How business is embracing Web 2.0

The internet is successfully elbowing its way into the corporate world and to stay on top, business must now embrace Web 2.0

MASH-UPS, WIKIS AND BLOGS: the names are commonly associated with the teenage and techie lexicon, but business managers can expect to find these phrases and some of their relatives increasingly elbowing their way into the corporate world.

These technology tools are all part of the stable known by the buzz-phrase Web 2.0, or more generally as social networking technologies, because they are all about allowing people to communicate and easily share ideas and information directly.

Most will be familiar with the principles of Web 2.0 from the consumer sector where they underly services like Google Maps, Wikipedia, MySpace, Bebo and online file-sharing of music and videos.

It may be hard to imagine how technologies that are likely to be more familiar to a 15-year-old student than a 50-year-old executive can be taken seriously. And it is true that these so-called "disruptive technologies" can introduce some fundamental management challenges, requiring managers to rethink typical hierarchies and customer interaction.

Yet industry surveys indicate a positive reaction from businesses that use them and a growing interest from companies that don't yet use them. "All these things that are thought to be consumer services are coming into the enterprise," Ray Lane, the former Oracle president, now a general partner at the venture capital firm Kleiner Perkins Caufield & Byers, told Business Week recently.

Their popularity with online consumers may make businesses consider them merely as work tools, says Cork-based internet and social media consultant Tom Raftery, but some authorities, such as management consultants McKinsey Group, say firms ignore Web 2.0 at their peril.

Already, these tools, when migrated to the business space, are being termed Enterprise 2.0. And while the varied nature of the tools may at first seem confusing, get under the hood of each specific application and what you find is that all are based around user collaboration.

Not just tools for working with information, they are tools for communicating with other people, with some potentially revolutionary effects on how companies are run, and how they interact with suppliers, clients and customers.

Companies as varied as IBM, Microsoft, Proctor & Gamble, Sun Microsystems, Wells Fargo, HP and General Motors have sections of Web 2.0 in place.

According to a recent McKinsey survey of 2,800 executives on Web 2.0, more than half are happy with investments in these technologies and 75 per cent say they plan to maintain or increase investments in coming years.

Executives say they use such technologies for communicating with customers and business partners and to facilitate collaboration inside the company.

And while technology sector companies are the obvious early adopters, 77 per cent of retailers said they would also be doing so, as well as 63 per cent of financial services executives.

"Nearly two-thirds of those whose companies are investing in them think they are important for maintaining the company's market position, either to provide a competitive edge or to match the competition and address customer demand," the McKinsey report states.

Peer to peer networks - most strongly associated with illegal music file sharing - are the single most popular technology, but collective intelligence, weblogs and social networks are also popular.

A December survey of 119 corporate information officers (CIOs) at mid-size and large companies indicated that Web 2.0 is infiltrating the corporate world. Some 89 per cent said their companies were using at least one of five key tools - blogs, wikis, podcasts, RSS or social networking - with 35 per cent using all five.

Web 2.0 tools flatten management structures by giving employees and their ideas a higher profile and removing the power from management "knowledge brokers". They also give customers a more up-front role and with tools like blogs and discussion boards, they have a public voice. "That can be terrifying for a company," says Raftery.

However, the clear and documented movement of so many corporate sectors towards an Enterprise 2.0 mentality indicates this is a very serious trend, both for internal and external company use.

External use of Web 2.0 technologies

INCREASING NUMBERS OF COMPANIES ARE using Web 2.0 technologies to face outwards where they can be utilised by customers and partners.

This is more challenging for companies, says Des McLaughlin of Dublin City University, "because companies can't control what people say. On the other hand, a company can use that - these technologies allow an extraordinary, immediate ability to tap into customers."

Internet consultant Tom Raftery points to blogs as a particularly good and easy way for companies to engage externally, offering a chance to have a dialogue with customers.

While some companies fear readers' ability to leave comments on blogs or discussion boards, Raftery notes that resolving such a problem publicly can be a major gain for a company, now seen to be caring and responsive to customer needs.

As McLoughlin notes, if the problems are there, then they are issues to be addressed; doing this publicly can create a strong picture of an engaged, responsible company. For the nervous, there are libraries of books written on using blogs in a business environment, such as well-known programmer and blogger Robert Scoble's Naked Conversations: How Blogs are Changing the Way Businesses Talk with Customers.

But McLoughlin acknowledges this is an area that has to be handled carefully. "If it goes badly wrong, that's a downside. You can lose control of your message and your agenda."

