The collaborative nature of Web 2.0 is a phenomenon
business must address. IT directors will need to support new ways
of working and new forms of customer interactions, in order for
businesses to compete effectively in the New World.
If the first version of the web was based on the idea that
people would visit HTML-based websites, Web 2.0 is all about
collaboration and user-generated content. If you build it, they
will come, no longer rings true. Businesses that can foster a user
community will be the winners in the next phase of the web.
A generation of youngsters see
MySpace,
Facebook,
YouTube and
Bebo as places to meet friends
and share ideas, favourite music and videos. Grassroot ideas can
grow into overnight successes without the need for any strong
organisational structure.
Don Tapscott, co-author of "Wikinomics - How Mass Collaboration
Changes Everything", believes low-cost collaboration over the web,
using the technologies associated with Web 2.0, will challenge the
traditional approach to business.
"The cost of collaboration in an open market used to be more
expensive than the cost of doing the business process internally.
The web has dropped the cost of collaboration so much that people
can come together at low-cost," says Tapscott.
In his book which is due to be launched in the UK in June,
Tapscott presents several examples of blue chip companies that are
using mass collaboration to help develop products.
Although it predates the web, the
open source philosophy is very much a part of Web 2.0
collaboration. Tapscott urges IT directors to look at open source
both for software projects and as an approach to web-based
collaboration. "There is no class of software that cannot be
written in open source," he says.
SpikeSource has been
set up to document, distribute and support enterprise open source
software, Tapscott says.
Topcoders is
another site Tapscott recommends IT directors look at. The site
uses eBay-style bidding to put software developers in touch with
companies looking for specific application development
requirements.
Beyond software projects, the book illustrates how traditional
companies such as Proctor & Gamble and the BBC are flirting
with Web 2.0. Proctor & Gamble, for instance, is planning to
cut its research and development budget dramatically. Instead, it
will use the web to gain access to a pool of global experts.
Speaking in Wikinomics, Alan Lafley, Proctor & Gamble chief
executive officer, said, "Someone outside your organisation today
knows how to answer your specific question, solve your specific
problem or take advantage of your current opportunity better than
you do. You need to find them and find a way to work
collaboratively and productively with them."
Proctor & Gamble was sitting on 27,000 patents developed on
an annual budget of £750m, but less than 10% of the patents it
owned were being used in its products. The company now makes all
its patents available for licence using sites like yet2.com, which
puts patent-holders in touch with companies willing to licence the
patents to build innovative products.
This is one example of how the new web is able to link companies
together far more easily, and so help new innovations come to
market. Another success on yet2.com was an agreement between
Kimberly-Clark and Axela Biosensors, a Toronto-based company
specialising in medical diagnostics.
Using the
yet2.com
noticeboard, Kimberly-Clark has given Axela exclusive rights to
about 150 world-wide patents and applications. As part of the
agreement, Kimberly-Clark will be acquiring an equity interest in
Axela.
Another tenet of Web 2.0 is user-generated content. As well as
blogs, Wikipedia, MySpace
and the Flickr photo-sharing
site, there are plenty of innovative developments in user-generated
content. In the Second Life
virtual world, Tapscott points out that end-users have created 90%
of the product themselves.
Similarly, on the
Lego Mindstorms website
end-users have uploaded their own programs to control Lego robots,
creating a community for the software.
Mashups are another example. Mashups have enabled businesses to
benefit from the work of hundreds of thousands of web developers.
By using open programming interfaces, in-house applications can be
embedded into third-party websites.
According to Tapscott, open programming interfaces are another
way businesses can use Web 2.0 to boost their brand and products.
Think how websites have enhanced
GoogleMap to link mapping and
geographical information with all manner of applications.
Another example is
Amazon, says Tapscott.
Rather than keeping its internal systems closed, Amazon produced
the biggest application programming interface. This has enabled
anyone to use the Amazon infrastructure to run an e-commerce
website for just £35 per month.
