 year olds it interviewed had paid to download music, versus 81% who downloaded it for free. When it came to film and TV, 35% and 31% paid for it versus 90% and 91% respectively, who downloaded it for free.
Those in favour of intellectual property rights argue that without these in place, creativity wouldnt be rewarded. At the same time, the development of new business models, such as open source and mash-up services, are delivering organizations
43
significant business value. The challenge lies in finding a path between the two that recognises and rewards creativity from the owners of intellectual property, while enabling the users of the Web 2.0 content to experiment and enjoy it.
Will the Web 2.0 bubble burst? In Chapter 4, we examine this topic in more detail, but it is worth mentioning it in the context of this chapter as many organizations are uneasy about the Web 2.0 label for fear that it will turn out to be another Internet bubble with the same repercussions as the 2000 dotcom boom and bust.
There is no doubt that the hype surrounding Web 2.0 has generated a lot of me too companies keen to cash in on the label as long as it is valid. It is also inevitable that there will be some fall-out as a result, as Web 2.0 businesses need users to survive. Not because they are based on a subscription model, but because advertisers will be more inclined to consolidate their marketing spend with those sites that put their adverts in front of their target audience, rather than taking a scattergun approach.
We do not believe though that Web 2.0 is another Internet bubble waiting to burst. While we expect there to be some consolidation this is inevitable in any maturing industry in the technology sector we do not expect to see the boom and bust of previous years. See Chapter 4 for more on this topic.
44
CHAPTER 3
45
Chapter 3
Summary
A survey carried out by Bournemouth University in the UK on behalf of IT services provider, Parity, found that only 32% of businesses had made any investment in Web 2.0. The McKinsey Global Survey found that companies were investing in back-end technologies that enable automation and networking such as web services (80%) and peer-to-peer networking (47%) rather than blogs (32%), podcasts (35%), wikis (33%) and other collaboration tools. In the same way that consumers are pushing for enterprise adoption of social software and other traditionally consumer-focused Web 2.0 applications and services in the corporate environment, it has tended to be non-IT departments leading the adoption of Web 2.0 in the enterprise. Most Web 2.0 implementations start as small pilot projects whether within a department or from grassroots e.g. a team wiki designed to test the viability of Web 2.0 in the enterprise. Over time, as Web 2.0 technologies become entrenched in the enterprise, it is inevitable that business processes for rolling out these applications and services will become more formalized. The main reason given by organizations in Bournemouth Universitys reseach for not using Web 2.0 was senior managements lack of understanding of the business benefits associated with these technologies. The challenge for CIOs in deploying Web 2.0 technologies is that many were not designed with the same security and performance features traditionally associated with enterprise software and services.
46
IT spending
Its interesting to see below that the top three IT spending priorities of large enterprises are no different to those of small and medium-sized enterprises, with all organizations putting most emphasis on IT delivering new functionality to business users.
Figure 3.2: IT spending priorities in large, medium and small enterprises in 2007
Align IT with overall business goals Improve supplier relationships Increase customer satisfaction Using IT to support revenue growth, new products Increase revenues Cut costs Achieve or maintain regulatory compliance Meet internal service level agreements Raise efficiency Deliver new functionality to business users 2.4 2.5 2.6 2.7 2.8 2.9 1 = Not an objective 3 3.1 3.2 3.3 3.4 3.5 Small enterprises Small enterprises Large enterprises
4 = Top priority objective
Source: Business Insights
This is good news for providers of Web 2.0 technologies and services, as one of the biggest advantages of Web 2.0 is enabling users to work in new, more effective ways, whether supporting customers or improving behind-the-scenes processes.
47
Enterprise adoption of Web 2.0

Enterprise 2.0 or the application of social Web 2.0 applications and technologies in the corporate environment has had a mixed reception so far. A survey carried out by Bournemouth University in the UK on behalf of IT services provider, Parity, found that only 32% of businesses had made any investment in Web 2.0 and the majority of these had done so to attain tangible benefits from enhanced content management, rather than to embrace the benefits of collaborative working that Web 2.0 can deliver.
In support of Web 2.0, 56% of those organizations implementing Web 2.0 had found it improves the way workers interact with one another. 53% also said it united workers across different locations, while half said it created more openness in the organization.
The McKinsey Global Survey, which includes the responses of 2,847 executives, delved deeper into the types of Web 2.0 technologies being used. It found that companies were investing in back-end technologies that enable automation and networking such as web services (80%) and peer-to-peer networking (47%) rather than blogs (32%), podcasts (35%), wikis (33%) and other collaboration tools. Mashups was the trend least referenced in the survey.
Where implemented, the main uses given for Web 2.0 in the enterprise were: 70% of companies rely on them to talk with customers; 51% use them to talk with suppliers and business partners; 75% use them to manage internal collaboration; One-fifth are using blogs to improve customer service or solicit customer feedback; Just over half are using the technologies to help manage knowledge internally;
48
Just under half are using these tools for designing and developing new products.
In addition, more than half of the executives surveyed said they were pleased with the results of their investments in Internet technologies over the past five years, and nearly three-quarters said that their companies plan to maintain or increase investments in Web 2.0 technologies in coming years (13% said they were disappointed with previous investments.) Of those companies that rate themselves as very satisfied, 46% are classed by McKinsey as early adopters and 44% as fast followers.
The McKinsey report notes that 43% of companies are more focused on networking and collective intelligence technologies than the global average; it concludes that these companies are more likely than others to be large, working in high tech and based in Asia. Meanwhile, 22% are much likelier to have invested in RSS, blogs, and podcasts than others; these companies are more likely to be in industries such as media and telecommunications and located in North America.
Return on investment Most users of Web 2.0 technologies believe it is too early to tell whether they will deliver a significant return on investment, or even whether they will be subject to the same scrutiny and traditional value metrics as other investments, given that many of the benefits cited often refer to softer measures, such as improving business processes, rather than hard metrics (e.g. cutting costs by 20%). Given many Web 2.0 implementations focus on improving business processes or collaboration, the long-term benefit of these Web 2.0 projects for example, in terms of reduced product lifecycle might not also come to fruition for several months or even years.
The technologies have not been available long enough in most cases to enable a comprehensive return on investment analysis. Also, many implementations are small projects designed to test the technology; their results can pale into significance against IT projects where the business case is based on traditional and relatively
49
straightforward metrics (return on investment (ROI) and total cost of ownership, for example).
This could hold back widespread rollout of Enterprise 2.0, as most CIOs or marketing directors need to give an indication a projects expected return to justify investing in the new technology in the first place. More often than not, it is pressure from employees using these tools outside work or positive results from small grassroots projects that drives greater adoption inside an enterprise. Typically, returns are also greater in organizations where they have implemented more than one Web 2.0 tool or service.
Bear in mind too, that of those organizations implementing Web 2.0 technologies from RSS feeds to blogs and even mash-ups many have said they improved the business, whether through customer service, reducing churn or improving product design and development.
Inevitably, providing a business case for Web 2.0 is easier in organizations that have embraced the Internet and next-generation ways of working. But that does not mean more traditional bricks and mortar organizations have no business case for Enterprise 2.0. Instead, they should consider other means of assessing a projects outcome whether through external focus groups to assess changes to brand awareness, for example, or employee engagement surveys to find out if Web 2.0 is supporting their job and how they are adapting to more collaborative working practices. For example, Web 2.0 is based on principles such as participation and discourse, therefore, users are more inclined to give their feedback or rate applications and services. The BBC used these aspects to prove the value of a Web 2.0 project by asking satisfied users of the bulletin board for their opinions.
Bear in mind too, that firms should be taking advantage of one of the main benefits of Internet-based platforms the ability to track and gather data about activities online
50
using Web analytics and other software packages to provide further evidence of the success of Web 2.0 implementations.
Who is driving Web 2.0 in enterprises?

In the same way that consumers are pushing for enterprise adoption of social software and other traditionally consumer-focused Web 2.0 applications and services in the corporate environment, it has tended to be non-IT departments leading the adoption of Web 2.0 in the enterprise. This highlights the increasingly decentralized and pervasive nature of technology in the enterprise today. The flexible nature of Web 2.0 technologies also means that they can often be implemented without the need for IT intervention, unlike most other IT initiatives of the past few decades which have taken a distinctly top-down approach.
Writing in Business Communications Review (Creating Enterprise 2.0 From Web 2.0, Aug 2007), Irwin Lazar, a Principal Research Analyst and Program Director for Collaboration and Convergence at Nemertes Research, commented: in most cases individual workgroups were using these tools [blogs, wikis and RSS] for both internal and external collaboration. In some cases, IT had little knowledge or control. Business units were taking it upon themselves to obtain the tools they needed to solve their communications and collaboration challenges, without waiting for IT to create a strategy.
Implementing Web 2.0 Most Web 2.0 implementations start as small pilot projects whether within a department or from grassroots e.g. a team wiki designed to test the viability of Web 2.0 in the enterprise. In the majority of organizations, it is triggered by an ad hoc response to a problem or a new initiative, rather than a strategic enterprise-wide IT plan. Interestingly, many organizations responding to the McKinsey survey noted that where an implementation has spread throughout the enterprise, it helped to break down
51
hierarchical and functional boundaries, by enabling the passing of information up, down, and around. For many users of Web 2.0 technologies, this is a refreshing way of working; to others it is disruptive or even threatening. The McKinsey survey noted that more prolific users showed a tendency to leap into grassroots efforts, while the light users took a more cautious and traditional approach.
In many cases, Web 2.0 implementations have been led by customer-facing teams, such as marketing or customer services. But the use of Web 2.0 extends behind the scenes as well, to teams working on product development and market research, for example. Unlike other technologies that have to be brought behind the firewall and integrated on site, Web 2.0 applications and services, such as blogs or social networks, tend to be hosted off site. This makes support and maintenance easier, although for some IT departments it raises issues of control, security and risk.
Over time, as Web 2.0 technologies become entrenched in the enterprise, it is inevitable that business processes for rolling out these applications and services will become more formalised. However, organizations should not attempt to make Web 2.0 fit into traditional software buying patterns and support; Web 2.0 is one of several new ways of delivering applications and services like software-as-a-service and open source and innovation should continue to be supported through grassroots projects.
A vertical approach to Web 2.0

Government The 2008 US presidential elections have been as hotly contested online through blogs, Twitter and YouTube as they have been offline in polling stations, jampacked lecture halls and on Americans TV screens. Indeed, despite its reputation for being slow to adopt new trends, government departments and bodies are often ahead when it comes to Web 2.0 technologies.
52
Differences exist around the world though. The UKs prime minister might have his own email address and Twitter page, but a report from The Centre for Policy Studies found that UK politicians have failed to use Web 2.0 technologies as effectively as their US counterparts. The reports author, Robert Colville, encourages UK political parties to explore the web tactics of US Presidential Democrat candidates, Barack Obama and Hilary Clinton, where putting existing bloggers on your staff is now seen as an essential campaign tool.
The European Union has been more forthcoming online, with a dedicated channel on YouTube to air audiovisual material (www.youtube.com/watch?v=95CuBI-BL4E). This initiative reflects the Commission's commitment to better explain its policies and actions on issues which concern citizens across the EU such as climate change, energy or immigration, said Margot Wallstrm, Vice-President for Institutional Relations and Communication Strategy.
In the US, the Defense Intelligence Agency is using wikis, blogs, RSS feeds and mashups to share information amongst analysts more effectively. More importantly, reports Computerworld, The tools are helping the DIA meet the directives set by the 9/11 Commission and other entities for intelligence agencies to "improve and deepen our collaborative work processes. Meanwhile, the Congress research arm the Library of Congress has launched a pilot project with photo-sharing website, Flickr, to open up access to its photograph collections and encourage visitors to comment and fill in gaps on the history of the photos where possible.
e-Democracy in Web 2.0 world Web 2.0 technologies have not just given a louder voice to politicians, but also the voting public. In the Web 1.0 days, voters might have written a letter to the newspaper; now they can blog, edit wiki web pages, email their representative or MP, and sign up for regular RSS news feeds. Its not surprising that a recent list of the 50 most powerful blogs in the world from the Observer newspaper featured more than 10 political blogs.
53
Never has there been more opportunity to be kept informed of what is going on in the world. However, with an estimated 175,000 blogs created every day (according to blog search engine, Technorati), writing or contributing to a blog does not guarantee an audience, just the opportunity to express an opinion (in most countries, at least more repressive regimes have clamped down on Internet use). So although Web 2.0 might give voters more tools at their disposal to lobby or challenge those in power, it arguably has not transformed the status quo to any significant degree.
Challenges in a Web 2.0 world Tone and style of Web 2.0 The most popular blogs, podcasts and videos online are those that court controversy, entertain or deliver candid and/or well-informed opinions. Perhaps this is why the most popular political blogs come from those of outspoken and charismatic political figures. But for most politicians, this conversational and intimate style does not sit comfortably with their persona.
Voter apathy There will always remain a group resistant to the messages of government, whether delivered online or offline. Likewise, there will always be those voters that do not know how to use or are interested in learning Web 2.0 technologies in the first place.
The healthcare and pharmaceutical industry Since the Internet came into existence, it has provided a natural home for healthcare information (such as online support groups for sufferers and access to research projects); how much of it is accurate is another matter for debate though. With the advent of Web 2.0, there has been a rise in user-generated healthcare information and healthcare content distributed via blogs, RSS feeds and videos. This can be found on general consumer sites such as YouTube or sites for medical practitioners, such as Doctors.net.uk, a UK social network with nearly 152,000 registered doctors, where
54
they can contribute to debates on the discussion forum about professional situations, education challenges and so on.
Many of these sites are consumer-driven in nature. By contrast, the University of Maryland's Ben Shneiderman, a researcher of human-computer interaction, argued recently in Science magazine that research practices hadnt kept up with this wave of innovation. He wants the social sciences industry to rethink the way it conducts research and has labelled his new method Science 2.0 because it combines the hypothesis-based inquiry of laboratory science with the methods of social science research to understand and improve the use of new human networks made possible by todays digital connectivity.
It's time for researchers in science to take network collaboration like this to the next phase and reap the potential intellectual and societal payoffs. We need to understand the principles that are at work in these systems, said Shneiderman. His view is that Science 1.0 is reductionist thinking closely linked to controlled experiments, a method that, while successful in explaining natural phenomena sometimes diverges from solving practical problems and only occasionally advancing broader goals. By contrast, Science 2.0 studies social interactions in the real world. Shneiderman uses the example of a project he is working on with colleagues to develop 911.gov Community Response Grid, an emergency response system that will rely on the Internet and mobile communication devices to allow citizens to receive and submit information about national security community problems.
Financial services Web 2.0 offers financial services firms an opportunity to communicate more effectively with customers and employees; target customers (or potential customers) in their natural environment and even deliver new services. For instance, MicroPlace (part of eBay) is a marketplace for microfinance investors; likewise Kiva puts entrepreneurs looking for finance in developing worlds with people that want to invest and help others with as little as $25.
55
Some retail banks have been particularly forward thinking in their use of Web 2.0 to reach out to customers. Wells Fargo, for example, has created a virtual world, Stagecoach Island, and writes several blogs including Guided by History (http://blog.wellsfargo.com/GuidedByHistory/) and The Student LoanDown (http://blog.wellsfargo.com/studentloandown/) to target customers who spend a lot of time online. Similarly, The Royal Bank of Canada has a Facebook page and online forum for students (www.rbcp2p.com) featuring advice from other students on managing finances through blogs and video blogs (vlogs).
TD Canada Trust also has a group on Facebook for university and college students, which currently has more than 11,000 fans. In the UK, the Royal Bank of Scotland joined Yell and other recruiters in attending a virtual careers fair in Second Life last October. Candidates were able to talk with careers advisers, meet RBS staff (albeit not necessarily looking as they do in the real world) and get any information they needed about working at the bank without leaving their laptop. ING also has an interactive website (http://moveoutmoveup.com) for first-time buyers with videos and games. In August 2007, US financial services provider, Wachovia, launched its first podcast (http://www.wachovia.com/misc/1,,1466,00.html), which gives weekly insight into the economy and topical financial events.
Challenges in a Web 2.0 world Risk Financial services firms are more regulated than businesses in other sectors, so understandably some employers are wary about opening the business up to wikis, blogs and other employee-generated or user-generated content. For instance, on Wells Fargos Guided by History blog, there is a disclaimer under the About This Blog section which says: As a bank, there are regulations that prevent us from obtaining some information, hence the restrictions in our blog comments that prevent you from submitting your full name. Under the Children's Online Privacy Protection Act (COPPA), you must be 13 years of age or older to provide us any of your personal information, including your email address Also, we cannot capture your blog's URL
56
in our comments due to concerns about phishing a method of identity theft in which unsuspecting Internet users are lured to a fake website.
To minimize risk, many banks have put in place procedures for approving blogs and only allow a select team of employees to post content on social networks and other online forums. Other banks, such as Wells Fargo, monitor and filter comments posted in response to their blogs.
Investment While Web 2.0 tools and services are relatively inexpensive to create or deploy, for some financial services institutions the investment required from a capital and time perspective is enough of a disincentive not to bother. Many financial services providers have dealt with this challenge by putting Web 2.0 content delivery under the remit of specific employees. Once the infrastructure is in place as well, it can be reused for other departments. At the launch of its The Week Ahead podcasts, for example, Juan Silvera, Wachovias eCommerce director of emerging trends, said: "Several other Wachovia business units are exploring the use of podcasts, and we will continue to partner closely on how to best leverage this new method of content delivery.
Tone and style One of the main challenges all organizations writing a blog, delivering a podcast or creating any external communications face is avoiding corporate language or turning the content into an advertisement for the company. Adopting the more consumerfocused approach of Web 2.0 is also daunting for those firms used to institutional or corporate finance speak. Those firms that succeed in this area do so by creating imaginative and engaging Web 2.0 content and putting in place proper safeguards inside their organization to ensure everyone knows what they can and cannot say through the Web (whether talking on behalf of the organization or as a private individual).
57
As the authors of a report from Deutsche Bank Research (Be a driver not a passenger: implications of Web 2.0 for financial institutions, July 31, 2007) point out: Basically, it is only possible to deploy Web 2.0 applications in corporate communications management within narrowly defined limits. This may be the case if, for example, there is close congruence between corporate objectives and those of the Web 2.0 community. Web 2.0 applications for a firm may also be successful if they are placed and run by businesses with the right kind of corporate culture. Authenticity, credibility of content and style, and a straightforward approach to handling negative reactions, e.g. comments in blogs, are the prerequisites.
Barriers to adoption of Enterprise 2.0

