Growing Pains: Can Web 2.0 Evolve Into An Enterprise Technology?

By Andy Dornan

Forget outsourcing. the real threat to IT pros could be Web 2.0. While there’s a lot of hype and hubris surrounding wikis, mashups, and social networking, there’s also a lot of real innovation–much of it coming from increasingly tech-savvy business users, not the IT department.

“We’ve cut IT staff by 20%, and we’re providing a whole lot more in terms of IT services,” says Ken Harris, CIO at nutritional products manufacturer Shaklee. Harris started with a mashup platform from StrikeIron; he found mashups such an effective way to integrate multiple Web services that he turned to Web-based service providers to replace in-house functions. Now, Shaklee gets its ERP from Workday and search from Visual Sciences, and it’s looking at other IT functions that software as a service can replace.

And Web 2.0 means more than just SaaS. Though the term is often abused, all the various technologies, products, and sites grouped together as “Web 2.0” do have one thing in common: interactivity. Web 2.0 is designed for two-way communication. At the technical level, it replaces static HTML with (usually) JavaScript apps that continually send and receive small chunks of XML or text. At the social level, it means Web sites that let people communicate, not just read or shop. Instead of passive consumers, Web surfers can become active creators.

All that interactivity ought to make Web 2.0 ideally suited for business use. Most workplaces are about production, not consumption. However, enterprises lag far behind consumers in adoption of Web 2.0 technologies. What’s more, our online poll shows that interest in technologies such as blogs, wikis, and mashups has gone down during 2007, despite explosive growth outside the firewall.

Part of the reason is that business users already have access to more sophisticated versions of the same technologies. Blogging is publishing, a wiki is a CMS (content management system), and Ajax is a more standardized way of achieving what many internal enterprise apps already do with ActiveX or Java. Now, that doesn’t mean new technologies can be ignored–their lower costs and simpler administration mean they will quickly overtake legacy platforms, and already have done so in some areas. But it does mean they need to fit in with their predecessors.

WIKI WISH LIST
“It’s awful having an artificial distinction between a wiki and a CMS,” says Aaron Hathaway, CIO at investment bank Prager, Sealy & Co. In common with most of the users in our poll, he sees wikis as having greater use within enterprises than other Web 2.0 technologies such as blogs. Wikis’ other big attraction is that, in keeping with their collaborative nature, almost all of them are free.

Hathaway started using wikis four years ago to manage the IT department’s internal documentation, but soon saw that the technology could be more widely applicable. In 2005, he decided to roll out TWiki, a popular enterprise wiki whose other users include Yahoo and British Telecom.

It was a decision Hathaway came to regret in fairly short order.

The problem was that TWiki couldn’t easily share data with Alfresco, the bank’s open source CMS. Users who needed information had to look in both, while those adding documents risked duplicating effort. The bank didn’t want to give up on either, so Hathaway turned instead to Deki Wiki, which is also open source but backed by a commercial vendor, MindTouch. Deki’s Web services API eases integration with other applications. “It means a Google map can show up on a Deki page, and we’re building an über-search,” he says. “In my ideal setup, Deki would be a front end to Alfresco.” The API also lets the wiki use the bank’s existing security architecture to limit user access to specific pages, important for preserving the wall between analysis and sales. According to Hathaway, the wiki is now providing a real return on investment.

A wiki is easier to use than a full CMS, but on its own it can’t yet provide some CMS functionality, such as working with documents and files. This has led several wikis to add extension capabilities, such as Deki Wiki’s API. TWiki also has a plug-in system that lets programmers extend it without editing source code; more than 200 modules are already available to cover applications such as calendaring and automated editing. The most ambitious is IBM’s QEDWiki, which aims to be a platform for user-created mashups and other simple applications, rather than just content. The mashup aspect empowers users even more than the “edit” button and also helps integrate the wiki with IBM’s other applications.