What this all means for IT directors is that business models
based on Web 2.0 will challenge traditional approaches. IT
directors have a key role in helping the business respond to the
new threat and opportunities of Web 2.0, says analyst firm
Gartner.
Significantly, IT directors will need to shift the balance of
their IT budget from the current situation, where 70% of the annual
IT budget is spent on legacy IT maintenance, to a situation where
70% is spent on new development.
David Schehr, a research director at Gartner, says that
companies that have traditionally pushed products to their
customers will need to address a new style of buying. "Providers no
longer define the competitive market. Businesses need to change how
they deliver and market services," Schehr says.
He predicts that products will be found by end-users using a web
search engine rather than being pushed by marketing. His advice to
IT directors is simple enough: "Use web search to help find what
people are looking for."
In other words, consumers in the Web 2.0 era will use the web as
the first source of information when they are looking to buy a new
product or service. To succeed, businesses will need to ensure that
their products and services make the top of Google's search
results.
In the financial services sector, Schehr says banks are being
challenged by disruptive technologies such as the person-to-person
payment model of Paypal or
the UK's Zopa. "Zopa is
offering an entirely new model of consumer lending by providing
direct links between a small group of lenders and a small group of
borrowers."
Similarly, there is a new era of stockbroking, such as
Zecco and
TradeKing, which are
targeting consumer niches and marketing their services using Web
2.0 and blogs.
For IT departments, "You will need to trade off nice-to-have
functionality with must-have functionality," Schehr says. This
means that IT directors do not need to try and be at the cutting
edge of IT. "Buy applications or rent rather than build, and use a
service oriented architecture to reduce the software development
time and increase software reuse," Schehr says.
In retail, Web 2.0 will mean consumers are able to draw on a
vast array of information, pulling on blogs, wikis, and seeking
real-time buying advice from online friends, allowing them to make
more informed buying decisions. This means they will no longer rely
on the limited expertise of in-store staff, says Gartner.
"Consumers in-store will search across the web to get the best
price, then look at the latest blogs on the products they wish to
purchase," Gartner managing vice-president John Davison
predicts.
He says that although the actual layout of stores is unlikely to
change radically, "By 2017, all the technology people use to
research their purchases when at home will be available
in-store."
To support this, Davison says stores will need to provide
internet kiosks for buyers to research their products, and
self-service tills to support the Web 2.0 approach to making
purchases.
"In 2006, 9% of a retailer's turnover was from the internet. By
2011, 16% of turnover will be from the internet. This will be the
single biggest shift in retail marketing."
IT will be needed to support the shift - not just to build and
support the infrastructure for greater use of e-commerce, but also
to improve how retailers track customers. "Retailers will need to
track across multiple channels," Davison said.
The challenge for businesses and IT directors in those
businesses is how to take advantage of Web 2.0.
Forrester vice-president John Rymer has noted that although Web
2.0 is obvious for consumers, its role in the enterprise is
unclear. "Web 2.0 was proven in consumer applications, but to work
in the enterprise it must adapt. Integration with enterprise data
is a big challenge, as are applications performance and
management," says Rymer.
He raises an interesting question: how can organisations benefit
from external innovation and feedback while minimising risk?
Forrester Research predicts that Web 2.0 will become core to
business systems within 18 months. By then IT directors will need
to have a strategy to support the potentially lucrative
opportunities of user-generated content and loosely coupled
collaboration.
The so-called Y-generation of young people who understand this
way of working will put pressure on IT to become more flexible.
Listen to Cliff Saran speak to Don Tapscott, author of Wikinomics -
How Mass Collaboration Changes Everything, on the economics of Web
2.0 >>
Web 2.0 can work
for storage >>
Read Cliff Saran's
blog on Web 2.0 >>
Business on Web 2.0 >>
Amazon: Wikinomics - How Mass Collaboration Changes Everything
>>
Wise up to mashups, says Gartner >>
Comment on this article:
computer.weekly@rbi.co.uk