Misperception and confusion The main reason given by organizations in Bournemouth Universitys research for not using Web 2.0 was senior managements lack of understanding of the business benefits associated with these technologies. Nearly a third of respondents not using Web 2.0 in their environment blamed the IT departments open admission of a lack of understanding about Web 2.0. Other respondents considered Web 2.0 irrelevant to their industry: Entirely irrelevant to our business. As a retailer there are no clear, tangible, hard benefits (or studies to identify benefits) to implement Web 2.0 technologies either for our customers or internally; This is not appropriate at present to our business model as a Foundation Trust Hospital.
For many enterprises, concerns focus on regulation and the risk that comes from handing control over to the wisdom of crowds. The hierarchical structure of many organizations also provides a natural impediment to widespread collaboration and sharing.
58
If information sharing is not encouraged, implementing a blog or wiki will not transform the organization overnight. Employees need to be motivated to share information and collaborate with one another so, in one sense, moving to Enterprise 2.0 is a training and people issue, as much as a technology one.
While some organizations have taken an interest in Web 2.0 because of the excitement and hype surrounding it, others have dismissed it outright as another fad. Yet as we shall explore later in examining the application of Web 2.0 technologies and services to various business processes, aspects of Web 2.0 can be used by any organization in any sector that wants to collaborate faster, increase business efficiencies and open its business to new marketing channels.
Culture The Internet may have driven todays global 24x7 always-on environment, but too many organizations have failed to radically alter their business practices and processes to keep pace. Collaborative working with suppliers, business partners and employees has been a goal of enterprises since the early days of EDI, but even with the technical possibilities enabled by Web 2.0, many organizations have failed to adapt their fundamental working practices to fully capitalize on these opportunities. Essentially, the hierarchical structures in place are unable to adapt or integrate as fluidly as some of the technologies available today.
Enterprises also have a tremendous amount of information at their fingertips than ever before, which rather than helping speed up their operations can be a hindrance. A consultant at social media agency, Headshift, cites an example on his blog (http://www.headshift.com/moments.cfm) of people complaining about being compelled to block 2 hours a day reading newsletters to keep up-to-date to their industry trends, because they have never used a newsreader. All these folks are not average employees. They are decision makers. They spend their days making sure processes work fluidly, coordinate people to make them work more efficiently, decide
59
how things need to be improved to make the whole organization more efficient and profitable.
IT security and management The challenge for CIOs in deploying Web 2.0 technologies is that many were designed with consumers, rather than enterprises, in mind. Hence, they are not designed with the same security and performance features traditionally associated with enterprise software and services. Given the breadth of these concerns, we shall examine this area in more detail below.
IT security Almost two-thirds of respondents to a survey by InformationWeek on Web 2.0 take-up and concerns cited security as a challenge. Web 2.0 is about two-way interaction and engagement, so if it is easy for a non-malicious user to upload content to a Web 2.0 site, what is to stop a hacker doing the same with malicious content? In April 2008, BitDefender, an antivirus software company, reported on the use of Nigerian 419 scams being used on the professional social network, LinkedIn; the scam was able to get past a users antispam filters by traveling via a LinkedIn users account. Users ran the risk of infecting their computer (or those of their employers) by visiting the infected sites.
Hacking practices, such as cross-site scripting which involves an attacker inserting malicious code into an HTML page take advantage of vulnerabilities in Web 2.0 technologies like AJAX, which deliver richer site experiences. By the same token, such code can give a hacker access to an employees computer as the browser provides a backdoor into an organizations confidential information. It was a vulnerability of this type that lay behind the worm infecting MySpace in 2005.
There are ways of protecting the enterprise not enabling users to download unknown Web applications, for example, or ensuring servers validate all inputs. To prevent attacks of the XSS variety, CIOs should ensure users cannot use JavaScript and educate
60
them on not giving too much information away online, which could open the door to spam. Where Web applications and third-party widgets are being used (see chapter 6), the sources need to be trusted and authorized.
Mary Ann Davidson, chief security officer for Oracle and Elad Yoran, CEO OF Security Growth Partners, suggest that: Security 2.0 means securing all end points; establishing simple, secure peer-to-peer connectivity between these end points; and controlling all data, in whatever form it lives and morphs, throughout its entire lifecycle, wherever it goes and however it gets there. It also means that each network entity must self-defend because network and application perimeters themselves have become mutable and collaborative. (Enterprise Security for Web 2.0 in Computer published by the IEEE Computer Society).
Vendors have, on the whole, responded to enterprises concerns. As Web 2.0 companies, such as Facebook, have opened their services to corporate clients they have incorporated more security features, for example. Many Web 2.0 service providers will also work with enterprises to address their concerns for example, installing Enterprise 2.0 technologies behind the firewall rather than hosting it externally on a providers servers. This may make it more expensive for the enterprise, but could help sway senior management buy-in. In addition, the entrance of IT heavyweights such as Microsoft and IBM to the Enterprise 2.0 market, should reduce CIO fears about security and control further.
An important point to bear in mind, though, is that too much security and control will negate the open and collaborative benefits of Web 2.0. IT managers need to be aware and minimize the security risks as much as possible, but without dissuading employees from using Web 2.0 tools or giving the impression that it is too complex and technical to use.
61
Application integration A survey of 100 end-user organizations by Nemertes Research found that more than half of respondents were still struggling with integrating voice and data architecture and operations functions. A survey from InformationWeek produced similar findings, with senior editor, J. Nicholas Hoover, pointing out in an article in February 2007 that: even within the Web 2.0 world, vendors haven't paid enough attention to interoperability. IBM and Microsoft's instant messaging platforms interoperate with several of the public Internet services, for example, but not with each other. Emerging business social networks are the same way.
Skills shortage Web 2.0 is such an emerging area that most organizations lack the expertise in-house to understand, assimilate and deploy their own version of Enterprise 2.0. More than half of the 250 companies interviewed by InformationWeek cited the lack of staff expertise as a major obstacle to rolling out Web 2.0 tools.
In other organizations though, the speed at which users can quickly pick up Web 2.0 technologies and services is making the role of IT redundant. Mash-ups, for example, could replace some traditional homegrown IT applications. If developed by non-IT people to solve a particular business solution, they could meet this need more effectively than the IT team, which may be too far removed from the business day-today operations.
Ken Harris, CIO at nutritional products manufacturer Shaklee, told InformationWeek in October 2007 that: We've cut IT staff by 20%, and we're providing a whole lot more in terms of IT services. This is because the manufacturer is using more external suppliers to provide in-house resources, such as ERP and search. While some IT directors might fear for their job, over-stretched IT teams will see this as good news, enabling them to hand over tactical tasks to focus on larger or more strategic projects.
62
Take-up For eight of the 13 Web 2.0 tools an InformationWeek survey asked its 250 respondents about, at least 20% of companies said they had made the tools available but they were hardly used. This is less an IT problem than a business problem, but such statistics provide ammunition for recalcitrant CIOs that do not think Enterprise 2.0 worth investing in.
One argument heard from some CIOs is that there is no need for Web 2.0 tools as enterprise versions already exist groupware applications provide a collaboration platform, content management systems do the job of wikis and so on and come with enterprise security and policy controls. Yet, as highlighted earlier in this report, Web 2.0 technologies offer lower start-up costs and simpler long-term maintenance than many existing collaboration and marketing platforms.
Where next for Enterprise 2.0?

Enterprise 2.0 is not a fad, but a growing trend. Among the executives familiar with the nine Web 2.0 trends cited in McKinseys survey, more than 75% said that their companies were already investing in one or more of these trends. In addition, executives from some industries and regions that were slow to invest during the past five years (such as retail) are poised to move more aggressively now. Similarly, while executives from China and Latin America typically said that their companies were late followers or had invested cautiously, they now planned to invest at the same rate or even faster than companies in Europe and North America.
63
Enterprise 2.0 recommendations

Re-think traditional information flows and structures Traditional top-down hierarchical structures are at odds with the Web 2.0 bottom-up way of interacting. While Enterprise 2.0 should not be seen as a revolutionary force, tearing up old ways of doing things, organizations should consider an evolutionary approach by opening up information flows and enabling employees to give their feedback through blogs, wikis and other collaboration tools.
Many younger employees are bringing Web 2.0 tools in the enterprise because they know what will help them do their job better. It is also the success of many small, grassroots projects that achieve the buy-in for larger department or enterprise-wide Web 2.0 implementations. For example, Pfizers Enterprise 2.0 initiatives took off after its group of Web 2.0 champions ran an internal conference explaining how Web 2.0 could be used inside the pharmaceutical company.
Finally, it is not just the way organizations disseminate information that needs reassessing, but also they way they reward performance and incentives employees to encourage them to share and disperse knowledge amongst employees.
Establish policies for Web 2.0 usage One of the big risks for organizations in deploying Web 2.0 tools and services is that they will open their enterprise to security risks not just from IT attacks but from their own employees compromising an organizations intellectual property or relaying confidential information, such as new product launches. A survey in 2007 from security vendor, Clearswift, of 1,000 employees found that 42% of respondents aged 18 to 29 had discussed work-related issues on social media websites.
By drawing up policy guidelines about how employees use and contribute to such sites, and communicating this to employees at key times (for instance, during the induction
64
process for new recruits or whenever information is updated) will help make them aware of their conduct and appropriate behavior.
Consider areas where new applications could be deployed Many Web 2.0 initiatives are borne from grassroots initiatives or employees identifying a gap that a mash-up, social network or other Web 2.0 application could fill. To promote a culture of innovation and experimentation, organizations should encourage employees to discuss and share ways of improving the way they work. Google employees are allowed to spend one day a week working on projects not related to their official job description and it was this freedom that produced Googles email program, Gmail, and its newsfeed reader, Google Reader. In a similar vein, it was a managers claim that social networking was of no use to Morgan Stanley that encouraged one employee to prove him wrong using LinkedIn.
As well as providing the culture and environment for information sharing, the IT team needs to provide a modern and flexible infrastructure capable of supporting Web 2.0. A service-oriented architecture makes it easier to integrate data sources and create application mash-ups, for example.
Dont abandon offline communication altogether Enterprise 2.0 is not a panacea for all ills; in some instances, organizations will find that Web 2.0 tools and services such as blogs are less effective than traditional communications. Each project should be considered on its merits and Web 2.0 technologies and services not used for the sake of Web 2.0 alone.
Avoid a disconnect between IT and business Web 2.0 could drive a disconnect between IT and the business by making it easier for users to assemble and contribute to applications and services without requiring the input of IT. In some cases, employees have outright ignored IT regulations surrounding the use of Web 2.0 tools and services. Facetime, a vendor that secures instant
65
messages, conducted a survey of 700 employees and IT managers in 2007, and found that 36% of employees disregard the IT department to download applications like Instant Messenger and VoIP (voice over IP services, such as Skype).
Such an approach could be dangerous. Any implementation should involve IT from the beginning in order to minimize risks caused by the leaking of confidential information or exploitation of loopholes in the IT architecture. At the same time, IT should give users the freedom to come up with creative solutions to business problems. But, says Brad Shimmin, a principal analyst with Current Analysis, Make sure your Web 2.0 software can keep tabs on the composite applications (read mash-ups) created by your newly empowered users. You must be able to control which assets they are allowed to mash and monitor the usage levels of all application sources for compliance with stated key performance indicators and service level agreements.
66
CHAPTER 4
Why Web 2.0 matters
67
Chapter 4
Summary
Why Web 2.0 matters
Internet-based companies such as Google, YouTube and Flickr have risen to prominence ahead of the carriers by taking advantage of cheap processing power and, above all, free bandwidth. The 2008 Predictions Survey from the National Venture Capital Association (NVCA) found that nearly three-quarters of venture capitalists were expecting moderate investment growth in 2008 of between $20bn and $29bn, on a par with 2007 investment levels. Web 2.0 businesses looking for funding could find that the venture capitalists they rely on are under pressure, with investment banks unable to provide the liquidity they need to realize their investments. Any slowdown in the IPO market could have an equally draining effect on mergers and acquisitions another source of funds for venture capitalists looking to offload their investments. Web 2.0 companies face very few barriers to market. It is relatively inexpensive to launch and run an Internet-based business: bandwidth is cheap and there are no expensive manufacturing costs associated with delivering their services. With services or products being offered for free, the Web 2.0 business model follows the publishing business model, with revenue coming from advertisers paying to reach people visiting the site. Competitive advantage in the Web 2.0 world doesnt come from locking out other platforms and applications; it comes from open standards that give consumers choice and control over how they manage their virtual world. In 2007, venture capitalists pumped a record $1.34bn into 178 Web 2.0 deals in the US, an increase of 88% on the previous year.
68
Introduction
Part of the reason why Web 2.0 has generated so much interest and column inches is because of the incredibly large valuations given to Web 2.0 companies such as YouTube, MySpace and Facebook. In this chapter, we shall examine why Web 2.0 companies have received such high valuations, whether this is justified and the business models Web 2.0 companies are built on.
Background
In theory, it should have been either the carriers that provide the Internet infrastructure or the Internet Service Providers, which provide the gateway to the Internet, that dominated the Web 2.0 landscape, rather than a company created by a Harvard graduate (Facebook) or a search engine started by two self-acknowledged geeks (Google). After all, they were the ones that controlled who could go online or were the first point of reference for Internet surfers.
Instead, Google, YouTube, Flickr and other Internet-based companies rose to prominence by recognizing the power of users and building up audiences by giving them a tool they wanted to use every day. Nielson Onlines 2007 survey of the ten most popular Internet brands in the UK (based on audience numbers) found that AOL and Real had lost their places to make way for YouTube and Wikipedia. Five of the 10 fastest growing online brands in the UK were related to social and professional networking, such as Facebook, RockYou and Slide (the latter two are providers of social networking applications), so expect the Internet businesses to be more popular than the infrastructure providers in the future too.
Internet-based companies such as Google, YouTube and Flickr have risen to prominence ahead of the carriers by taking advantage of cheap processing power and, above all, free bandwidth. Users upload entire photo albums onto Flickr, back-up their
69
hard drive to online repositories at Apple for an almost insignificant fee (given the amount of storage that everyone combined is using), and fill up their Yahoo! Mail inbox thanks to unlimited free email storage. What we shall explore next is whether Web 2.0 businesses have a business model that is built to last.
How much is Web 2.0 worth?

