Web 2.0 technology can fundamentally change business processes by delivering productivity gains and making user feedback an integral part of development processes. But many IT managers are shying away from the technology, unsure of how it will fit into their business.
A survey of 3,000 executives conducted in January by US consultancy McKinsey found widespread but cautious interest in using Web 2.0 technology to enable greater automation and networking within enterprises.
The success of Google Apps and the entry of many major software suppliers into the web-based application market - including Microsoft with its Live platform and SAP with its hosted AS1 enterprise resource planning tool - points to the potential for much greater penetration of Web 2.0 technologies into enterprises.
Neil Ward-Dutton, research director at analyst firm Macehiter Ward-Dutton, said this trend towards using more web-oriented technologies discloses something far more significant.
"The fundamental shift going on beneath all the talk about Web 2.0 technology is delivering user functionality through a web browser," he said. "But it is important to separate out whether enterprises are getting IT functionality over the technologies that come under the Web 2.0 banner, or whether that functionality comes through from the internal IT function."
Many companies are already using such technology to deliver web-enabled front-ends for complex applications. Through this, they hope to improve end-user productivity or engage customer feedback, Ward-Dutton said.
"FedEx or UPS, for example, are using the web to offer the same services that they may already offer over the phone, such as delivery tracking services," he said.
The trend towards using hosted, or software as a service, delivery models for delivering functionally rich, web-based applications also serves as a good indicator of the growing prevalence of Web 2.0 use in businesses.
Software as a service
Hosted applications rely heavily on the same technologies used by social networking websites, such as Facebook. Ward-Dutton cited web-based business networking tool Huddle as an example of technology that is blurring the distinction between Web 2.0 and software as a service.
"Huddle is like Microsoft Sharepoint crossed with Basecamp [a web-based tool to track and manage projects]," Ward-Dutton said. "Software as a service examples, like Huddle, can offer knowledge management capabilities across company boundaries, as well as internally, in a way that is often more cost-effective for small and medium-sized enterprises in particular, which may not have large internal IT resources."
In his work with large enterprises, such as the London Stock Exchange, Dan Norris-Jones, from web-development consultancy Priocept, has seen the growth in the use of Web 2.0 technologies to deliver more sophisticated and responsive user interfaces.
This adoption of Web 2.0 technology has been of particular importance for larger enterprises, which have a lot of data and complex functionality to integrate across multiple application sets.
"When the interface was built into the browser, the user experience was much more limited, and people would resort to traditional software development using Windows, for example," Norris-Jones said. "With so-called Web 2.0 technologies, that is no longer the case."
He said that his larger clients were definitely using Web 2.0 development techniques as part of their internal IT resource to improve the usability and sophistication of their end-user and customer-facing products.
Although Norris-Jones said he could see the benefits and increasing uptake of Web 2.0 within medium and large enterprises, he sounded a note of caution to those taking on its concepts for internal strategic software development projects.
"The one thing Web 2.0 cannot do is offer the same level of security as traditional server-based software," he said. "As a result, many clients find that Web 2.0-driven applications cannot access the file server on the client. They then find they are forced back into the more traditional Windows environment."
Organisations with a closed, authenticated loop of communication between themselves and their supplier network do not face the same difficulty in using Web 2.0, as a level of security is built into their developer environment.
Suw Charman, a social software consultant, said companies looking to achieve the functionality of social networking technology in business applications through traditional client-based development methods often find themselves bogged down in administering user rights and permissions. This can create separated groups of knowledge and information.
"Web 2.0-driven equivalents to Sharepoint, for example, seem much more lightweight and user friendly, taking up far less end-user administrative time and maintenance overheads," Charman said. "However, the opposite of that is that you end up with data all over the place, which can have disaster-recovery and security implications."
She said IT managers looking to explore or extend Web 2.0 use - whether at the front or back end of operations - should carefully evaluate the strategic requirements for rolling out such technologies across the enterprise.
"Be aware of the implications of sharing data inside and outside the firewall, as well as what data is being shared." Charman said.
"The thing to remember is that the problem with Web 2.0 adoption is not technical, it is cultural. These tools can make life simpler, easier and quicker for users. And those companies that are fully Web 2.0-enabled are going to be in a better position to take advantage of new technology opportunities and do business better than the competition."
Case study: Firefly Tonics
Firefly Tonics, which manufactures and sells health drinks across the UK, Europe and the Far East, adopted Web 2.0 business development tool Huddle in November 2006 to connect its growing network of international suppliers with one another and with its London-based internal team.
Huddle is designed to create a network of online workspaces for businesses, and is described as a document management system, virtual meeting room, brainstorming tool, office assistant and knowledge management tool rolled into one.
Huddle is intended to allow employees to work more productively in a collaborative virtual environment by freeing them from a reliance on e-mail. It should also enable better version control and information flow, accelerating the decision-making process.
Firefly uses Huddle to distribute marketing materials among its team and supplier base, and keep them up to date with the latest product news and information. Firefly also wanted to promote an increased sense of community within the Huddle network by allowing employees to stay in contact with one another, share information, plan joint projects and discuss ideas.
Based on feedback from Firefly and its distributors, the Huddle team released improvements to the system in January, enabling users to upload zip files of multiple documents in one step, copy files from one Huddle group to another, and personalise Huddle invites.
All of these improvements were designed to develop usability and reduce the time taken to perform routine tasks, which was essential for Huddle to be taken up within the supplier network.
Firefly has now extended Huddle into its marketing and public relations agencies, and also uses it to manage key communications between its raw-ingredient suppliers, packaging designers and bottlers.
Kate Moore, Firefly's marketing manager, said user satisfaction with Huddle was high. "We can update our marketing materials centrally, and our suppliers are automatically notified that files are waiting for them," she said. "I wish every system we had was this simple."
Case study: New Look
Clothing retailer New Look said it is saving £700,000 a year using the P2D web-based trading and document imaging system to automate its manual invoice authorisation and processing procedures.
P2D allows businesses to exchange documents with trading partners and suppliers electronically on a per-transaction basis. P2D said the system offers all the benefits of traditional Electronic Data Interchange systems at a fraction of the normal cost.
The P2D platform acts as an electronic hub that receives documents as data files from New Look suppliers, or as images of physical documents from the Kodak i160 scanner that was purchased at the same time that the P2D service was rolled out.
Data is extracted from the images using rules-based optical and intelligent character-recognition technology. Supplier invoice files can be accepted in formats such as CSV, XML and Webform, or from the accounting packages used by mid-sized companies, such as Sage, Quickbooks and Pegasus.
With P2D, documents are transmitted directly between New Look and its suppliers' systems, removing costly and error-prone data-entry processes. Each transaction is delivered for a fixed cost of 25p.
Simon Boyne-Manchee, New Look's senior financial systems analyst, said the cost compared favourably with time-consuming postal alternatives, and it was cheaper than developing and maintaining an in-house automated system. He estimated that the system was saving the company two-thirds of what was previously being spent on these processes each year.
About 120 of the retailer's suppliers have signed up to the system since it went live earlier this year, and 300 are expected to be online within six months, with support for the transition provided by P2D.
"The P2D system tracks invoices from creation to delivery," said Boyne-Manchee. "It will scale with us as we grow with new stores and franchise operations, allowing us to know what our costs are going to be. We are also getting a lot more data. Manual procedures just cannot capture all the data."