Indeed, Forbes magazine ran a cover story not long ago headlined "Attack of the Blogs". But Michiel Boreel, chief technology officer with Sogeti, a consulting arm of CapGemini, says: "That is like saying, 'attack of the customers'. A business that doesn't get this, is going to have problems."

The fact that so many companies now have external company blogs demonstrates that in many organisations blogs bring defined benefits: or why would they bother?

IBM has successfully used a chatroom environment faced outwards to generate thousands of fresh ideas. The vast online brainstorming session, called Innovation Jam, brought together employees, academics, business partners, customers and even family members to propose potential areas for innovation and development.

IBM's chief executive, Sam Palmisano, has promised to put $100 million (€74 million) towards good ideas and in 72 hours last July, 140,000 people came up with 37,000 ideas in four thematic areas chosen by IBM. Intellectual property rights will be shared between IBM and the initiator of the idea. The idea was so successful that many client companies wanted to try it out for themselves and Innovation Jam is now a service marketed by IBM.

With so many technologies (many of them freely available), organisations can pick and choose what suits them best for very little cash outlay.

Or, go full throttle and investigate one of the large knowledge management packages such as OpenText, which keeps track of 3,900 blogs, 3,300 wikis, 3,600 project workspaces and 12 million daily instant messages. The sky is truly the limit.

Internal use of Web 2.0 technologies

ANALYSTS SAY INTERNAL USE IS WHERE Web 2.0 technologies are most popular at the moment, where they fall into the general categories of communication and knowledge management.

"All these technologies can dramatically lower costs for businesses, from communication to searching, from interacting to transactions," says McLaughlin. "They also provide a potentially massive opportunity for gathering knowledge within an organisation."

Knowledge management, especially in an era of knowledge workers, is one of the biggest challenges facing organisations, he says. Information that used to leave an organisation when an employee left can now be preserved by getting that knowledge out into shared forms.

Wikis alone help reduce e-mail volume by up to 30 per cent, says Raftery, and are an excellent collaboration tool for group projects.

Technology giant HP uses blogs and wikis throughout the company, says HP Ireland engineering manager Niall Connolly. "We might have engineers in four different global sites and to network them together before would take three or four days. Now, we can set up a wiki in three hours."

Many HP managers in the company's Leixlip facility use blogs for internal communication and discussion. Employees can join in discussions by leaving comments on the blogs where they may put forward ideas in a process Connolly calls "open innovation". Especially productive ideas can be rewarded through the company's recognition programmes, he says.

IBM has a program called ThinkPlace for generating ideas - basically, a giant chatroom that any of the company's 300,000 employees can contribute to. About a third have participated.

"It gets rid of the hierachy that makes people uncomfortable - anyone can throw in an idea - but it also provides the ability to truly innovate. We've had hundreds of millions of dollars' benefit from this," says Paul Baffes, programme director of innovation programs, at IBM.

Ireland is a particularly enthusiastic user of ThinkPlace, he says. In one case, an engineer came up with the idea of writing a piece of code that would enable one database to talk to another. A process that used to take 100 hours of engineering work now is automated and takes 30 minutes, at a savings of $12,000 (€8,890) per query. As at HP, there is a formal recognition programme of bonuses or cash incentives to reward ideas like this.

WHAT'S IN WEB 2.0?

BLOGS(short for web logs) are online journals or diaries hosted on a website often distributed to other sites using RSS (see below).

COLLECTIVE INTELLIGENCEdescribes any system that attempts to tap the expertise of a group rather than an individual to make decisions, such as collaborative publishing and common databases.

MASH-UPSare aggregations of content from different online sources to create a new service. For example, a programme that pulls apartment listings from one site and displays them on a Google map to locate the apartments.

PEER-TO-PEER NETWORKING (P2P)is a technique for efficiently sharing files (music, videos and text) either over the internet or within a closed set of users. Unlike the traditional method of storing a file on one machine, P2P distributes files across many machines. Some systems retrieve files by gathering and assembling pieces from many machines.

PODCASTSare audio or video recordings - a multimedia form of a blog or other content. They are often distributed through an aggregator, such as iTunes.

RSS(Really Simple Syndication) allows people to subscribe to online distributions of news, blogs, podcasts, or other information.

SOCIAL NETWORKINGrefers to systems that allow members of a specific site to learn about other members' skills, knowledge and preferences. Examples include Facebook and LinkedIn. Some companies use these systems internally to help identify experts.

WEB SERVICESare software systems that make it easier for different systems to communicate with one another automatically in order to pass information or conduct transactions.

WIKIS, such as Wikipedia, are systems for collaborative publishing. They allow many authors to contribute to an online document or discussion.

- McKinsey Quarterly