Table 4.5 shows how much was invested in Web 2.0 companies between 2001 and 2006. It is interesting to note not only the incredible rise in investment in this area a compound annual growth rate of more than 1,000% but also emerging interest in investing in this area from Israel and China. That said, in 2006, the US was by far the biggest investor throughout the period, investing 11 times more than China alone in that year.
Table 4.5: Amount invested in Web 2.0 companies ($m)

2001 US Europe Israel China Total 67.20 5.63 2002 30.15 2.16 2003 89.31 6.51 2.00 1.30 99.12 2004 231.02 2005 289.33 33.28 1.00 82.60 406.21 2006 682.70 100.46 61.25 844.40
2.21 233.23
72.83
32.31
Source: Dow Jones VentureOne and Ernst & Young
The 2008 Predictions Survey from the National Venture Capital Association (NVCA) found that nearly three-quarters of venture capitalists were expecting moderate investment growth in 2008 of between $20bn and $29bn, on a par with 2007 investment levels. Table 4.6 shows the most active venture capitalists in Web 2.0 in 2006. Given the findings in Table 4.5, its unsurprising that the leading investor, Benchmark Capital, is a US firm (although it also has operations in Israel) and was active during the first dotcom boom, wisely investing in eBay back in 1997.
70
Table 4.6: Most active Web 2.0 investors, globally 2006

Firm name Benchmark Capital Draper Fisher Jurvetson Sequoia Capital Omidyar Network Accel Partners General Catalyst Partners Kleiner Perkins Caufield & Byers IDG Ventures China Index Ventures Mayfield Storm Ventures
Source: Dow Jones VentureOne and Ernst & Young
Deals 13 10 9 8 7 7 5 4 4 4 4
These figures refer to the six years up to and including 2006; given current economic conditions, it is likely that investment in Web 2.0 will slow down towards the end of 2008 and beyond. The sector may still be performing better than others in 2008 and indeed, some businesses could flourish in the downturn if they are able to trim costs and offer a cost-effective alternative to more expensive enterprise software platforms but even the digital sector is not immune to wider macro economic conditions.
Web 2.0 businesses looking for funding could find that the venture capitalists they rely on are under pressure, with investment banks unable to provide the liquidity they need to realize their investments. And any slowdown in the IPO market could have an equally draining effect on mergers and acquisitions another source of funds for venture capitalists looking to offload their investments. This could mean that M&As of the value seen below will no longer be recorded: News Corp paid $580m for MySpace in 2005; eBay bought Skype for $2.6bn in 2005; Google paid $1.65bn for YouTube in 2006; AOL spent $850m on Bebo in 2008;
71
Comcast bought Plaxo for an estimated $150m in 2008; Yahoo! turned down a buy-out from Microsoft valued at $44.6bn in 2008.
Wider economic considerations have undoubtedly held back many Web 2.0 companies from racing to IPO; this wasnt the case in the first dotcom bubble in 2000. LinkedIn, a social network for professionals, may not become a public company until next year, reports BusinessWeek, and Facebook even later, in 2010. In the meantime, they plan to focus on growing their business and developing a solid revenue model.
The Web 2.0 business model

Web 2.0 companies face very few barriers to market. It is relatively inexpensive to launch and run an Internet-based business: bandwidth is cheap and there are no expensive manufacturing costs associated with delivering their services. As a result, businesses that raise venture capital typically find that their funding can go far with relatively low outgoings.
In addition, the free service model that Web 2.0 businesses rely on means there is no need for Web 2.0 businesses to spend time building up their reputation or expertise that people want to pay for access to, which some of the niche financial data websites need to do. So a Web 2.0 business can be up and running very quickly; indeed, the beta model of operations is something that has come to characterize Web 2.0. In his seminal paper on Web 2.0, Tim OReilly wrote: The open source dictum, release early and release often in fact has morphed into an even more radical position, the perpetual beta, in which the product is developed in the open, with new features slipstreamed in on a monthly, weekly, or even daily basis Real time monitoring of user behavior to see just which new features are used, and how they are used, thus becomes another required core competency.
72
With services or products being offered for free, the Web 2.0 business model follows the publishing business model, deriving revenue from advertisers paying to market their products or services to visitors on the site. But in their attempts to woe or satisfy advertisers, Web 2.0 companies havent always managed their revenue model successfully. Witness the MySpam accusations that have surrounded MySpace or the angry user response when Facebook implemented its advertising platform, Beacon, at the end of 2007. Users werent responding to the use of advertising on the site per se there were ads on users profile pages before Beacon was introduced but what they perceived as an intrusive advertising model. It was a mistake Facebooks founder, Mark Zuckerberg, publicly admitted to in his blog:
We were excited about Beacon because we believe a lot of information people want to share isn't on Facebook, and if we found the right balance, Beacon would give people an easy and controlled way to share more of that information with their friends. But we missed the right balance. At first we tried to make it very lightweight so people wouldn't have to touch it for it to work. The problem with our initial approach of making it an opt-out system instead of opt-in was that if someone forgot to decline to share something, Beacon still went ahead and shared it with their friends. It took us too long after people started contacting us to change the product so that users had to explicitly approve what they wanted to share. Instead of acting quickly, we took too long to decide on the right solution. I'm not proud of the way we've handled this situation and I know we can do better.
Beacon wasnt just a problem for Facebook; it could be a problem for every other business wanting to sell advertising on its site if it creates animosity amongst consumers about giving their details to social networks like Facebook in the first place. The problem for sites that rely on user numbers to make their business model work is that if members choose to go elsewhere, inevitably the advertisers will follow. What every Web 2.0 business strives for is a way of emulating the success of Google, whose share of the search market continues to grow (see Table 4.7), and make their site the destination for that particular product or service.
73
Table 4.7: Googles share of the US search market, April 2008

Domain www.google.com search.yahoo.com search.msn.com www.ask.com
Source: Hitwise
Apr 2008 67.90% 20.28% 6.26% 4.17%
Mar 2008 67.25% 20.29% 6.65% 4.09%
April 2007 65.26% 20.73% 7.77% 3.69%

Figure 4.3: Googles share of the US search market, April 2008

100% Share of the US search market (%) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% April 2008
Source: Hitwise
4.17% 6.26% 20.28%
4.09% 6.65% 20.29%
3.69% 7.77% 20.73%
67.90% www.ask.com
67.25%
65.26%
search.msn.com search.yahoo.com www.google.com
March 2008
April 2007
Its no easy challenge. The history of social networking sites illustrates how easily users follow their peers with Friends Reunited, once the most popular social networking site, being overtaken by MySpace, and, in turn, Facebook.
Are Facebook and co. worth more than $15bn? With users proving promiscuous in their loyalty to any one site and advertisers taking a cautious approach to Web 2.0, is it possible for such businesses to command billiondollar valuations?
74
Founded in February 2004, Facebook started life as a way for Harvard graduates to stay in touch with one another before extending the invitation to anyone online. There are now more than 64m active users and it is the most popular photo-sharing website. In October 2007, Microsoft purchased 1.6% stake in the social networking site for $240m, leading many to slap a $15bn valuation on Facebook.
MySpace, now owned by News Corp, is estimated to have around 200m users, but it was bought outright for $580m which works out at only 2.5% of what Facebook is worth, if the industry valuation is taken at face value. This means that either Facebook is vastly overvalued or News Corp bought MySpace for a bargain price. RBC Capital Markets analyst, Jordan Rohan, would appear to support the latter view, writing in a note to clients at the time of the deal, that he believed MySpace could be worth around $15bn by 2009. Perhaps he wasnt wrong Google paid $900m to provide search and display advertising on Foxs websites, including MySpace (but excluding FoxSports.com) in August 2006.
The problem with any valuation in this area is that it is usually based on speculation, not actual profit or sales. Complicating matters further is the fact that Web 2.0 is such a nascent market, so putting valuations on firms operating in the space is challenging at best, impossible at worst. A common dilemma is: can Web 2.0 companies be valued like other start-ups even when there are no similar businesses in operation to compare it to? Others are asking, how much can performance be taken into account when many of these businesses havent been operating for very long or, importantly, operating in a market that has been going for very long? Can user numbers and traffic translate into meaningful advertising revenue? Should all traffic be considered equally?
There are no easy answers, so lets start by considering why sites such as MySpace, YouTube and Facebook have received such high valuations:
75
Network effect It sounds trite, but social networking sites only work if users use them. Facebook experienced a huge growth curve because users invited others to join them on the site or looked up other contacts through the search engine. The incentive was to become part of the club.
Innovation Web 2.0 companies embrace the social and communication aspects of the web, which was largely lacking in Web 1.0. They may not be helping users do anything new people have been making offline networks, creating home videos and sharing holiday snaps for years but they are creating new ways of doing things that are quicker, faster and cheaper. Skype disrupted the telecoms industry by offering free calls over the Internet, while Digg.com challenged the way the print industry works by letting users tag and vote for their favorite news stories to create their own front page that they wanted to read.
Using the site as a platform Where Facebook and MySpace differ from more established social networking sites like Friends Reunited or GeoCities is in turning their site from being somewhere that users can look up friends and build a community, to a platform that lets them listen to new music (MySpace), watch original entertainment (Bebo) or find a new job (LinkedIn).
Open architecture Competitive advantage in the Web 2.0 world doesnt come from locking out other platforms and applications; it comes from open standards that give consumers choice and control over how they manage their virtual world. This is why sites such as Ning (co-founded by Netscape co-founder, Marc Andreessen) and Netvibes, which allow users to create their own social networks and mash-up homepages respectively, have received close to $60m in investment from venture capitalists.
76
Lower infrastructure costs Todays Web 2.0 companies arent built on the expensive web infrastructure required in the Web 1.0 world, which, in many ways, provided the foundations for the industry today. Writing in his blog, Andreessen says: my back of the envelope calculation is that it is about 10x cheaper to start an Internet business today than it was in the late 90's due to commodity hardware, open source software, modern programming technologies, cheap bandwidth, the rise of third-party ad networks, and other infrastructure factors.
Online advertising is growing With Web 2.0 companies relying on revenue from advertisers, one might assume that with news of a global slowdown in the economy, online advertising will take a hit. Yet while TV and print advertising is feeling the pinch, online advertising continues to flourish, growing by 797m year-on-year in the UK in 2007 to have 15.3% market share, ahead of direct mail and regional newspapers (according to the Internet Advertising Bureau). Advertisers are heading online as thats where users increasingly are. And with more investment in online, theres inevitably more room for companies operating in that environment.
The Internet Advertising Bureau argues in a whitepaper released shortly after Googles acquisition of YouTube: A bubble implies a sudden flux of interest and investment, but the Internets growth and influence has been rapid, but steady It is the sudden appearance of web 2.0, buoyed by a number of new technologies such as RSS and AJAX the Internet has become a two-way medium, that has fuelled the bubble discussions. But the wealth of user generated content online has been steadily building for a number of years. MySpace and YouTube were preceded by podcasts and blogs and going back even further the companies that flourished post dotcom crash incorporated elements of user generated content.
Flaws in the Web 2.0 business model Yet despite all this, there are skeptics out there and with some good arguments.
77
The online advertising market isnt equal Paid search marketing commands the biggest chunk of the online advertising market (57.6% of the UK online advertising market in 2007). Display has considerably less market share, but is predominantly what social networks, blogs, widgets, usergenerated content and other Web 2.0 sites rely on (there is some video advertising, but this market is still nascent, although growing at 45% in the UK). Anecdotal evidence from ad networks indicate that there is too much inventory on social networks millions of users does result in millions of web pages, after all and none of it is commanding a premium. At this stage, its also too early to tell whether other advertising models developed by the social networks Bebos TV programming, for example or Facebooks Beacon program have produced any significant figures.
The Pay Per Click (PPC) model used in search advertising was even brought into question in February 2008 when comScore released its PPC report and revealed a seven% sequential decline on December 2007 and flat annual growth in paid clicks for Google. As comScores CEO, Magid Abraham, pointed out: The information triggered a flurry of reactions in the media and the financial community that centered on two concerns: 1) a potentially weak first quarter outlook for Google, and 2) an indication that a soft U.S. economy is beginning to drag down the online advertising market.
This was why shortly after releasing its report, comScore brought out a press release to clarify its findings, which said: the evidence suggests that the softness in Googles paid click metrics is primarily a result of Googles own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur. In addition, the reduction in the incidence of paid listings existed progressively throughout 2007 and was successfully offset by improved revenue per click. It is entirely possible, if not likely, that the improved revenue yield will continue to deliver strong revenue growth in the first quarter. Separately, there is no evidence of a slowdown in consumers clicking on paid search ads for rest of the US search market, which comprises 40% of all searches.
78
Theoretical valuations vs. actual revenue and profitability Despite its billion-dollar valuation, it comes as a surprise to discover that several industry estimates only put Facebooks revenue at about $150m in 2007. Its not the only one Slide was reported to have received more than $70m in funding with the most recent round valuing it at $550m, despite having revealed no revenue figures. The real concern is that these valuations are far higher than any profits or sales the Web 2.0 companies will ever be able to attain.
Web 2.0 isnt the only sector chasing VC funding More respondents to the NVCA survey predicted that the clean tech sector would attract higher levels of venture financing in 2008 than those backing increased investment in Web-based companies. Investors are also investing geographically too, with funding in China, in particular, seeing growth.
Wheres the disruptive technology? Email, Skype and iTunes are all examples of disruptive technologies that have burst onto the consumer (and corporate) stage over the last 20 years challenging the postal, telecoms and music/broadcasting industries respectively. But is there really a disruptive technology amongst todays Web 2.0 companies? Writing in InformationWeek in July 2006, Rob Preston, editor-in-chief, said: The plummeting prices of PCs, servers, storage, memory, and backbone bandwidth have made it easier for Web 2.0 startups to get in the game, but cheaper infrastructure doesn't always spark ingenuity.
Web 2.0 businesses are going bust As expected, the fallout from Web 2.0 has already started to occur, with several companies looking to sell their assets or running out of funds to continue operations.
Is Web 2.0 another dotcom bubble waiting to burst? In 2007, venture capitalists pumped a record $1.34bn into 178 Web 2.0 deals in the US (source: Dow Jones VentureSource). This was up 88% on the amount invested in 2006,
79
leading many industry watchers to proclaim the arrival of a second dotcom bubble. However, a few extravagant parties and over-enthusiasm for Web 2.0 stock doesnt make a bubble on its own. Table 4.8 shows there are many key differences between the dotcom bubble of the Millennium and todays hype surrounding Web 2.0: IPOs of Web 2.0 companies are almost non-existent, venture capital investment in Web 2.0 isnt nearly as high as investment in other emerging sectors, such as clean tech, and theres only been one $billion-dollar acquisition so far when Google bought YouTube in 2006.
The Dow Jones VentureSource report also revealed the number of deals is actually slowing down, with Facebook alone accounting for 22% of all funds raised in this sector in 2007. Furthermore, deals from the Bay Area (home to many Web 2.0 companies) declined slightly on the previous year.
Table 4.8: The Millennium dotcom bubble vs. Web 2.0 fever
1999/2000 1) Skyhigh valuations 2007/2008 1) Ditto today, with Facebook valued at $15bn
2) Internet companies promise potentially 2) Web 2.0 companies promise potentially high high returns and a short time from start-up to returns but revenue generation takes longer than revenue generation expected for some companies 3) IPO goldrush: 260 venture-backed companies IPO in 1999 and 264 in 2000; followed by cut-price IPOs as the bottom falls out of the market 3) The Web 2.0 companies that people are most excited about are choosing to wait a year or two before going public; in 2007 80 venture-backed companies went public, compared to 57 in 2006.
4) The median time from start-up to IPO was 4) The median time from start-up to IPO in the first four years in 1999 three quarters of 2007 was nearly eight years. 5) Lots of start-ups 6) Overhyped talk of an Internet revolution 5) This is also true of Web 2.0: 6) Fears about a credit crunch and memories of the last dotcom bubble provide a more balanced perspective of the Web 2.0 reality
Source: Business Insights/BusinessWeek/NVCA/Thomson Financial
As in any market sector, expect those companies with imagination, sound management and a product or service people want to thrive, and those companies that jump on any
80
bandwagon thats passing, lack a decent revenue model and declare sensible business practices boring not to make it past their first birthday. What follows might not be anywhere near as exciting or adrenalin-fuelled, but for consumers tired of being invited to join multiple social networks and enterprises wanting to find a business case for rolling out Web 2.0, common sense can be a useful market correction.
81
82
CHAPTER 5
83
Chapter 5
Summary
Web 2.0 technologies such as wikis, social networks, blogs and microblogging sites like Twitter, have the potential to drive higher productivity gains by enabling employees to communicate with one another more quickly and frequently, and share their knowledge throughout the organization more easily. In the enterprise, Web 2.0 technologies like wikis, blogs and social networks can be used for information and knowledge sharing, while RSS feeds, tags and folksonomies assist in the process of retrieving information from the increasingly large amounts of digital content organizations have created, not to mention the collective wisdom of crowds inside the enterprise. The benefits of Web 2.0 collaboration include tapping into the wisdom of crowds, bypassing email as a communications method, flexibility in creating Web 2.0 applications on an ad hoc basis and genuine knowledge sharing. Holding Web 2.0 collaboration back, however, are organizations fears of losing control, the idea that majority rule doesnt always produce the best results, scalability issues, and concerns for intellectual property and security. Wikis provides a Web 2.0 alternative to groupware applications, like Lotus Notes. Blogs can be an effective channel for broadcasting information to a wide audience, such as company results, and collecting feedback to help refine existing products, services or promotional methods, for example. In many ways, blogs are the Web 2.0 equivalent of a newsletter or email. Ad hoc social networks can improve project management or foster a community around a research idea or topic, for example. In some instances, an organizations social network could evolve into an intranet for the Web 2.0 era.
84
Introduction
IT, communications and ecommerce are widely recognized to have contributed to increased productivity in organizations. Manufacturing companies in the UK achieve an extra 2.2% in productivity for each additional 10% of employees using computers. In newer firms, this extra productivity effect rises to 4.4%.
The effect associated with Internet use is even greater: manufacturing companies in the UK achieve an extra 2.9% in productivity for each additional 10% of employees using the Internet. US-owned firms in the UK are more successful in exploiting IT, with recent government statistics on international productivity comparisons, showing higher output per worker for the US compared to other G7 economies.
Web 2.0 technologies such as wikis, social networks, blogs and microblogging sites like Twitter, have the potential to drive even higher productivity gains by enabling employees to communicate with one another more quickly and frequently, and share their knowledge throughout the organization more easily.
Below we shall examine what form of collaboration, knowledge sharing and information retrieval Web 2.0 offers organizations, which companies are already using Web 2.0 to improve the way they work and the challenges associated with rolling out Web 2.0 technologies in the corporate arena.
85
The Web 2.0 opportunity

