Beware Web 2.0

“Business can no longer dismiss the trendy Web 2.0 crowd: participation is mandatory.” So concluded one of two articles on collaborative and social networking technologies in the March issue of Information Age.

The other feature ended on a much more tentative note from Web 2.0 evangelist and Harvard University Associate Professor, Andrew McAfee: “All we have are anecdotes, case studies and a lot of hope.”

The different conclusions, when put together, demonstrate how informed business people are struggling to judge the real potential of so-called Web 2.0 technologies – blogs, wikis, social tagging, mashups and the like. They are hearing that these might turn out to be the most powerful technologies and organisational phenomena of the information age, saving money and unleashing waves of creativity.

The only problem: there isn’t much evidence that Web 2.0 actually works. Indeed, some sceptics are warning that their application, at least within business, will echo the dot-com experience of the late 1990s (albeit on a far smaller scale). Then, billions of dollars were invested in advanced web-facing systems that were inappropriate for the chosen business activity.

Most senior IT executives will weigh up Web 2.0 like any other possible investment, steering a course that is neither too conservative nor too bold. But any buy-in of Web 2.0 is greatly complicated by a big unknown – the behaviour of the humans involved.

To a certain extent, adoption isn’t in the hands of the leadership at all – Web 2.0 is intrinsically participative, and relies on network effects if it is to truly work; while such participation can be encouraged, it not easily directed or controlled. A project that fails with one group of people might succeed with another. Cultural factors, petty jealousies, a tendency to withhold information and an unwillingness to accept change – all these can all kill a project. Web 2.0’s tendency to flatten hierarchies and shortcut processes can be very unsettling to some, while delighting others. Indeed, some CEOs have been known to shut down wikis and blogs because the staff are talking too freely.

One parallel with the dot-com period is immediately clear. The application of Web 2.0 technologies to business is enjoying what Gartner calls a “Peak of Hype”, a time of excitement, frenzy and often absurd exaggeration.

In March, no less than three extensive surveys on the use of Web 2.0 in business were published, and their findings are, as you might expect at this stage, confused. The first of these comes from the Economist Intelligence Unit. The researchers spoke to 400 “C suite” executives around the world, and of those, an astonishing 79% said they expect Web 2.0 to increase revenues and improve margins.

It must be powerful stuff – but wait, there’s a slight problem. A lot of the respondents didn’t know what they were talking about. Jeannette Borzo, who headed up the research, highlights that, given multiple choice definitions, a number of respondents thought that email was a Web 2.0 technology; and only a third identified the ‘network effects’ that form the basis of most strict definitions of Web 2.0. “Because they’ve heard the term, they think they know what it is. They can identify a few of the trees, but not the forest.”

“The sophistication level among the respondents was not high,” concluded Borzo. “In some ways, I equated [their optimism] to the thinking that, by putting ‘.com’ after your name ten years ago, life would suddenly become beautiful.”

Given this insight, it is unlikely that a McKinsey poll in the same arena – albeit of a much larger sample of some 2,800 executives – is more revealing. It asked businesses which Web 2.0 tools they either have today or plan to invest in. The results: social networking (37%), RSS (35%), podcasts (35%), wikis (33%), blogs (32%), and mashups (21%). .

McKinsey didn’t ask about tagging and search, and the inclusion of podcasts is somewhat questionable, so is the conclusion that nearly 40% of enterprises have invested in social networking. Maybe the respondents are thinking of instant messaging or group email as Web 2.0? Or maybe they just mean “we have a pilot project underway”. To put this in context, InformationWeek, a US IT newspaper, found wikis are widely used at 6% of companies, and used effectively by a few employees at 25% of companies.

A third piece of research in March came from Forrester. It found that nearly 90% of CIOs said they had adopted one of the following six technologies: blogs, wikis, podcasts, RSS, social networking or content tagging; 35% said they were already using all six. The most valuable, they said, are RSS, wikis and tagging. (Forrester also found that CIOs would like to be able to buy a ‘Web 2.0 suite’ from an established vendor.)

But there is a problem here: using Web 2.0 for certain projects, such as software development, is not the same as using it for running entire businesses, for ensuring compliance or for managing multi-partner sales campaigns. None of this research has effectively addressed the issue of where Web 2.0 actually works.

Maybe this doesn’t matter. Because a lot of Web 2.0 is low cost, any absence of success may not be too painful. Indeed, as Web 2.0 is supposed to be an “emergent system”, meaning it is self-organising, its value, or otherwise, may take time to become evident. And that is a new way of thinking that plenty people will not be comfortable with.

Ben Lobel

Ben Lobel is the editor of SmallBusiness.co.uk and specialises in writing for start-up companies in the areas of finance, marketing and HR.

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