Still, companies like Prager, Sealy can’t abandon their content management systems just yet, and the most popular collaboration platform remains Microsoft SharePoint. SharePoint also is at the center of Microsoft’s online Office Live strategy, best described as “software plus service.” Rather than a Google-style suite of online apps that would compete with its own products, Microsoft sells SharePoint and Outlook as services, with a subset of the full functionality soon to be available at no cost. Users still need a client-side application to edit documents, theoretically giving them the best of both worlds–and preserving Microsoft’s Office revenue stream.

A SOCIAL ENTERPRISE NETWORK?
Of all Web 2.0 technologies, social networking is the one that gets vendors and venture capitalists most excited. At least 17 startups are pitching social networking technology to business customers (see table, Social Networking Technology Startups), while countless social networking Web sites are chasing individual users. But it’s also the one about which our readers are most skeptical: When asked to rate the value of technologies, 68% say that public social networking sites are of no use at all. Only 5% rate any kind of social networking as very useful.

Still, one type of company finds these public sites very exciting: recruiters.

“We have great expectations for Facebook,” says Jason Blessing, general manager of the small and midsize business division at recruitment service provider Taleo. “The thing we really like is that it has a heritage from the top universities, and it’s a place where the Gen Y’s or millennials like to hang out.” His company rolled out a Web service that its SMB customers use to advertise jobs through Facebook’s API, letting users recommend their friends (or friends of friends of friends) for specific positions.

Rather than joining the big social networking sites, many enterprises are trying to compete with them. Though few respondents to our poll have yet added social networking to their Web sites, many of the startups pitching the technology have scored big-name customers. The media industry is particularly well-represented among clients of companies like KickApps and Leverage Software, with newspapers and TV stations trying to find a way to keep their audiences interested. The panic is driven by surveys showing that people under 24 prefer user-generated content and connections with others over traditional media.

Other enterprises can benefit from setting up social networks as a means to communicate with customers–and let customers communicate with one another. The big question for enterprises: Do we buy dedicated social networking technology or wait until it becomes a standard feature of Web servers and hosting services?

THE SEARCH FOR A BUSINESS CASE
As the table below shows, startups differ widely in how they sell their technology, or in some cases, give it away. The majority have SaaS business models, but some sell software or appliances. Free services can seem attractive, but in most cases vendors retain ownership of users’ data, something that could threaten both trade secrets and customer privacy. This is a particular risk given the likely fate of at least some startups–privacy policies and contractual obligations don’t always survive bankruptcy and liquidation. Though they all try to sell to enterprises, some vendors such as Pringo Networks and Kick Apps are finding that their largest market is niche sites, where social networking is an end in itself. These sites are essentially in the media business, with business models based on selling ads. They’re betting that users will ultimately be more loyal to sites narrowly focused on an industry, sports team, or hobby than a giant network that anyone can join. The relatively few vendors focused on social networking for use within an enterprise intranet, such as Awareness Networks and Tacit, often provide these features as part of a larger Web 2.0 suite that includes blogs and wikis.

When database vendor Endeca wanted to roll out a social networking site aimed at customers and system integrators, it rejected off-the-shelf software in favor of a homegrown system. Though enthusiastic about social networking for customers, Endeca isn’t convinced it has a role to play internally. “We’re still holding off on what the ROI is for our own employees,” says Colby Dyeff, Endeca’s IT manager. “It’s hard to say if that’s a valuable use of their time.”

Many of Endeca’s contributors are system integrators selling their expertise, giving them a direct financial incentive to be highly rated. But the same lessons can apply to social networks elsewhere, where rating content is also a way to help people find others with similar interests or locate related information. The former isn’t of much use within an enterprise, but the latter could be, especially given the poor state of enterprise search compared with the big Internet search engines.

This kind of tagging isn’t strictly social networking, so it’s usually described as social bookmarking, based more on Del.icio.us than MySpace. It’s a big part of Connectbeam’s social networking appliance, as well as new Web 2.0 platforms from IBM and BEA Systems. IBM’s system is called Dogear, part of its larger Lotus Connections suite that also includes blogs, wikis, and shared workspaces. BEA’s entry, AquaLogic Pathways, is sold alongside its Pages and Ensemble mashup tools. Both products are relatively new, as is the concept of enterprise social bookmarking itself.