The opportunities offered by Web 2.0 in the enterprise are as broad and varied as the imaginations of the early adopters trialing the technologies in their workplace. As reported in BusinessWeek: LEGO Group uses the Net to identify and rally its most enthusiastic customers to help it design and market more effectively. Eli Lilly & Co., Hewlett-Packard Co., and others are running prediction markets that extract collective wisdom from online crowds, which help gauge whether the government will approve a drug or how well a product will sell.
Headshift, a UK-based social software consultancy, has worked with Business Link for London, a business support service for London-based SMEs, to set up two corporate blogs aimed at reaching its audience of entrepreneurs more effectively. The agency was also involved in setting up Patient Opinion, a user-generated content site funded jointly by the Department of Health and South Yorkshire Strategic Health Authority, which allows anyone to share their experiences of receiving specialist treatment on the NHS.
Web 2.0 technologies tap into the original idea behind the Web, as a massive network of collective intelligence. While peer-to-peer technology has harnessed peoples spare computing power, Web 2.0 taps into their collective knowledge and insight. In the enterprise, Web 2.0 technologies like wikis, blogs and social networks can be used for information and knowledge sharing, while RSS feeds, tags and folksonomies assist in the process of retrieving information from the increasingly large amounts of digital content organizations have created, not to mention the collective wisdom of crowds inside the enterprise.
When it comes to collaboration, Web 2.0 technologies can improve project management, communicate information more readily and harness the views of a wider group of people to solve problems. KPMGs Matuszak highlights the example of The Western States Intelligence Network in Enterprise 2.0: Fad or Future? The Business
86
Role for Social Software Platforms, which has adopted wikis to help assemble crimefighting information in one place. In the past, this sort of information was shared via email, and vital intelligence often would fall through the cracks.
Likewise, he points out how Americas Defense Intelligence Agency is using an internal wiki called Intellipedia to help analyze security threats. In the past, producing a national intelligence estimate for a foreign country would have required a timeconsuming, face-to-face meeting of the relevant analysts, but many with an understanding of the issues would have been excluded due to location. Intellipedia allows anyone with expertise and an interest, and even a little time, to contribute. Both examples demonstrate the application of a consumer technology in the corporate environment to increase information sharing and problem solving.
Writing in Business Information Review, Luke Tredinnick of the London Metropolitan University, considers the impact of Web 2.0 on company intranets: The most significant feature of Web 2.0 is the way in which it subtly inverts the traditional conception of information and knowledge that has dominated the library and information profession since its inception. Web 2.0 by contrast treats information and knowledge as things constructed in social interaction, and in the interaction between users and information systems The key to Web 2.0 is harnessing the ways in which users use information to add value to information (either through direct or indirect user-participation) in creating the information sources that they use. In other words, Web 2.0 reflects collective use over time, rather than reflecting an organizations preferred view of itself.
Likewise, Paul Argenti of the Tuck School of Business at Dartmouth, considers the influence of Web 2.0 on corporate communications. Writing for the Social Science Research Network, he points out: every employee today is a corporate communication manager on his/her own and a potential publisher through the use of technology. Through emails, blogs, and social networking sites, people have more ways to share corporate information than ever before.
87
The benefits of Web 2.0 collaboration

The wisdom of crowds An organizations knowledge and intellectual property is what gives it a competitive edge. So imagine the benefit of being able to tap into that expertise and garner the opinions of diverse groups around the organization to solve problems that previously would have been examined by the few. BusinessWeek highlights the experience of HP: Hewlett-Packard Co.'s services division was having trouble a few years ago with forecasts in the first month of a quarter. So Bernardo A. Huberman, director of HP Labs' Information Dynamics Lab, set up a market with 15 finance people not normally involved in such planning. They bought and sold virtual stock that represented a range of forecasts at, above, and below the official company forecast. Their collective bets yielded a 50% improvement in operating-profit predictability over conventional forecasts by individual managers.
Some organizations are even looking outside their four walls to tap into a wider pool of talent. BusinessWeek reports: Procter & Gamble's $1.7bn-a-year R&D operation, for instance, is taking advantage of collective online brain trusts such as Lilly company InnoCentive Inc. in Andover, Mass. It is a network of 80,000 independent, self-selected solvers in 173 countries who gang-tackle research problems for the likes of Boeing Co., DuPont, and 30 other large companies More than a third of the two dozen requests P&G has submitted to InnoCentive's network have yielded solutions, for which the company paid upwards of $5,000 apiece. By using InnoCentive and other ways of reaching independent talent, P&G has boosted the number of new products derived from outside to 35%, from 20% three years ago. As a result, sales per R&D person are ahead some 40%.
88
The limitations of current communication methods Email made communications faster instant messenger made it instantaneous but then the problems of spam, email overload and version control with documents flying back and forth began to appear. Likewise, far from being useful resource tools, company intranets have become huge data repositories for information that a lot of people simply dont use.
With Web 2.0 technologies like wikis, document version control becomes manageable, and information becomes dynamic and democratic, created by the many rather than the select few. Moreover, because the information does not have to be structured up front, but rather evolves in accordance with the demands placed upon it, a collaborative document produced using wiki software would likely be more efficient and more relevant, writes KPMGs Matuszak. IBM operates dozens of wikis within its enterprise to foster everything from internal project collaboration to software development. It is also taking part in an experimental project, the Community Patent Initiative, with others including Microsoft, General Electric, and HP. This initiative uses the wisdom of crowds to help the understaffed U.S. Patent Office review applications and ensure that only truly worthwhile inventions get 20 years of nearmonopoly protection.
Open, flexible and accessible Earlier in this report we touched upon the ease with which anybody in an organization not just those with IT knowledge can use, build and create applications based on Web 2.0 technologies and tools. Such flexibility and accessibility makes participation, information sharing and information retrieval open to a wider audience than ever before.
89
Genuine knowledge sharing Sites like Wikipedia rely on self-regulation to ensure information is accurate. Within the enterprise, wikis enable people who might not previously have been invited to contribute or been considered relevant to a subject matter to share knowledge. In this way, wikis enable genuine knowledge sharing amongst an organizations employees.
Barriers to Web 2.0 collaboration

Losing control As discussed earlier in this report, the top-down approach to management doesnt sit comfortably in a Web 2.0 world. Internal collaboration through wikis, social networks and other Web 2.0 tools is horizontal by nature, drawing on the expertise of the networked many, rather than the elitist few. Even more frightening for some organizations is the prospect of opening up their organization to external wisdom, whether from customers, investors or other stakeholders. This will require a radical rethink of what organizations perceive their role to be and how they retain a competitive edge when intellectual property has more avenues to leak out of an organization.
The unwisdom of crowds Opening ideas out to the many may bring with it the possibility of new innovation and opportunities, but does the opinion of the majority always yield the best results? Therefore, organizations rolling out collaborative Web 2.0 applications in the enterprise need to consider how they will be managed and how any information gained will be used to improve the way it works.
90
Enterprise scalability Web 2.0 tools are new, so inevitably they havent been tried and tested long enough in the enterprise to determine how scalable, secure and robust they are in the long term. Will an internal social network be able to support thousands, rather than hundreds, of members? How will previous versions of a wiki document be archived? Therefore, individual team members should work closely with IT to consider the long-term implications of Web 2.0 tools and ensure they are put to best use.
Appropriate content As Henrik Schneider points out in Rapid ICT Change and Workplace Knowledge Obsolescence: Causes and Proposed Solutions published by The Berkman Center for Internet & Society at Harvard Law School: Certain figures, performance indexes, technology and process descriptions, or even customer feedback could be considered valuable corporate secrets, accessible only by a select few authorized users. Online community knowledge sharing on the other hand is specially built upon the basis of equal right to information for everyone.
The challenge for organizations is in finding a way to maximize the benefits of Web 2.0 tools without risking the loss of its intellectual property. Too prohibitive an approach will destroy the value Web 2.0 tools deliver, but too lax an approach could compromise the organizations crown jewels.
Securing the enterprise As well as the content of blogs and other Web 2.0 tools, organizations need to consider the IT security risks of enabling new collaborative working practices. This challenge is analyzed in more detail in the Chapter 3.
91
Information sharing
Wikis in the workplace A wiki is web page that users without HTML experience or author rights can contribute to or link content to. Inside the enterprise, it provides a Web 2.0 alternative to groupware applications, like Lotus Notes. Thats because group-editable Web articles can be created quickly and distributed easily internally. Any changes made to the document are instantaneous and can lead to problem solving from an unexpected source. According to San Murugesan, adjunct Professor in the School of Computing and Mathematics at the University of Western Sydney in Understanding Web 2.0 published in IT Pro by the IEEE Computer Society, wikis offer: Excellent means to annotate information or discuss evolving issues; Higher communication efficiency and productivity compared to back and forth exchanges of emails; Support for harnessing the power of diverse individuals to create collaborative works; Centralized, shared repositories of knowledge and documents for all aspects of a project planning, development, implementation, maintenance and management; Support for the content to evolve, expand and improve incrementally over time.
Wikis can also be put to widespread use: investment bank Dresdner Kleinwort Wasserstein uses a wiki instead of email for managing meetings, compiling agendas, distributing minutes, brainstorming, publishing ideas and creating presentations,.
In Rapid ICT Change and Workplace Knowledge Obsolescence: Causes and Proposed Solutions, Henrik Schneider says: A wiki can also be used in conjunction with information developed outside of the wiki. For example, a wiki-double may be used to gather notes and comments on the draft of a document. The reason for this set-up is that
92
in many corporate knowledge sharing environments (e.g. a repository of project deliverables or a collection of policies) it might be undesirable to let users directly edit the original content, but it is still useful to give a concise overview of opinions. Also, a wiki is a great way to build and share meeting minutes as everyone can add information; if one thinks there are incomplete or misleading parts in the most current version contributed by others, he or she can change those parts. This provides a tool for reaching a consensus that is valuable to refer to later.
KPMGs Matuszak reveals that, Nokia hosts a number of wikis, some of which are used internally to coordinate technology investment research. And Forum Nokia Wiki provides a place where issues around Nokias phones and software are debated. Disneys Family.com site is a wiki that contains features aimed at parents that will aggregate links to other parenting sites as well as offer tips.
Pitfalls of using wikis in the enterprise Content accuracy and consistency One of the big concerns with group-editable documents is that without one person responsible for them, the content will be inaccurate or inconsistent. But as Wikipedia has demonstrated, self-regulation can be even more effective than having a group of regulators in place to ensure facts are checked, sources are cited and more.
Regular contributors have the dominant voice In Wikipedia, there is a group of prolific editors that create and edit articles, and monitor the site to ensure contributors are working to agreed rules. In the enterprise, a similar hierarchy could emerge, with the same regular voices creating and editing, which could inhibit creativity and knowledge sharing.
This is a problem offline too, with certain speakers dominating meetings, for example. To minimize this problem with wikis, users should be encouraged to contribute widely, the group should be encouraged to self-regulate as much as possible and organizations should consider their policy for administering collaborative documents.
93
Legal liability and privacy It should be made clear in any employer policy that certain behaviour and content is not permitted anything defamatory, confidential or discriminatory, for example in the creation or editing of wiki documents.
Blogging in the workplace Blogs are big business, with one out of 20 US adults creating a blog and 11% of Internet users being regular blog readers, according to the Pew Internet & American Life Project Report. Corporate blogging has also become increasingly widespread, with several high-profile examples, such as General Motors Vice-Chairman, Bob Lutz.
But blogging doesnt have to always be to an external audience. It can be used as effectively internally to broadcast information to a wide audience, such as company results, product recalls and more. With the opportunity for readers to give their comments, blogs are also a good feedback tool and can be useful in the areas of R&D or product development for refining existing products, services or promotional methods.
In many ways, blogs are the Web 2.0 equivalent of a newsletter or email. Computerworld highlights the example of health benefits provider, WellPoint, whose CEO wanted to talk employees about the top issues at work. The email approach to keeping up the conversation was cumbersome. Boxer [the CEO] figured there had to be a better way for communicating on such a large scale, so in June 2007 he tried blogging. The results have been positive. It's been a very effective way for building a community, Boxer says. Its a unifying force.
According to Henrik Schneider in Rapid ICT Change and Workplace Knowledge Obsolescence: Causes and Proposed Solutions in The Berkman Center for Internet & Society at Harvard Law School: There are two dominant ways apparent currently for businesses to justify the use of blogs in the context of corporate knowledge management. The first is the value of employee blogs that focus on a very narrow
94
topic, thus making them an easy source to search on that issue, without having the burden of trying to crawl through thick layers of off-topic content The second way a company can use blogs in its KM system relates not to internal knowledge organization, but to customer relations. Blogs can facilitate the acquisition of customer knowledge and experiences, to be internalised into business processes and product development.
Unlike wikis, which are based on a many-to-many model, blogs are a more appropriate medium for communicating information from one-to-many. That said, there are some multi-user versions of blogging software available. UK delivery company eCourier uses Traction's Teampage project management blog software to speed the development process of its bespoke IT systems between global teams. In this example, blogging software becomes more like a wiki, with past articles providing access to further information where necessary.
Like wikis, blogs can help disseminate information more widely throughout an organization by providing insight into departments or individuals that other teams might not have known existed. To maximize any learnings from past blogs, it is vital that they are archived and can be easily searched. Blogs can be used on a project-byproject or ongoing basis, and are flexible enough to adapt to a variety of corporate scenarios.
Pitfalls of using blogs in the enterprise Inappropriate content and style The personal nature associated with many of the first mainstream blogs they were nicknamed online diaries, after all can dissuade many potential bloggers from using this channel in the corporate arena. But blogs have moved on significantly since then, and although personal blogs are still widely popular with some Internet users, enterprises need to be aware corporate blogs fulfill a different role.
Kelleher and Miller in Organizational blogs and the human voice: Relational strategies
95
and relational outcomes published in the Journal of Computer-Mediated Communication point out that the conversational tone of a blog doesnt have to be a bad thing either: The observed advantage of blogs in conveying a conversational human voice echoes what popular and professional literature on the nature of blogs already tells us. Blogs are a good place to speak candidly with a conversational style (e.g., invite people to a conversation), and this conversational style may be an important part of the process of building and maintaining computer-mediated relationships.
Other corporate concerns have centered on the legal implications of blogging one Cisco employee found himself and his company involved in a lawsuit after allegedly posting defamatory comments about two lawyers on a blog. While external parties will generally not have access to internal blogs, employers should still ensure that nothing is posted which could be deemed defamatory, discriminatory or libelous. As with any other area of information sharing, organizations need policies in place to prevent misuse, whether intentional or not.
Ongoing input required Bloggers dont blog once a year, they blog regularly. Organizations need to acknowledge that blogging requires ongoing commitment and provide incentives for bloggers to post regularly. They should also canvass employee opinion about what works and what doesnt to continually improve the blogging environment, which will, in turn, drive up usage.
Finally, organizations wanting to use blogging to best effect need to develop a culture that encourages transparency, sharing of ideas and feedback.
Social networking in the workplace Social networks like Facebook, MySpace and Bebo might not appear to have much relevance to organizations, beyond the fact that employees use them regularly during work hours, but the concept of social networking could have far greater relevance to
96
enterprises than they first realize. Organizations such as Cadburys already use Facebook to keep potential job candidates warm, for example.
But they also have a valuable role to play inside organizations. If we return to the basis behind social networking, essentially they are communities where users come together Facebook, for example, describes itself as a social utility that makes it easier for people to communicate with one another. People tend to feel strongly about any social network they join. The 2008 Digital Future Project published by the Center for the Digital Future at the USC Annenberg School for Communication found that a large and growing percentage of members now 55% say they feel as strongly about their online communities as they do about their real-world communities.
Organizations can create closed groups on such sites as Cadbury has done or they can build their own internal social network, using third-party software, around a particular issue, project or team. Ad hoc social networks can improve project management users simply log on to find out the status of a project or foster a community around a research idea or topic, for example. In some instances, an organizations social network could evolve into an intranet for the Web 2.0 era, housing valuable company information with regular status updates on policy changes and so on.
As a straightforward communications tool, they also enable geographically dispersed employees to keep in touch with one another and provide regular updates on what projects they are working on. Like the Q&A feature on LinkedIn, employees could post requests and fill skills gaps from within rather than looking externally for assistance. This could have some financial benefits too in cutting back on recruitment and external agency costs.
In some sectors, industry-wide social networks have been created to foster greater partnership. For example, UnLtdWorld, is a social network for social entrepreneurs, designed to increase information sharing between social entrepreneurs and relevant
97
bodies. Our aims are to connect socially-minded people and enable them to share content and build collaborative value, raise the visibility of ideas, issues and projects and ultimately help generate greater positive impact in the real world, reads a press release from the site. Other organizations such as McDonalds are simply looking to social networks to increase knowledge sharing amongst employees; social network profiles can be an effective way of raising awareness of employees areas of expertise and disseminating published articles or research out to a wider audience.
Pitfalls of using social networks in the enterprise Scalability As anyone familiar with the exponential growth in social networking will know, social networks need to be able to scale upwards quickly. The good news is that many thirdparty social networks have been developed with enterprises in mind, so scalability is a priority, as is security and performance.
Inappropriate content Many of the pitfalls associated with social networks also plague other Web 2.0 collaboration tools, such as misuse. As before, enterprises can minimize employee misuse and risk by creating policies that outline how the company expects the employer to behave and act on such collaborative sites.
Ownership of contacts In what is likely to be the first of several cases globally around ownership of contacts managed through personal networking profiles, Mark Ions, a former consultant with UK recruitment firm Hays was ordered by the High Court in June 2008 to disclose business contacts built up on LinkedIn. The court ordered Mr Ions to disclose his LinkedIn business contacts and all emails sent to or received by his LinkedIn account from Hays' computer network. According to Ions, Hays had encouraged Ions use of the site and his solicitor claimed unsuccessfully that once professional contacts had accepted joining Ions network, they ceased becoming confidential property of his employer. While Hays won the case, it nonetheless highlights the degree to which
98
networking sites can blur confidential commercial information or contacts with the public domain and future areas of conflict between employers and employees.
Other Web 2.0 collaboration tools Mash-ups Mash-ups have pioneered some useful consumer tools letting users identify the location of houses for sale in an area, for example but they also have a valuable role to play in the corporate environment. In Understanding Web 2.0, in IT Pro, published by the IEEE Computer Society, San Murugesan, Adjunct Professor in the School of Computing and Mathematics at the University of Western Sydney in Australia, says: An enterprise can use mash-ups internally to collect information from different sources and combine it in intelligent ways to help people make smarter decisions. For example, executives can use mash-ups to gain a deeper understanding of customers and sales, and thus to make better decisions. Mash-ups also find application in areas such as payroll, customer relationship management, logistics, procurement, marketing and ecommerce.
He sounds a note of caution, however, for enterprises using mash-ups based on thirdparty APIs: Although a mashup makes it easy to draw on multiple data sources or services to create new applications quickly, there are also risks in using someones mashup service or API, in terms of their continued support, reliability, security and scalability. Developers and enterprises that deploy and use mash-up applications should be aware of the risks and limitations and choose dependable services.
Twitter This microblogging site might seem frivolous at first glance with some users delivering inane comments in 140 words or less on their life but it has the potential to enable greater collaboration amongst employees in the workplace. An obvious use is for project teams to deliver real-time status updates to one another. Users can close their postings to outsiders, so only those Twitterers allowed to join receive the postings.
99
Organizations are also using it to communicate with customers, or citizens in the case of the Los Angeles Fire Department, which uses it to communicate real-time fire information to residents signed up to follow its postings. In the UK, the government has signed up to Twitter and uses the site to send out updates on the Prime Ministers activities. Market researchers are using it to identify consumer trends in real time, according to BusinessWeek, which also reports that Dell claimed to have boosted sales through these efforts [searching for mentions of its business on Twitter and jumping into the conversations] by $500,000 in recent months.
Virtual worlds Recruitment advertising agency, TMP, held what it billed the worlds first virtual careers fair inside Second Life in 2007. Employers such as Yell, KPMG and the Royal Bank of Scotland were able to meet with candidates virtually and discuss career opportunities in a relatively anonymous environment.
Besides recruitment, virtual worlds can provide a destination for geographically dispersed project groups to meet and discuss projects or brainstorm ideas. It is significantly cheaper than paying travel fares for delegates to attend face-to-face meetings and also easier than communicating to several team members over email. Attending delegates are provided with the coordinates of where the meeting is held, ensuring that only the invited parties attend.
Virtual worlds also provide an opportunity for role play in a simulation environment: for example, Toyota, is encouraging avatars in Second Life to buy its cars and gain valuable insight into what customers want based on how they customize their models. Other organizations are using virtual worlds for training new recruits or employees in new practices.
100
Information retrieval
Web 2.0 doesnt just have benefits for information sharing, but also information retrieval, with technologies such as tags, folksonomies and RSS feeds helping users to find information they are looking for or identify trends in data.
Tagging in the workplace In the consumer world, sites such as Del.icio.us and StumbleUpon, provide an online repository for peoples social bookmarks web pages are tagged and can then be managed, stored and organized through the site. Inside the enterprise, tagging a digital document held in an information repository with some descriptive text could make information retrieval much simpler and quicker.
Writing in Rapid ICT Change and Workplace Knowledge Obsolescence: Causes and Proposed Solutions, Henrik Schneider says: if tags were added to these knowledge items by readers as well contributors, a more practical and natural method of categorization could emerge from the dynamically evolving tag pool. These new categories would most probably fail to comply with the mece (mutually exclusive and collectively exhaustive) criteria, but could organize the knowledge to much more nearly approximate practical experience, and could also provide the possibility of continuous evolvement for the categories.
David Weinberger, a Fellow at the Harvard Berkman Center for the Internet and Society outlines the benefits of tagging in Tagging and Why It Matters: Tagging, on the other hand, doesnt require a team of Information Architects to argue for years over whether the right term is natural language processing, language parsers, or nlp. Users can use whatever term works for them. This may lower the barrier sufficiently to engage corporate users.
He also points out the benefits of folksonomies, a term invented by Thomas Vander Wal in 2004: A folksonomy is an emergent grassroots taxonomy. For example, if Im
101
about to tag a photo of San Francisco that Ive found, if the application tells me that 5,000 people have already tagged it, and most have tagged it as San Francisco and only a few as Frisco, that encourages me to tag it (and future photos of San Francisco) the popular way.
Tag clouds These rank topics by size, so the most tagged topics appear in larger type. Tag clouds could be used inside the enterprise to identify trends in data, such as common causes of absence at work or popular insurance claims.
RSS feeds in the workplace RSS feeds provide updates on when a web page has been updated with a new blog, news item and more. RSS feeds save time by sending information to users rather than making them go search for it. In the enterprise, this could speed up information retrieval, by sending users updates when group edited documents or other web pages have been amended or changed, instead of relying on them to check a central repository or email documents back and forth. RSS feeds can also cut through a lot of superfluous information by only sending users updates on those documents they have selected to receive feeds from.
Henrik Schneider sums up the benefits of RSS feeds inside the enterprise in Rapid ICT Change and Workplace Knowledge Obsolescence: Causes and Proposed Solutions: The amount of information in company legacy systems and data warehouses is tremendous. The ability to customize and focus the view on that information is critical. Feeds and aggregators offer an easy and personally customizable way to construct that view. When personal requirements change (certain sources lose importance, while others emerge), it is easy for individuals to modify their preferences to best fit their current needs.
He continues: Best of all, the feeds themselves can be integrated. One person may be better at collecting and arranging sources and data about a particular topic, while others
102
are better in different areas. If participants have access to the collections of their peers too, everyone will have much better overall access to the best sources than they would if everyone had organized everything separately. In a corporate knowledge management environment this way of leveraging a social network has great potential. According to studies, most people find business knowledge through other people in their social network and not directly from the system (Ives, 2005 quoting Anklam, 2005). Aggregating news and information from existing external knowledge sources can aid business intelligence efforts, and creating collective pieces of data about internal knowledge items helps employees more quickly locate required knowledge and keep informed about interesting new submissions.
Best practices in Web 2.0 collaboration

