Enterprise 2.0 To Become a $4.6 Billion Industry By 2013
Written by Sarah Perez.
A report released by Forrester Research is predicting that enterprise spending on Web 2.0 technologies is going to increase dramatically over the next five years. This increase will include more spending on social networking tools, mashups, and RSS, with the end result being a global enterprise market of $4.6 billion by the year 2013.
This change is not without its challenges. Although there is money to be made in the industry by vendors, Web 2.0 tools by their very nature are defined by commoditization; as is much of the new social media industry, a topic we touched on briefly here, when discussing how content has become a commodity.
For vendors specifically, there are 3 main challenges to becoming successful in this new industry, including:
I.T. shops being wary of what they perceive as “consumer-grade” technology
Ad-supported web tools generally have “free” as the starting point
Web 2.0 tools will have to now compete in a space currently dominated by legacy enterprise software investments
What is Enterprise Web 2.0?
Most technologists segment the Web 2.0 market between “consumer” Web 2.0 technologies and “business” Web 2.0 technologies. So what does Enterprise 2.0 include then?
Well, what it doesn’t include is consumer services like Blogger, Facebook, Netvibes, and Twitter, says Forrester. These types of services are aimed at consumers and are often supported by ads, so they do not qualify as Enterprise 2.0 tools.
Instead, collaboration and productivity tools based on the concepts of web 2.0, but designed for the enterprise worker will count as being Enterprise 2.0. In addition, for-pay services, like those from BEA Systems, IBM, Microsoft, Awareness, NewsGator Technologies, and Six Apart will factor in.
Enterprise marketing tools have also expanded to include Web 2.0 technologies. For example, money spent on the creation and syndication of a Facebook app or a web site/social network widget could be considered Enterprise 2.0. However, pure ad spending dollars, including those spent on consumer Web 2.0 sites, will not count as Enterprise 2.0.
Getting Past the I.T. Gatekeeper
One of the main challenges of getting Web 2.0 into the enterprise will be getting past the gatekeepers of traditional I.T. Businesses have been showing interest in these new technologies, but, ironically, the interest comes from departments outside of I.T. Instead, it’s the marketing department, R + D, and corporate communications pushing for the adoption of more Web 2.0-like tools.
Unfortunately, as often is the case, the business owners themselves don’t have the knowledge or expertise to make technology purchasing decisions for their company. They rely on I.T. to do so – a department that currently spends 70% of their budget maintaining past investments.
Despite the absolute mission-critical nature of I.T. in today’s business, the department is often provided with slim budgets, which tends to only allow for maintaining current infrastructure, not experimenting with new, unproven technologies.
To make matters worse, I.T. tends to view Web 2.0 tools as being insecure at best, or, at worst, a security threat to the business. They also don’t trust what they perceive to be “consumer-grade” technologies, which they don’t believe have the power to scale to the size that an enterprise demands.
In addition, I.T. departments currently work with a host of legacy applications. The new tools, in order to compete with these, will have to be able to integrate with existing technology, at least for the time being, in order to be fully effective.
Finally, given the tight budgets, there is still a chance that even if a particular tool does meet all the requirements to get in the door at a particular company, I.T. or other company personnel utilizing the service may try to exploit the free version of the service if the price point for the “enterprise” version gets to be too high. They may also choose to look for a free, open source alternative.
How Web 2.0 Will Reach $4.6 Billion
All that being said, the Web 2.0 market, as small as it is now, is, in fact, growing. In 2008, firms with 1000 employees or more will spend $764 million on Web 2.0 tools and technologies. Over the next five years, that expenditure will grow at a compound annual rate of 43%.
The top spending category will be social networking tools. In 2008, for example, companies will spend $258 million on tools like those from Awareness, Communispace, and Jive Software. After social networking, the next-largest category is RSS, followed by blogs and wikis, and then mashups.
The vendors expected to do the best in this new marketplace will be those that bundle their offerings, offering the complete package of tools to the businesses they serve.
However, newer, “pure” Web 2.0 companies hoping to capitalize on this trend will still have to fight with traditional I.T. software for a foothold, specifically fighting with the likes of Microsoft and IBM. Many I.T. shops will choose to stick with their existing software from these large, well-known vendors, especially now that both are integrating Web 2.0 into their offerings.
Microsoft’s SharePoint, for example, now includes wikis, blogs, and RSS technologies in their collaboration suite. IBM offers social networking and mashup tools via their Lotus Connections and Lotus Mashups products and SAP Business Suite includes social networking and widgets.
What this means is that much of the Web 2.0 tool kit will simply “fade into the fabric of enterprise collaboration suites,” says Forrester. By 2013, few buyers will seek out and purchase Web 2.0 tools specifically. Web 2.0 will become a feature, not a product.