Relatively few vendors are pushing full-scale social networking for intranets. Of those that are, Visible Path is the most ambitious. Its service tries to span the extranet as well as intranet, linking staff to contacts within other organizations as well as their own. Its pitch is heavily oriented toward sales staffers, who can use social networking as a way to reach prospects, as is its own go-to-market strategy: Rather than sell directly to enterprises, it prefers to go through partners like Oracle and Salesforce.com, whose CRM systems its social networking is integrated with. Most people won’t join a social network just so that salespeople can contact them, of course, so Visible Path emphasizes its security and privacy controls at both the individual and corporate levels. Users can decide what sort of introductions they want to receive, while companies can override employee choices. That might seem to make Visible Path impractical as a sales tool, since blocking unsolicited sales pitches is a no-brainer. According to its users, however, this isn’t necessarily the case.

“People don’t have to be users to be accessed through it,” says Rod Morris, VP of business information solutions at LexisNexis. Morris uses the tool to promote his company’s ExecRelate service, which tracks relationships between C-level executives and board members in publicly traded companies–people who are more likely to rely on the old-boy network than LinkedIn or Twitter.

FREE FOR THE TAKING
Still, vendors will have to show hard ROI before these technologies will be adopted by enterprises, and that could be difficult with so many free alternatives. The long-term evolution of Web 2.0 in business is likely to trace a path similar to that of instant messaging, which has comparable social characteristics to wikis, blogs, and social networks, and initially followed a parallel adoption curve in business. IM was brought in by people who used it in their personal lives, and though many people resisted it at first, IM quickly became an enterprise staple: Three-quarters of all organizations in our survey use it; half say they find it very useful or critical to their business.

So far, so much like any other technology. Home users are driving innovation, so it’s no surprise to see the enterprise lagging. But unlike the PC a generation ago, IM has managed to colonize the workplace without going native. Despite frequent warnings from security vendors that unrestrained use of consumer IM technology can violate privacy policies, give attackers a back door into the network, and even send executives to jail, most companies happily use the same free services as teenagers. Fewer than 30% of respondents in our online poll have enterprise IM servers such as Lotus SameTime. Actual use is likely a lot lower, as staff in many companies ignore the officially sanctioned software and install their own. The move to enterprise voice over IP is bringing other players like Cisco Systems into the IM game, attempting to converge IM’s presence features with telephony, but they could be too late. The public IM services are already integrated into cell phones, another technology frequently used in the workplace but not controlled by IT.

IT’S LOOSENING GRIP
Loss of IT control is a consistent theme as Web 2.0 penetrates business. The greatest upheaval is likely to come from enterprise mashups, which combine the social and technical aspects of Web 2.0 by letting users develop their own applications. Though very few businesses use mashups at present, those that are see great benefits, and larger players such as BEA, IBM, and Oracle are entering the game. Cutting out the middleman–that’s the IT department–can be a great way of aligning business and technology.

“Mashups have let end users do more of what used to be done by IT,” says Warren Breakstone, executive VP in charge of client services at investment tools provider Thomson Financial. Although not in the IT department, Breakstone started using a hosted mashup service from Serena Software and now runs a team of business analysts who develop Web-based applications for sales, marketing, and other personnel. “Now we’re moving into traditional IT services: The IT department is using apps that we built.”

Breakstone says this doesn’t bring his team into conflict with the IT department. “It frees IT up to do those mission-critical tasks behind the scenes,” he says.

IM itself is already giving way to newer technologies that are even further outside IT’s control. The leading candidate so far is Second Life. Though often seen (and increasingly scoffed at) as a marketing vehicle, its true potential is as a glorified chat room. Like IM, it’s free, but it gives users a more immersive experience and is designed for multiparty conversations.

“We found that Second Life allows more user engagement than traditional video or phone conferencing,” says Breakstone, who is testing Second Life as an environment for meetings. “One employee told me, ‘I’ve participated in lots of meetings and I tend to be very quiet, but I felt very comfortable opening up in Second Life.'”

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