Before leaping into a Web 2.0 environment, organizations should consider a list of best practices for ensuring any initiative is a success: Consider what is right for your organization if you have a geographically dispersed workforce, what Web 2.0 tools would make information sharing easier? How easy is knowledge transfer already inside the workplace? Likewise, if the workforce is fairly mature and not computer-based, then social networking might not be a good investment; Create a culture where knowledge sharing and creativity is encouraged; if this is uncommon to the organization, consider ways of incentivizing people to contribute their ideas and lend their support to other teams; Create a policy for how the new collaborative working practices will be managed, make sure to outline any behavior that will not be allowed and communicate this to existing staff and new recruits as they come on board; Ensure there is cross-departmental support for any new initiatives and IT is involved from the start, as inevitably they will be the first port of call should any technical issues occur;
103
Train staff in how to use these new tools it doesnt have to be a lengthy process, but give them the tools to understand how they work and what insights they could deliver them; Remember this is an enterprise, not consumer initiative and make sure that the network can cope with large numbers of users contributing to group documents at the same time, social networks can scale upwards and enterprise security is not compromised by any web-based communications; Learn from any mistakes, test out different Web 2.0 tools to find what works best for different projects and encourage teams to pass on best practices in information sharing and retrieval. Bear in mind too that new Web 2.0 tools and technologies are continually emerging, so read the trade press and relevant blogs to keep up to date with this rapidly evolving area.
104
CHAPTER 6
105
Chapter 6
Summary
In the first half of 2007, the UK online advertising market was valued at 1.3bn, an increase of 41.3% on the same period the previous year. This was at a time when the advertising industry as a whole only managed growth of 3.1%. Morgan Stanley predicts an equally favorable outlook for Internet advertising in the US, with a CAGR of 20% from 2005 to 2010 and an estimated 13% market share by the end of the period. The necessity for brands to move to a Web 2.0 presence is highlighted by a finding from the Ketchum/USC study. It identified a disconnect between consumers lack of reliance on corporate websites for information (a Web 1.0 phenomenon) and marketers strong use of them to convey corporate information. Benefits of advertising in Web 2.0 arena include measurability, cost, the opportunity to reach the 18-34 age group and niche audiences effectively, and a variety of channels. Challenges to advertising in the Web 2.0 arena, however, include being seen as too intrusive, jumping on the next big thing, targeting their audience effectively and ceding control to users. Marketing on social networks can take the following forms: display ads, corporate group pages, viral marketing, social network applications or widgets, and branded content or advertising within entertainment content. In 2007, eMarketer predicted around $900m would be spent on advertising through social networking sites in the US and $335m elsewhere. For marketers, widgets represent a new advertising opportunity. Rather than simply piggybacking on an existing piece of content, the widget becomes the piece of advertising, combining a brand message with a useful function. Alternatively, advertising can be run inside a widget, in the same way an ad might appear on a web page or social network page.
106
Introduction
The Internet is used by most organizations for sales and marketing. This is driving growth in the online advertising market, with many industry commentators predicting it will overtake TV advertising in the UK in 2009. For the first half of 2007, Internet advertising in the UK had 14.7% market share, putting it above direct mail, outdoor and radio advertising.
Figure 6.4: Digital vs. offline media, January June 2007

Radio 3% Outdoor 5% Directories 7% Cinema 1% TV 21%
Direct mail 12%
Press - display 20% Internet 15%
Press - classifieds 16%

Source: IAB and PricewaterhouseCoopers Business Insights Ltd
Yet within the online advertising sector, new advertising channels continue to emerge, most recently through Web 2.0 and opportunities on social networks, social network applications and so-called widgets.
107
In this chapter, we examine the opportunities Web 2.0 presents marketers and how organizations are using these new channels to reach consumers in ever more creative ways. We also highlight best practices in this area and pitfalls to watch out for.
The Web 2.0 marketing opportunity

The UK outlook In the first half of 2007, the UK online advertising market was valued at 1.3bn, an increase of 41.3% on the same period the previous year. This was at a time when the advertising industry as a whole only managed growth of 3.1%. Figure 6.5 breaks down spending on digital advertising by display, classifieds, paid search and email marketing.
Figure 6.5: Digital media mix in the UK, January June 2007
Solus email 1%
Display 22%
Paid for search 56%
Classifieds 21%
Source: IAB and PricewaterhouseCoopers
108
The US outlook Morgan Stanley predicts an equally favorable outlook for Internet advertising in the US, with a CAGR of 20% from 2005 to 2010 and an estimated 13% market share by 2010. Despite the wider economic conditions which normally hit advertising expenditure Morgan Stanley predicts that the relative transparency and high ROI of Internet advertising may make it less economically sensitive than other advertising areas. Furthermore, analysts predict that the large gap between Internet advertising spending and Internet usage is a positive indicator for future growth opportunities, estimating Internet advertising spending per user will grow from $64 in 2005 to $139 in 2010. Table 6.9 shows the top spenders on online advertising in the US.
Table 6.9: Top 10 advertisers by estimated spending (US)

Rank Advertiser 1 2 3 4 5 6 7 8 9 10 NexTag Experian Group Netflix InterActiveCorp Vonage Holdings Corp Verizon Communications General Motors Apollo Group AT&T Scottrade Total estimated spending Impressions (000s)* $58,908,000 $54,110,300 $37,325,600 $31,365,700 $23,608,100 $19,525,600 $17,895,200 $12,828,600 $12,294,200 $11,902,600 29,001,642 24,983,807 12,018,955 7,340,837 10,502,164 3,911,431 2,979,960 4,522,496 2,729,374 2,321,756
*An impression is counted as the number of times an ad is rendered for viewing

Source: Nielsen Online Business Insights Ltd
The social networking opportunity Advertising spend online is driven by a number of factors, notably the growing number of people moving online and spending increasing amounts of time once connected. While not a major driver of online advertising expenditure, the UK Internet Advertising Bureau believes social networking sites have influenced online advertising spending by generating higher consumer demand for fast broadband, increasing time spent online and boosting overall consumer confidence in the online experience. This is likely to
109
increase advertiser interest in the medium and lead to a continued growth in advertising expenditure for years to come, it predicts. Table 6.10 highlights the UKs most popular social media websites in January, while Table 6.11 reveals which might be the most popular social networks in the future.
Table 6.10: UKs most popular social media websites: Jan 2008
Rank Rank Website J08 J07 1 2 3 4 5 6 7 8 9 10 2 1 18 4 3 8 16 10 6 9 YouTube Wikipedia Facebook Blogger MySpace Bebo Slide Yahoo! Answers Windows Live Spaces TripAdvisor UK Unique Audience (000s) J08 10,426 9,557 8,513 5,145 5,026 4,090 3,355 3,319 3,127 2,364 UK Unique Change in Audience UA Jan07(000s) J07 -Jan 08 6,667 7,758 1,048 3,697 5,513 2,670 1,092 2,111 2,716 2,186 56% 23% 712% 39% -9% 53% 207% 57% 15% 8% Social media type Video Information Network Blogging Network Network Add-on tool Information Network Travel review
Source: Nielsen Online, UK NetView, home & work data, including applications, Jan 2007 Jan 2008 Business Insights Ltd
Table 6.11: UKs fastest growing social media websites*: Jan 07 - Jan 08
Rank Website* Change in UA J07 (unless Stated) J08 UK Unique UK Unique Audience Audience (000s) J08 (000s) in measurable mon in 2007 260 8,513 281 799 306 2,207 237 295 252 371 32 1,048 38 115 49 358 55 70 72 107 Earliest Social measurable media 2007 month type (period of change) April 07 12 months Nov 07 12 months April 07 12 months 12 months 12 months March 07 July 07 Network Network Video Video Video Tool Music commity Tool Video Video
1 2 3 4 5 6 7 8 9 10
PerfSpot Facebook vidShadow Veoh Youku RockYou! Imeem
713% 712% 639% 595% 524% 516% 331%
Bunnyhero Labs 321% Tudou 250% Video Jug 247%
*Minimum UK Unique audience of 100,000 in Jan 08

Source: Nielsen Online, UK NetView, as above Business Insights Ltd
110
According to Nielsen Online, 20.8m Britons 63% of Britons online visited at least one of the ten most popular social media sites in January 2008, 21% more than visited at least one of January 2007s top ten social media sites.
The necessity for brands to move to a Web 2.0 presence is highlighted by a finding from the Ketchum/USC study. It identified a disconnect between consumers lack of reliance on corporate websites for information (very much a Web 1.0 phenomenon) and marketers strong use of them to convey corporate information compared to other channels. This does not mean that Web 1.0 is to become extinct, rather that it can be refreshed with the judicious use of new concepts and innovations, including those that have made Web 2.0 services increasingly popular.
Benefits of advertising in Web 2.0 arena

Measurability One of the oft-cited benefits of online advertising is that advertisers can track the success of campaigns far more effectively than they can do offline using web analytics and other online advertising tools. Beyond measuring clicks through to their site though, they can also track user behavior across multiple online touchpoints to build up a profile of users visiting their website. So instead of being a drain on resources as John Wanamaker famously quipped Half the money I spend on advertising is wasted. The trouble is, I don't know which half advertising can become more targeted and profitable.
Cost Targeting users via social network platforms is considerably cheaper than using other channels in some cases, its free, for example, the only cost involved in creating and maintaining a corporate profile page on a social network is the time required to do so. For small businesses, this provides the opportunity to get in front of customers they might normally struggle to hit and improves their reach at considerably lower cost than
111
other advertising method. Its also an effective way to maintain communication with existing customers, whether a small or large company.
Reach elusive 18-34 target audience in their environment Marketers often moan about the difficulties of reaching the elusive 18-34 age group. They seem immune to advertising through traditional channels, like TV or the press. But head online, and its a different story. A study from the Online Publishers Association found that 18-34 year olds are far more likely to go online (46%) than watch TV (35%), listen to the radio (three%) or read a newspaper (also three%).
Many of todays Internet-savvy 18-34 year old consumers are as comfortable with social networking, blogging and twittering as they are with using the telephone or writing an email. As are those even younger: research from the Institute for Public Policy Research found that UK teenagers between the ages of 13 and 18 spend more than 20 hours a week using Web 2.0 sites. The hope by marketers is that if they reach them in their natural environment with advertising that is engaging, entertaining, maybe even useful, they may be more receptive to advertising messages.
Target niche audiences effectively Alongside the big generalist social networks like Facebook, MySpace, Bebo and LinkedIn are plenty of smaller social networks based around a community of shared interests. For marketers interested in targeting a particular audience, such as the over50s or healthcare workers, these offer an effective way of getting in front of niche audiences.
Increased choice of channels With TV advertising, marketers options are pretty limited, by time slot and choice of channel, for example. But online, the choice of advertising formats is far more varied: display, video, banner ads and sponsorship replicate advertising found in the offline arena, while exclusively online channels include social networking applications,
112
widgets, pop-ups, podcasts and games. There are significantly more ways of getting at online content too, whether through PDAs and digital set-top boxes, as well as PCs or laptops. For marketers, the possibilities are exciting, even if they bring with them new challenges.
Challenges of Web 2.0 advertising

Intrusive or invasive advertising Just because there are more opportunities to advertise in the Web 2.0 world, it doesnt automatically follow that it will be any easier to reach consumers in the offline environment. A study by Kyp Systems found that more than more than half of 13 to 49 year olds on Facebook never trusted the marketing material they receive, while 46% said Internet advertising was driving them insane. The same survey also found anecdotal evidence that users are increasingly unhappy with social networks using their details for marketing.
In the same way that advertisers using email marketing have to be extremely careful to provide users with information they want to read or services they want to use, marketers using social media need to tread a very fine line between being helpful and being intrusive. For many users, social networks represent their space; they dont want to hear advertisements directed at them unless theyve requested to do so. This is why when Facebook first launched its Beacon advertising system it jarred with users. Members had gone from being in a position of perceiving their information to be theirs even if that isnt technically the case or they chose to share it with hundreds of other people to discovering that whenever they bought something, the information was shared with everyone. It was considered a step too far and provided a very timely reminder to marketers of the need to tread carefully in advertising on social media sites.
113
The next big thing It is hard not to be carried away on the hype of Web 2.0 or even Web 3.0 if industry commentators are to be believed but marketers should not lose sight of the basic principles of running a marketing campaign. Web 2.0 might provide new opportunities for advertising, but the same rules apply as in any other campaign and possibly some new ones too such as not being seen as too invasive.
Another problem with advertising on Web 2.0 sites or social media sites is that marketers will always find they are chasing the next big thing. Five years ago it was Friends Reunited, two years ago it was MySpace, now Facebook is the site du jour. The answer is to build content or applications based on open source tools, so it can be applied across multiple social networks or social media sites. Googles social networking platform, OpenSocial, for example, lets developers create applications that will work across participating social networks (such as Bebo, Orkut and Plaxo to name a few). With more names expected to join as OpenSocial continues its development, the trend for building open source applications and services will become even more evident.
For the sake of new Marketers shouldnt automatically assume that new advertising platforms are the best way to convey their message to consumers. Experimentation can be good; but only if its based on research that users will want to buy through these new channels. Bear in mind too that Web 1.0 advertising still has a strong role; search marketing, for example, accounts for the majority of online advertising spend, and advertisers are unlikely to radically rethink their marketing mix any time soon.
Audience Marketers should consider carefully if their audience is likely to be using Web 2.0 platforms before launching a full-scale advertising assault. A report from Forrester Research found that only 44% of Americans online used what it called social technologies, such as social networks. It is easy to get overexcited about technologies
114
that might for the majority of demographics and age groups still be considered only suitable for early adopters.
Control One of the overwhelming challenges for marketers in a Web 2.0 age is understanding that control largely lies with the consumer whether they use an application, spread a video virally or create user generated content that touches a brand. Web 2.0 is about participation, interactivity and creation for consumers; for brands, that means it is about influencing, sharing and communicating. Marketers cannot control their brand online; for example, many may not want a presence on a social network but find themselves there anyway (Primark apparently decided not to create a Facebook page because the unofficial Facebook group with more than 94,000 members was already doing so well).
Marketers can, however, tap into user opinions and tastes, get closer to their buyers and build ties with their brands. Research from Microsoft Digital Advertising Solutions found that a third of users on social networks forwarded an ad to a friend; if targeted successfully, marketers could find their customers do their marketing for them.
Marketing on social networks

Advertising opportunities on social networks take multiple forms: Display ads on web pages; Corporate group pages; Viral marketing (through videos and other content passed on from member to member); Social network applications from creators such as iLike, Slide and RockYou downloaded free by users;
115
Branded content or advertising within entertainment content (such as Cadburys Creme Egg on the Kate Modern drama series on Bebo).
This list isnt exhaustive; advertisers and developers are continually devising new, ever more ingenious ways of reaching consumers in their space.
In 2007, eMarketer predicted around $900m would be spent on advertising through social networking sites in the US and $335m elsewhere. In 2008, the total was expected to increase from $1.2 billion to $1.7bn as social networking became more established outside the US. Likewise, research sponsored by TNS media intelligence/Cymfony, found that 95% of senior marketing executives believe social media will grow in significance over the next five years. Respondents endorsed it as a strategic tool to gain consumer insights (37%), build brand awareness (21%) and increase customer loyalty (18%).
Case study examples Travel firm, STA Travel, has profiles on both Facebook and Bebo, and for Facebook has created a trip planner application. It has also built some widgets available on Facebook or its own website which let travellers count down to their trip, find special offers, compare weather forecasts and more; Victorias Secret PINK page has more than 350,000 fans and was created before the product line was launching, apparently helping to build up advance sales; Charles Schwab has created a Money & More community, where users can discuss anything from buying a home to taking out a credit card or starting their own business. As InformationWeek revealed, the richest information came from the free-form online discussions. Even without Schwabs asking about debt, for instance, the conversation revealed peoples worries and desire to eliminate debt; In 2007, O2 sponsored a group on Facebook to find the UKs favourite university. Within 11 days it had attracted 63,000 members, as students posted up pictures and
116
comments about their university. The university with the most activity after 30 days won a 50,000 O2-branded party on their campus; According to Computerworld, Intel is using an online community model to gather feedback for use in next-generation chip development projects; The Humane Society ran a successful campaign based around a MySpace profile for a seal that was at risk; Fox News used Twitter to provide directors commentary during the premiere of Drive Show; MTV launched a virtual world based around its popular show, Laguna Beach; Buckleys, a Canadian cough medicine, has a presence on MySpace and encourages consumers to submit the best picture of them consuming the product; In 2007 Proctor & Gamble launched Tampax's first social networking campaign on Takkle.com, a high school athletics social networking site, and asked cheerleaders to submit videos of their best cheers; Anheuser-Busch developed a photo-sharing campaign with 300,000-member social networking site MingleNow, inviting users to share photos of themselves clinking beer bottles when out.
Best practices Look beyond your own website marketers have to follow their customers and with 70m active users on Facebook alone, thats on social networks, in blogs, on YouTube videos, in Second Life or in software applications; Build trust too much intrusion into what they perceive to be their private space and users will be put off from interacting with a brand; Listen and take on user feedback it might just influence what products or services an organization rolls out, or how it is advertised in the future. Remember in 2007
117
when the pleas of thousands of people on Facebook resulted in Cadburys reviving the Wispa chocolate bar? But dont always believe what youre hearing as in meetings in the offline world, some voices will always dominate. Brands need to listen loud voices might be complaining about poor customer service on a blog, for example but use other research to back up any findings discovered online; Tone of voice this comes down to the age old maxim of know your audience. In the social networking environment, where consumers have come to socialize, an overt sales pitch should be avoided at all costs. Marketers should familiarize themselves with target websites to understand its user base and tailor their message accordingly; Web 2.0 doesnt have all the answers. As IAB PR and marketing manager, Amy Kean, points out in Moving beyond a 'web 2.0' and making sense of social media: Web 2.0 is not a mythical beast that must be tamed, or exploited, in order to make your brand a real contender in a digital age. Its not a magic bullet that will automatically re-engage an audience of disheartened consumers and renew their faith in the power of mass marketing; Be inventive As the IABs Kean says: The inescapable fact is that unless you have a strong creative idea that suits your brand, the mode of delivery and level of interactivity is pretty irrelevant; Give users an incentive to participate marketers need to create a buzz around their product or service to create interest and get users participating in their community; in social media, its not a case of build it, then wait and see if anyone turns up. O2s competition was successful as it tied in with other marketing initiatives around its favorite place tariff, had a huge incentive for members to sign up and also injected a healthy dose of competition into the proceedings; Sharing media (with and between consumers) is perhaps the easiest entry point into Web 2.0. Social network advertising is perhaps the trickiest, but offers the best
118
prospects for building relationships and generating positive word-of-mouth recommendations.
Marketing on widgets
A widget is a bit of code that can be embedded into another website, its a type of website within a website. Widgets work the same way, autonomous of their environment whether a desktop, web page, social network or personalised web page (such as Netvibes). Whats more, they dont require any technical knowledge to be downloaded; users only have to click to install it.
Widgets are designed to be useful, informative and engaging. They can also be shortterm by nature (such as STA Travels trip countdown widget or Dells Christmas promotional tool); users dont mind how permanent they are so long as they serve a purpose, and are easy to download and delete.
One might ask, why do widgets matter? In short, they make life easier by enabling users to perform tasks such as a flight search or stock price quote quickly from the destination they use most frequently (whether a customized iGoogle page or the desktop, for example). They also pool information into one place, such as a Facebook page, so users dont have to navigate to different sites or visit several destinations to get what they need.
For marketers, widgets represent a new advertising opportunity. Rather than simply piggybacking onto an existing piece of content be it a website, search engine or social network page, for example the widget becomes the piece of advertising, combining a brand message with a useful function. Given their portability, widgets can become viral, relying on users to transport a companys marketing message.
119
Alternatively, advertising can be run inside a widget, in the same way an ad might appear on a web page or social network. Unlike other display advertising though, using widgets exposes a brand to a potentially larger audience if the widget takes off virally. Clearspring, an ad network for widgets, promises distribution to 25 social networks, for example.
Organizations should bear in mind too that widgets could be a potentially useful tool for their own website, incorporating third-party share charts into the investor relations page, for example. More transactional widgets are also emerging that let users purchase goods and services without leaving the site. Expect to see more of this type of functionality incorporated as standard in websites soon.
Case study examples STA Travel has widgets for travellers that can be downloaded either to their desktop, for Facebook, for iGoogle (a personalised version of the search engine) or onto a users own website; In support of its website www.YoursIsHere.com, which Dell launched in the run up to Christmas 2007, Dell created a widget that users could download to their Facebook or MySpace page to track their progress. The website enabled consumers to select the Dell computer they wanted for Christmas, add a video of a celebrity doing a sales pitch for the product then send it onto family and friends. The widget let them track if anyone receiving the email then contributed to a PayPal account set up for the occasion; eBay To Go is a widget that users can download to share items they have found or are bidding for online. At the time of writing, users could not transact through the widget, but this functionality will surely come soon; Honda created a widget to promote the 2008 Honda Civic Tour featuring videos, news and more; AMV BBDO created a Get Some Nuts widget for Snickers, which featured Mr T from the A-Team and let users play a game or Get TLook;
120
Virgin Mobile provided in-widget sponsorship of a Futurama widget.
Best practices The ad as a tool As BusinessWeek points out in its CEO Guide to Widgets Right in that little box, without switching sites, users should be able to browse products, customize orders, and eventually make a purchase; Make users want to engage and spread the content on there are more than 14,000 widgets available for download on Facebook alone, so marketers should consider what would make their widget stand out or what would make a good brand fit to advertise with. In the Web 2.0 world of engagement and participation, content is king, so advertisers need to support, not attempt to take over, user conversations online; Widgets that serve a purpose expect to see some user fatigue with gimmicky widgets that involve games, videos or quizzes. The widgets that users will return again and again to are those that enable them to do something quickly and more easily than they could elsewhere online; Ease of use the patience of users online can be measured in seconds; if a widget cant be downloaded or spread virally in a few clicks, users will go elsewhere; Be aware of users security concerns in January, FortiGuard, a security company, sent out a warning about a Facebook widget, which appeared as a friend request secret crush invitation (later changed to my admirer). Far from being a simple bit of fun, the widget was created by Zango, a company known to have spyware; Make widgets part of a wider campaign dont expect that with one ad-sponsored widget or homegrown widget, users will come flocking. Viral marketing can be hit and miss; what works is when a message is reinforced across multiple channels. So widgets have a valuable role to play in the channel mix, but shouldnt be the channel; Is your widget reaching the right demographic? Marketers should try to place their viral widget campaign so it reaches the people theyre trying to reach;
121
Look for a return on investment estimates vary widely about how much return they can deliver, so its worthwhile researching the market thoroughly first to create a business case for rolling out a campaign.
122
CHAPTER 7
Vendors to watch
123
Chapter 7
Summary
Vendors to watch
Googles business model is predominantly advertising based 99% of revenue over the last few years has come from online advertising and it has several Web 2.0 products and services, including Google Reader, Orkut, Blogger, Google Sites and YouTube. Yahoo! increased revenue in 2007 to $6.9bn. However, year-on-year growth was only 8% (compare that to Googles 54% increase) and advertising revenue from affiliate sites actually fell 5%, despite a buoyant online advertising market. Shareholders are now looking to see how the company will turn itself around and challenge Google. In 2007, Yahoo! indicated it was moving into offering web-based office tools with the acquisition of Zimbra, a provider of email and collaboration software. Zimbra should help Yahoo!s push into the enterprise particularly in SMEs or cost-conscious organizations because it is built on open source software. For enterprises, Twitter offers the possibility of collaborating with one another quickly from the web or a mobile device. Web 2.0 Goes to Work is the name of IBMs Web 2.0 campaign to help enterprises adopt social media and Web 2.0 technologies inside their organization. Microsofts Web 2.0 strategy revolves around its Office SharePoint server. Intel has embraced Web 2.0 through a series of partnerships to create SuiteTwo, a business Internet suite. As a networking company, its little surprise that Ciscos approach to Web 2.0 is to combine collaboration with communications. Unsurprisingly, a range of enterprise software start-ups have jumped into this space, with corporate tools based on social networks and other Web 2.0 technologies. What these start-ups have in expertise and innovation, however, they lack in scale and resources.
124
Introduction
There are thousands of companies calling themselves Web 2.0 companies. In his seminal essay on Web 2.0, Tim OReilly outlined what he saw as the core competencies of Web 2.0 companies.
Table 7.12: Core traits of a Web 2.0 company

Services, not packaged software, with cost-effective scalability Control over unique, hard-to-recreate data sources that get richer as more people use them Trusting users as co-developers Harnessing collective intelligence Leveraging the long tail through customer self-service Software above the level of a single device Lightweight user interfaces, development models, AND business models
Source: Tim OReilly Business Insights Ltd
For the purposes of this report, we have confined our examination of companies working in the space to those that offer some elements of Web 2.0 applicable to the enterprise. For that reason, the report doesnt include most of the Web 2.0 start-ups in operation unless they have developed a tool or service for Enterprise 2.0.
Which Web 2.0 companies are important?

Internet companies Google Background Google has been one of the Internets most remarkable success stories. It was founded in the mid-1990s by two Stanford University graduate students, Larry Page and Sergey Brin, who were interested in finding a way of retrieving relevant search information from the web. Initially their aim was to license the search technology and continue with
125
their Phds, but David Filo, a friend and founder of Yahoo! persuaded them to grow the business themselves.
Growth came quickly: by 2000, the business had moved to its current headquarters in Mountain View, California, forged partnerships with Yahoo! and others, and introduced AdWords, its auction-based, keyword-targeted advertising program. Other key milestones for the company included: Eric Schmidt became CEO in 2001; Googles commercial search offering was released in 2002; In 2003 it bought Blogger and launched AdSense, its display advertising program; Local search and Gmail followed in 2004, and the company went public; In 2005, Google Video launched, as did Google Maps for North America, Google Earth, Google Talk and Google Analytics; A year later, AdWords was integrated with Google Analytics, Google signed a deal with Fox Interactive Media to provide search and advertising to MySpace, Google Checkout arrived, Google bought YouTube and finished the year with the launch of Google Docs and Spreadsheets, a web-based word processing and spreadsheet program, and the acquisition of JotSpot, a wiki platform; In 2007, Google bought DoubleClick, partnered with Echostar and Astound Cable on a TV ads trial, acquired Zenter giving it online slide presentation capabilities to add to Google Docs and Spreadsheets, and began a move towards delivering a universal search model.
Google stood for all that was modern and different about the Internet from its unconventional approach to raising money on the stock markets down to its Dont be evil corporate values. However, as it has grown into a billion-dollar company revenue in 2007 was $16.6bn with a market cap of around $180bn, just over $14bn in cash and 17,000 employees, some dissenting voices have started to criticize Google for
126
turning into a monopoly and intruding on their privacy, such is the pervasiveness of Google in a lot of peoples lives.
With nearly 70% share of the search market, Googles critics have some justification for their argument; its acquisition of DoubleClick could give it a headstart over rivals in the display advertising market, for example. But Google has also engendered incredible respect for the way it has entered markets and changed the rules of engagement it used to be Microsoft that companies feared would enter their sector; now its Google. It has also taken steps to improve consumer privacy making search logs on its servers anonymous after 18 months, for example, and changing the cookie expiration date to two years, rather than 2038.
Theres also a philanthropic side to Google through Google.org, the Google Foundation and the owners pledge to make Google carbon neutral by the end of 2007 even if cringe-worthy, its owners claim to have set out to improve, not take over, the world. And lets not forget that Google is also more effective than other search engines. A study by Alan Rimm-Kaufman, a marketing consultant, as reported in the Economist, found that Google's ads converted more often into actual sales, which tended to be larger than those originating from Yahoo! or Microsoft.
Web 2.0 credentials Googles business model is predominantly advertising based (99% of revenue over the last few years has come from online advertising); Google Reader is its free news aggregator service for RSS feeds. Users can receive updates from multiple websites and share the content with others; Orkut is Googles social network, enabling users to create, join and manage their own online communities, personal mailboxes, photos and profile; Blogger is a web-based publishing tool that Google acquired and which it uses internally behind the corporate firewall to track meetings, share information and code. In 2006, it made it more suitable for enterprises with new privacy features
127
so people posting blogs can determine who can read the blog and allowed individual feeds for comments to each separate post; Google doesnt wait to release a definitive version of its services, instead releasing them in Beta and providing continual improvements and updates; Google is a predominantly web-based business delivering services, rather than outof-the-box software. For enterprises particularly small and medium-sized businesses Google Docs and Spreadsheets provides a free way of enabling users to create, save, share and edit documents wherever they can find an Internet connection. This also makes use of the substantial investment Google has made in data centers and hardware to provide this cloud computing method of application delivery (which applies to its any new service it might want to launch too). This model also means that even if a service receives unexpected demand, processing power is automatically redirected from another of the data centers to ensure consistent service uptime and accessibility; Googles acquisition of YouTube brought with it user-generated content (Google Video did the same but YouTube saw far greater growth) and Google has said it wants to build on the community and social networking aspects of video; Googles acquisition of JotSpot provided the basis for Google Sites, a wiki-based tool for creating web pages that can be edited, uploaded with attachments, import information from other Google applications (like YouTube or Google Docs) and shared amongst designated users (the publisher can control who has access to the site).
128
Yahoo! Its fair to say that 2008 has not been the pinnacle of Yahoo!s 16-year history. The company was founded by another two Stanford University graduates, David Filo and Jerry Yang, in February 1994. They began by creating a portal where users could categorize the Internet. Today, Yahoo! is a global company with communications, media and ecommerce services in its portfolio.
Key milestones for the company include: 1995 begins serving ads; 1996 launches personalized version of Yahoo!, goes public and launches Yahoo! News; 1997 launches Yahoo! Chat and Yahoo! Mail; 1998 introduces Yahoo! Calendar and Yahoo! Address Book; 1999 acquires Geocities (considered the first social network) and broadcast.com, and launches Yahoo! Messenger; 2000 launches Yahoo! Photos; 2001 launches Yahoo! Groups; 2002 introduces Yahoo! Maps and acquires Inktomi; 2003 introduces first music subscription service and new Yahoo! search, and acquires Overture; 2004 acquires Kelkoo; 2005 launches Yahoo! 360 (its social network, which has since closed), acquires Flickr and launches Yahoo! Widgets; 2006 launches Yahoo Video and new search advertising platform;
129
2007 delivers range of mobile services, acquires RightMedia, replaces CEO Terry Semel with Jerry Yang and launches SmartAds.
So far this year, Yahoo! has built up its mobile portfolio and, more importantly, defended itself from a Microsoft bid the two companies are now deciding whether a combination of their advertising businesses might make it easier to fight Google.
Despite a lot of negative press about its performance, Yahoo! did increase revenue in 2007 to $6.9bn. However, year-on-year growth was only 8% (compare that to Googles 54% increase) and advertising revenue from affiliate sites actually fell 5%, despite a buoyant online advertising market. Shareholders are now looking to see how the company will turn itself around and challenge Google.
Web 2.0 credentials Yahoo! may have recognized the importance of widgets early, but these can only be downloaded to a users desktop at present, rather than a personalized web page or social network; Yahoo!s purchases of Flickr and Del.icio.us, a social bookmarking site, indicate that it recognised the future was going to be based on user generated content; in 2007, Yahoo! indicated it was moving into offering web-based office tools with the acquisition of Zimbra, a provider of email and collaboration software. Zimbra should help Yahoo!s push into the enterprise particularly in SMEs or costconscious organizations because it is built on open source software. Zimbras technology also lets users create mash-ups (Zimlets) connecting web services to email; Pipes is a free online, hosted service from Yahoo! that lets users create mash-ups from different data feeds without having to write a line of code. When the service launched, Yahoo! was seen as scoring a first over Internet rivals; the real test for the service will come in user take-up. For enterprises, Pipes offers a way of creating new web-based applications on the fly to solve problems around collaboration or
130
integrate data from existing applications. It is also being used with some existing enterprise applications, such as Oracle Application Express.
Others AOL Formerly known as America Online, AOL has been transitioning in recent years from an Internet Service Provider to a content and advertising-driven business, following recent acquisitions of Advertising.com, Tacoda and Buy.at. These acquisitions have been rolled into a new entity called Platform A, which AOL hopes to turn into the worlds largest advertising network.
More recently, AOL acquired Bebo, in March 2008. Speaking at the announcement of the acquisition, Randy Falco, Chairman and CEO of AOL, said: What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers. For advertisers, the deal gives them access to a network of 80 million unique users (a combination of Bebos members with AOLs online messaging system, AIM, and ICQ network users). Other opportunities come through the creation of widgets for the AIM nework.
Twitter Twitter, the microblogging site that asks users to answer the question: what are you doing right now, is currently the toast of Silicon Valley after raising $15m at the end of May 2008 in its latest round of funding.
For enterprises, Twitter offers the possibility of collaborating with one another quickly from the web or a mobile device. One organization is already using it as another channel to communicate information to its employees alerting them to new HR policies, for example. Twitter is also being used as a news feed by the UK government, the BBC, Guardian and public safety organizations such as the LA Fire Department.
131
However, for it to become a regular broadcast channel for enterprises, it needs to tackle some of its performance issues. With no limits currently applied to the number of people that can follow a user, the frequency with which messages are sent and posts are updated has put a tremendous strain on its infrastructure.
eBay Online auction company, eBay, is an Internet success story, selling nearly $60bn of goods on its trading platforms in 2007 and generating $7.67bn in revenue. For enterprises, the main attraction of eBay comes from its acquisition in 2005 of Skype, an Internet communications service, that lets people make free voice and video calls online. Skype has been building up its enterprise capabilities giving IT managers much greater control over the behaviour of Skype in a corporate network, for example and could offer a very effective form of real-time collaboration for SMEs in particular.
Social networks: Facebook, MySpace, Bebo For enterprises, social networks offer the opportunity to create virtual communities amongst their workforce and also to advertise their products and services, according to their target market. The advertising opportunities are varied (see Chapter 6) but social networks can also be a useful collaboration tool, enabling the broadcast of information to a large group of people, fostering a sense of shared identity or targeting hard-toreach groups (such as graduate trainees while they finish their studying), for example.
Challenges in advertising lie in targeting audiences effectively, while in collaboration they are focused on maintaining content on the social networks and keeping up to date with trends in this area (on which social network are most of its employee based, for example?) We expect to see more companies making use of their own corporate social network a bit like a 21st-century version of the company intranet created from social network tools, such as Ning or enterprise equivalents from IBM or Microsoft in the future.
132
The enterprise IT heavyweights With the buzz surrounding Web 2.0 it was inevitable that the enterprise IT heavyweights IBM, Microsoft, Oracle and Sun to name a few would make a move into the market at some point. The advantages they have are size, huge customer bases and the genesis of many Web 2.0 technologies, such as Web 1.0 collaboration platforms. The challenges they face are adapting to a new way of delivering software and being able to innovate as much as start-ups in this area. 2.0. Some fundamental differences in the delivery of Web 2.0 services still remain too products from the enterprise software vendors, for example, arent in beta version, but come tested and ready to ship. The next section will look at the approach of each vendor, their products and what they might do next.
IBM Web 2.0 Goes to Work is the name of IBMs Web 2.0 campaign to help enterprises adopt social media and Web 2.0 technologies inside their organization. It is based on three components Economic Impact, Community Value and Enabling Technologies and technologies that fall under these banners include Lotus Connections, Lotus QuickR and its WebSphere portfolio.
Connections is essentially social networking software for companies with profiles, communities, blogs, widgets and bookmark features. Quickr is a team-based collaboration tool that enables content sharing and editing. It is also designed to include blogs, wikis and templates for pre-built team places where users can share projects.
New additions to WebSphere include Web 2.0 features in Websphere Commerce that enable customers to filter shopping attributes such as price, and drag-and-drop navigation to make it easier to compare products. In February 2007, IBM partnered with Google to create the IBM Portlet for Google Gadget, which lets employees customize their own web pages using Google Gadgets, these are applications created by users such as maps, translators and YouTube video players.
133
Organizations can also create mashups using IBM Mashup Center a web-based tool that enables non-technical users to easily create enterprise mashups and include out-ofthe-box widgets suitable for businesses and WebSphere sMash, for the technical developer. According to IBM: An early Mashup Center customer is already using these capabilities to improve their sales force effectiveness. The company is combining core enterprise ERP and CRM data with a line of business application to show accounts by region, sales history, customer service incidents and projected sales pipeline by product line. Sales reps can then upload their own planned travel and spreadsheets of account forecasts into IBM Mashup Center, which generates feeds to allow them to plan their most effective customer engagement strategy with better insight about the account including external Web-based information on the customer's business environment and even competitor activity.
Microsoft Microsofts Web 2.0 strategy revolves around its Office SharePoint server. In 2007, it enhanced its SharePoint server with Web 2.0 collaboration and communication features, such as templates for wikis and blogs, a MySite portal, social networking features and enterprise search. SharePoint integrates with Office Communicator, a unified communications client, as well as other Microsoft applications such as Exchange and Office.
Oracle The internal driver behind Oracles foray into Web 2.0 is Oracle AppsLab, a think tank developed to drive adoption of new web patterns and technologies across Oracles business and products. Oracle has also developed several Web 2.0 tools for its own users: The Official Oracle Wiki is based on WetPaints wiki platform and Oracle Mix is a social networking site for customers. Oracle also has a social network for employees called Connect. According to GigaOM, which interviewed Jake Kuramoto, Oracles product strategy director working on Connect and Mix, Our plans are to build momentum with Mix and eventually join the two systems, longer term. This has
134
been our vision from the beginning, i.e. a network of work contacts seamlessly joined to collaborate.
For enterprises, Oracle offers its WebCenter suite part of the Fusion Middleware product family which helps developers incorporate Web 2.0 tools such as blogs, wikis, RSS feeds and mash-ups with Oracles business applications. The benefit, says Oracle, is that it means users dont have to have several desktop and web-based applications open, but can access everything they need through one interface. It also has the Oracle Collaboration Suite, offering collaboration and unified messaging tools.
Intel Intel has embraced Web 2.0 through a series of partnerships to create SuiteTwo, a business Internet suite. This comprises wikis from Socialtext to build a Wikipedia Inside; the NewsGator RSS aggregator to pool content feeds into one place; RSS from SimpleFeed to syndicate different content sources; Six Aparts blogging tool, Movable Type; and SpikeSource, an integration platform that enables all the applications to work together. All services have been integrated with a single sign-on and rich user interface, and Intel will build on it in the future with podcasting, business networking, mobility and other features.
Compared to other enterprise IT companies, Intel displays a refreshing approach to Web 2.0, allowing internal bloggers to post their opinions on Web 2.0, even if it doesnt seem entirely on message. Heres an extract from Jeff Moriartys blog on November 14, 2006, just after Intel had launched SuiteTwo. He was formerly a social media advocate for Intel IT before moving to the post of community manager for Intels mobile developer community:
Intels culture is still one of separated groups and deep structure. We could be an immensely more agile company if we had more open, dynamic dialogues, both internally and between us and our customers. Yet we struggle with the most basic elements. Our internal blogs get little use, and the few managers that do blog mostly
135
just have their assistants put up press-releases once a month. (Moriarty is one of the exceptions). Not much discussion there. We have an internal wiki that is doing well, and just celebrated its 1st Birthday, but is grossly underutilised for a company like Intel. Even these external blogs arrived only after fierce battles and crazy amounts of approvals and red tape. The people inside Intel that see the value of these tools and free-flowing information are pushing hard, and change is starting to come, but I cant help but think how much further along we would be if people werent expecting glorious shining lights and fresh minty breath just by being in the same room as this stuff. I laughed out loud when we announced our SuiteTwo Web 2.0 package. Were Web 2.0, are we cool yet?
His honesty and open attitude towards Web 2.0 not to mention the problems large companies face in trying to open themselves up or enable greater information sharing should be familiar to many of Intels customers. And despite Moriartys disgust for the hype surrounding Web 2.0, he recognizes that it has a valuable role to play in the enterprise, even in the way he works and collaborates with colleagues. Writing a couple of months later in early 2007, he wrote in his blog:
Yet inside Intel I see our blogs connecting people in new ways. In the past week Ive talked about enterprise search with someone in Poland, cultural differences with someone in Russia, and corporate ethics with someone in Penang. I didnt know any of these people the week before. Im using our internal wiki to collaborate on RSS deployment with people on three different continents and across six time zones. There are just some great tools and ideas here if you can get past all the sugary frosting.
136
Cisco As a networking company, it is little surprise that Ciscos approach to Web 2.0 is to combine collaboration with communications, whether video, Telepresence (its highdefinition videoconferencing system) and other unified communications technologies. Its sales approach will also resonate with large enterprises, focusing on issues of scalability, reliability and security.
Cisco is testing out new Web 2.0 ways of working inside its own organization first through what it calls the Communications Center of Excellence. It promises that any best practices developed here will be shared with customers. Currently in Beta testing is Directory 3.0 the next iteration of Ciscos internal employee directory, which lets employees look up experts in different areas more easily than they can now and how they can be reached through one one click and WebEx Connect (from Ciscos acquisition of WebEx in March 2007), its solution for shared workspaces and business collaboration, which pools collaborative applications such as chat, online meetings and document management into one interface. Other applications being tested include a video wiki, C-Vision, with rating functionality; a wiki for innovation called Idea Zone or I-Zone and a finance network. If a lot of these tools seem to be wiki-based, thats because wikis have proven to be one of the most popular, business-relevant Web 2.0 tools so far within Cisco, with new wiki pages expected to top 300,000 in the organization this year.
We can also expect to see some social networking capabilities for enterprises from Cisco soon, following its acquisitions in early February of Five Across, a white label provider of social networking technology, and Tribe, a consumer social network.
Newcomers Unsurprisingly, a range of enterprise software start-ups have jumped into this space with corporate tools based on social networks and other Web 2.0 technologies. Enterprise software provider, Worklight, for example, claims to bring a secure and
137
highly personalized Web 2.0 computing experience to the enterprise by delivering Web 2.0-style access to corporate data stored behind the firewall. Likewise, Awareness Networks and Tacit deliver Web 2.0 software suites, with Awareness focusing on communities and Tacit specializing in collaboration through expertise location software. ConnectBeam, meanwhile, is a hardware option, offering what it calls a social computing appliance.
VisiblePath acquired in January by Hoovers and powering its professional social network, Hoovers Connect judges a users social network based on his or her email correspondence and meetings, and creates a type of social graph for organizations based on its users connections. Meanwhile, Community Server provides the back-end infrastructure for corporate social networks at National Geographic and Mazda MX-5 to name a few. Other social media tools for enterprises come from KickApps, Onesite (a white label social network, which bought Social Platform in February 2008, indicating the start of consolidation in this area), Leverage Software and Pringo Networks.
What these start-ups have in expertise and innovation, however, they lack in scale and resources. Many of their applications still rely on the platform infrastructure provided by enterprise IT heavyweights, such as IBM and Microsoft. As a result, expect to see further consolidation in this space as the enterprise IT companies build out their offerings and the credit crunch tightens.
138
The enterprise approach to buying Web 2.0 applications and services

Enterprises, particularly those with thousands of employees, are understandably cautious about introducing Web 2.0 technologies into the enterprise more commonly associated with the consumer space. This is why the entrance of the enterprise IT heavyweights is welcome they bring some familiarity and reassurance to organizations that might already have their IT systems built on their technology. A survey from Forrester Research found that 71% of large organizations prefer to buy from incumbent vendors (see Table 7.13). After all, they want Web 2.0 technologies to integrate with the systems already in place; they also want the support and maintenance they are used to receiving.
Table 7.13: Would you be more interested in Web 2.0 technologies if offered by a major incumbent vendor?
Percentage of 119 US CIOs More interested 71%
Source: Forrester Research
Doesnt matter 26%
Less interested 3%
Dont know 1%
Table 7.14: Would you be more interested in Web 2.0 technologies if offered as a suite?
Percentage of 119 US CIOs More interested 74%
Source: Forrester Research
Doesnt matter 22%
Less interested 3%
Dont know 1%
Organizations should be wary, however, of buying an enterprise 2.0 suite; Web 2.0 technologies arent designed to come out-of-the-box and be controlled in the manner of previous software platforms. Web 2.0 tools from the likes of SocialText, Tacit or
139
ConnectBeam may provide a useful enhancement to existing collaboration software packages and tools, but at essence they herald a new way of working based on collective wisdom, continual improvements and tactical problem solving. The pace of development associated with Web 2.0 also means that development times are shorter, so software packages claiming to offer the latest technology are behind the trend before theyve even hit the shelf. Thats why the model of software delivered as a service is so effective for these technologies.
This Web 2.0 view of the world might not fit in with the IT departments planned and ordered view of a companys IT infrastucture, but it is the way users increasingly want to use technology. IT should be the enabler, rather than the straitjacket that makes users conform to a prescribed way of doing things.
Sales strategies for success Enterprises are looking for a return on investment (ROI) even if many of the Web 2.0 tools have softer benefits, such as improving employee productivity. But, where possible, IT managers should relate the business case to hard figures e.g. reduced costs associated with product development, costs saved from collaborating virtually through wikis than by flying overseas and so on. With advertising, the business case can be more easily made using web analytics and other tracking tools that show the effectiveness of different online advertising campaigns; Provide case study examples to show how Web 2.0 can address business problems; ask for customer testimonials and consider Web 2.0 ways of allowing your own customers to communicate with one another through an informal social network or wiki-based FAQs; Consider that buyers will feel differently about these Web 2.0 tools. In Whose space? Differences among users and non-users of social network sites published in the Journal of Computer-Mediated Communication, the author found that: Students with varying backgrounds select into different services, potentially limiting the extent to which they will interact with a diverse set of users on those services. Additionally, social context of use and experiences with the medium have
140
predictive power when it comes to explaining both specific and general levels of SNS adoption, suggesting that students who have more resources are spending more time on these sites and have more opportunities to benefit from them. Although the findings relate to the consumer space, vendors should be aware this could influence how IT managers or users in an organization take up Web 2.0 technologies; Consulting and training of users is required not just in how to use Web 2.0 technologies (if not doing so already outside work), but how Web 2.0 technologies can work for them. A report last year from The Pew Internet & American Life Project, found that 49% of Americans fell into the category of being technology laggards or luddites, with few (or no) gadgets and either inexperienced or indifferent attitudes towards them. Like the study above, the Pew project shows the dangers in generalizing about technology usage and take-up, and the importance of educating users about the benefits to overcome concerns with technology; Avoid selling an enterprise-wide solution most Web 2.0 applications work best amongst teams of employees or groups set up to manage a particular project. There are exceptions Twitter alerts could be sent to all employees, for example, or a social network could deliver company-wide updates but most successful Web 2.0 projects so far have started at the grass roots level and spread through word of mouth and the sharing of best practices. The technology may be applied across the enterprise, but how groups adopt it should be up to their departmental or groups needs. Should CIOs not listen, expect to see users bringing the consumer technologies theyre familiar with, into the enterprise anyway.
141
142
CHAPTER 8
Where next: Web 3.0
143
Chapter 8
Summary
Where next: Web 3.0
Mobility might have been cited as the next big thing for the last five to ten years, but new developments in the sector mean that the humble mobile handset and anytime communications could drive the next wave of innovation in the enterprise. In the semantic web, computers can extract deeper contextual meaning from information on a document, web page or other online content. For users, it will make the experience of finding information and interacting on the web far more intuitive. It may not happen in the next evolution of the Internet, but virtual reality will inevitably play a bigger role in the future. Barriers to Web 3.0 include limited processing power and bandwidth, user reticence to new technology, incumbent vendors blocking market developments and organizations failure to embrace Web 2.0 yet.
Welcome to Web 3.0

To be writing about Web 3.0 before most organizations have even grasped Web 2.0 technologies might seem a little overzealous or even to be encouraging hype in this area. But already developers, engineers and CIOs are looking to what might be the next big thing. Table 8.15 reveals findings from a Pew Internet & American Life Project study into what users expect to be doing with technology in 2020. Some of it might sound familiar to readers already virtual reality addiction, for example while some scenarios are too frightening to comprehend. As well as revealing what the future might look like, Table 8.15 is interesting for highlighting some of the concerns people have about technology use in the future.
144
Table 8.15: A view of the future Internet-driven world in 2020

Exact prediction language, presented in the order in which the scenarios were posed in the survey Agree DisNo agree response 43% 1%
A global, low-cost network thrives: By 2020, worldwide network 56% interoperability will be perfected, allowing smooth data flow, authentication and billing; mobile wireless communications will be available to anyone anywhere on the globe at an extremely low cost. English displaces other languages: In 2020, networked 42% communications have leveled the world into one big political, social and economic space in which people everywhere can meet and have verbal and visual exchanges regularly, face-to-face, over the Internet. English will be so indispensable in communicating that it displaces some languages. Autonomous technology is a problem: By 2020, intelligent agents 42% and distributed control will cut direct human input so completely out of some key activities such as surveillance, security and tracking systems that technology beyond our control will generate dangers and dependencies that will not be recognized until it is impossible to reverse them. We will be on a J-curve of continued acceleration of change. Transparency builds a better world, even at the expense of 46% privacy: As sensing, storage and communication technologies get cheaper and better,individuals' public and private lives will become increasingly transparentglobally. Everything will be more visible to everyone, with good and bad results. Looking at the big picture - at all of the lives affected on the planet in every way possible this will make the world a better place by the year 2020. The benefits will outweigh the costs. Virtual reality is a drain for some: By the year 2020, virtual 56% reality on the Internet will come to allow more productivity from most people in technologically-savvy communities than working in the real world. But the attractive nature of virtual- reality worlds will also lead to serious addiction problems for many, as we lose people to alternate realities. The Internet opens worldwide access to success: In the 52% bestseller The World is Flat, Thomas Friedman writes that the latest world revolution is found in the fact that the power of the Internet makes it possible for individuals to collaborate and compete globally. By 2020, this free flow of information will completely blur current national boundaries as they are replaced by city-states, corporation-based cultural groupings and/or other geographically diverse and reconfigured human organizations tied together by global networks. Some Luddites/Refuseniks will commit terror acts: By 2020, the 58% People left behind (many by their own choice) by accelerating information and communications technologies will form a new cultural group oftechnology refuseniks who self-segregate from modern society. Some will live mostly off the grid simply to seek peace and a cure for information overload while others will commit acts of terror or violence in protest against technology.
47%
1%
54%
4%
49%
5%
39%
5%
44%
5%
35%
7%
Results are based on a non-random Web-based survey of 742 Internet users recruited via email
Source: Pew Internet & American Life Project Survey, Nov. 30, 2005-April 4, 2006. Business Insights Ltd
145
The rest of this chapter will be spent exploring some of the possible developments in Web 3.0.
Mobile
Mobility might have been cited as the next big thing for the last five to ten years, but new developments in the sector mean that the humble mobile handset and anytime communications could drive the next wave of innovation in the enterprise.
For a start, devices come with more built in functionality, blurring the distinction between mobile phone and computer. Second, the mobile Internet experience is steadily improving, aided by new handsets, such as the iPhone, which provide a familiar interface for accessing the Internet via the mobile phone.
The mobile advertising market is still nascent, used mostly by vendors selling products related to entertainment or the handset itself, such as ringtones. But the possibilities offered by GPS and mapping functionality integrated in handsets, such as the Nokia N95 8GB, could herald a new wave of relevant advertising when combined with targeted advertising messages. UK mobile operator, Blyk, which launched in 2007, offers a select amount of text messages and call minutes free in return for users receiving six text ads a month. Users have to be between 16 and 24 years old and give information on their hobbies and habits when signing up, enabling marketers to reach this hard-to-reach audience with tailored advertising messages. When one takes into account the mobile advertising opportunity there are more mobile phones in the world than laptops, for instance its easy to see why marketers are so excited about this up and coming channel.
146
The semantic web

The semantic web may not look much different to todays Internet, but it will be far more intuitive than todays version. It is the vision of the web espoused by World Wide Web inventor Tim Berners Lee. In the semantic web, computers can extract deeper contextual meaning from information on a document, web page or other online content; with the current web, humans need to join the dots. But humans wont be needed to provide the context with the semantic web; computers will be intelligent enough to do it automatically or rather, the information being searched will be tagged in a way that gives it richer meaning. For users, it will make the experience of finding information and interacting on the web far more intuitive. Computerworld explains how this might work in practice:
With a robust semantic Web, for instance, one might have an application (an agent) that can understand not only how to search for information on bobbins, but also how to parse the information to see that per-bobbin prices have dropped by 10% in Southeast Asia this week 7% in the past 24 hours alone. If you're a person who cares about your bobbins, you'd probably have your agent configured to alert you that there's a situation in progress. A good agent might even be able to connect the dots between the bobbin crisis and an editorial in yesterday's Bangkok Post advocating a bobbin embargo, or the release of a revolutionary Bobbin 2.0 that'll make all current bobbins obsolete.
147
Second Life in real life?

It may not happen in the next evolution of the Internet, but virtual reality will inevitably play a bigger role in the future. In one sense, virtual reality is a next step on from the social media, participatory world of Web 2.0 providing a face for the predominantly text-based interactions so far. The popularity of Second Life and online, multiplayer virtual reality games, such as World of Warcraft, suggest user interest has already been piqued.
Some organizations are already using Second Life to test job candidates abilities in role play scenarios. Furthermore, some of the tools available today, such as Cisco Telepresence, which bring geographically dispersed groups together through advanced videoconferencing technologies, provide a precursor to the types of virtual meetings organizations might be hosting on a regular basis in the future.
Barriers to Web 3.0

Computer and bandwidth limitations The processing power required for computers to support numerous virtual worlds or dig deeper into the Internet isnt available yet. Also, these Web 3.0 services could seriously slow down Internet connections. With concerns already being raised about bandwidth-intensive services (see chapter 2), its not just the computers but also the network infrastructure that will need to be significantly more robust before Web 3.0 services can happen.
User reticence Remember the 49% of American Luddites highlighted in the Pew & American Life Internet Project survey in the previous chapter? They could be the biggest barrier to the
148
development of richer Internet interactions and new technologies if their wariness or lack of understanding about technology is symptomatic of a larger global group.
Bear in mind too that some users and they are a very vocal group are also extremely worried about their privacy online. They have cause for concern: identity theft is becoming a bigger problem, with many people blas about posting information about themselves, their families and their company on social networks, blogs and other Web 2.0 sites. The trend towards cloud computing, where data and applications are stored virtually on someone elses servers, brings with it some privacy fears about who has control and access to this information. Consequently, vendors will have to work hard to reassure enterprises about such concerns and demonstrate the security and reliability measures they have in place.
Vendor delay Market incumbents often provide one of the biggest barriers to enterprise adoption of new technologies and behaviors. In the UK, for example, its well near impossible to run mobile advertising campaigns based on a users location. This is partly because it is too expensive to do so at present, but also, crucially, because the mobile network operators have been very slow to make it possible. Most are still mulling over how best to make money through mobile advertising. In addition, although the operators hold details on every customers location (based on the address they give when first signing a contract), most have yet to get customers permission to use their data for the purposes of mobile marketing.
Embracing Web 2.0 Before even considering the next phase of the Internet or Web 3.0, the majority of enterprises need to first grasp the concept and opportunities offered by Web 2.0. As this report has revealed, there is still considerable work to be done in this space and organizations need the support and assistance of vendors to keep apace with innovation.
149
Index
AdSense, 34, 126 Advertising.com, 131 AdWords, 126 AJAX, 36, 60, 77 Amazon, 23, 34, 35 AOL, 69, 71, 131 Apple, 70 AT&T, 41, 42 Awareness Networks, 138 Beacon, 73, 78, 113 Bebo, 27, 29, 32, 37, 71, 76, 78, 96, 112, 114, 116, 131, 132 Benchmark Capital, 70, 71 Blog, 21, 56 Blogger, 17, 30, 124, 126, 127 Blyk, 146 BT, 41, 42 Buy.at, 131 Cisco, 17, 41, 96, 124, 137, 148 Clearspring, 120 Comcast, 42, 72 Community Server, 138 ConnectBeam, 138, 140 Del.icio.us, 22, 32, 101, 130 Digg, 22, 32, 34, 76 Doctors.net.uk, 54 150 DoubleClick, 34, 126, 127 eBay, 33, 38, 55, 70, 71, 120, 132 Facebook, 27, 29, 30, 32, 33, 41, 56, 61, 69, 72, 73, 74, 75, 76, 78, 79, 80, 96, 97, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 132 Flickr, 14, 23, 32, 34, 41, 53, 68, 69, 129, 130 Friends Reunited, 29, 74, 76, 114 Geocities, 33, 129 Gmail, 65, 126 Google, 14, 17, 22, 29, 34, 36, 38, 65, 68, 69, 71, 73, 74, 75, 77, 78, 80, 114, 124, 125, 126, 127, 128, 130, 133 IBM, 17, 21, 37, 38, 61, 62, 89, 124, 132, 133, 134, 138 iLike, 115 Instant Messenger, 37, 66 iPod, 29 iTunes, 79 JotSpot, 126, 128 Juniper Networks, 41 Kate Modern, 37, 116 KickApps, 138 Kiva, 55 Leverage Software, 138 LinkedIn, 60, 65, 76, 97, 112 Mahalo, 34 Mash-up, 22 microblogging, 15, 84, 85, 99, 131
MicroPlace, 55 Microsoft, 17, 21, 38, 61, 62, 72, 75, 89, 115, 124, 127, 130, 132, 133, 134, 138 MingleNow, 117
SpikeSource, 135 StumbleUpon, 22, 32, 101 Sun, 38, 133 Tacit, 138, 139
MySpace, 27, 29, 32, 60, 69, 71, 73, 74, 75, 76, 77, 96, 112, 114, 117, 120, 126, 132 Netscape, 76 Netvibes, 76, 119 NewsGator, 135 Ning, 76, 132 Onesite, 138 OpenSocial, 114
Tacoda, 131 Tag cloud, 102 Tagging, 22, 101 Technorati, 54 TripAdvisor, 33, 36 Twitter, 15, 17, 22, 27, 33, 52, 53, 84, 85, 99, 100, 117, 124, 131, 141 UnLtdWorld, 97
Oracle, 61, 131, 133, 134, 135 User generated content, 23 Orkut, 17, 114, 124, 127 Verizon, 41, 42 Plaxo, 72, 114 Virgin Media, 42 Podcast, 22 VisiblePath, 138 Pringo Networks, 138 WebEx, 137 Real, 69 Widget, 24 RightMedia, 130 Wiki, 24, 93, 134 RockYou, 69, 115 Wikia Search, 34 RSS, 15, 22, 33, 36, 49, 50, 51, 53, 54, 77, 84, 86, 101, 102, 127, 135, 136 Second Life, 56, 100, 117, 148 SimpleFeed, 135 Six Apart, 135 Skype, 29, 30, 41, 66, 71, 76, 79, 132 Slide, 69, 79, 115 Social network, 22, 32, 96, 98, 115, 118, 132 Socialtext, 135 YouTube, 14, 17, 29, 33, 52, 53, 54, 68, 69, 71, 75, 77, 80, 117, 124, 126, 128, 133 Zenter, 126 Zimbra, 17, 124, 130 Wikileaks, 43 Wikipedia, 24, 33, 34, 69, 90, 93, 135 Worklight, 137 Yahoo!, 17, 27, 38, 70, 72, 124, 126, 127, 129, 130
151
152

Web 2.0 and The Enterprise

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Web 2.0 and The Enterprise

Încărcat de

Drepturi de autor:

Formate disponibile

TECHNOLOGY

Web 2.0 and The Enterprise

What Web 2.0 means for your business

The enterprise approach to Web 2.0

Why Web 2.0 matters

Collaboration in a Web 2.0 world

The Web 2.0 opportunity

88 88 89 89 90 90 90 90 91 91 91 92 92 93 94 95 96 98 99 99 99 100 101 101 102 102 103

Web 2.0 marketing opportunities 106

114 115 115 116 117 119 120 121

Where next: Web 3.0

The enterprise approach to Web 2.0

Why Web 2.0 matters

Collaboration in a Web 2.0 world

Web 2.0 marketing opportunities

Where next: Web 3.0

What is this report about

Who is this report for?

What Web 2.0 means for your business

What Web 2.0 means for your business

The emergence of Web 2.0

Source: Nielsen Online

Instant messaging 23%

Source: Nielsen Online

Business Insights Ltd

Table 2.2: Web 2.0 mistakes

Defining Web 2.0

Table 2.3: Web 1.0 vs. Web 2.0

Table 2.4: Enterprise 2.0 in action

Defense Intelligence Agency Novartis Seti@home

Dell eBay Wiki

Colgate-Palmolive iStockphoto Cambrian House Google HP Dells IdeaStorm Yahoo!

Collaboration Customer relations Transformative ideas

General Motors IBM

Source: KPMG International Research

Barriers to Web 2.0

The enterprise approach to Web 2.0

The enterprise approach to Web 2.0

4 = Top priority objective

Source: Business Insights

Business Insights Ltd

Enterprise adoption of Web 2.0

Who is driving Web 2.0 in enterprises?

A vertical approach to Web 2.0

Barriers to adoption of Enterprise 2.0

Where next for Enterprise 2.0?

Enterprise 2.0 recommendations

Why Web 2.0 matters

Why Web 2.0 matters

How much is Web 2.0 worth?

Table 4.5: Amount invested in Web 2.0 companies ($m)

Source: Dow Jones VentureOne and Ernst & Young

Business Insights Ltd

Table 4.6: Most active Web 2.0 investors, globally 2006

The Web 2.0 business model

Table 4.7: Googles share of the US search market, April 2008

Apr 2008 67.90% 20.28% 6.26% 4.17%

Mar 2008 67.25% 20.29% 6.65% 4.09%

April 2007 65.26% 20.73% 7.77% 3.69%

Figure 4.3: Googles share of the US search market, April 2008

4.17% 6.26% 20.28%

4.09% 6.65% 20.29%