The Web 2.0 effect

When the dotcom bubble burst in 2001 there was an understandable backlash against all things connected to the Internet. It was the best thing that could possibly have happened to the World Wide Web.

Certainly, from the perspective of business, the community of Internet sites that we have since learned to refer to as Web 1.0 was more of a hindrance than help. Under the assumption that ‘if we build it they will come’, early developers of commercial web services had rushed into cyber-space using screen-scraping development tools to grace antiquated COBOL programmes with web front-ends. The result: thousands of unstable, insecure and difficult to use websites that attempted to create 21st Century business models in 20th Century technology bottles. No wonder so many went bust.

Now that the dust is settling in on Web 1.0, it is clear that the next generation of web-based businesses will be very different – not least because instead of harnessing new technology to old business models, this time new technology is being used to build new business models. Indeed, in some instances, it is possible to argue that Web 2.0 the technology is also Web 2.0 the business model.

Take Google for instance. To most people’s eyes Google is still essentially a search engine provider – a software company whose product happens to be accessible via the web and, in the case of the majority of its users, without charge. However, this simple view of Google is very deceptive. In reality, Google is a fundamentally different kind of software company that is pioneering a fundamentally different way of doing business.

Now that the dust is settling in on Web 1.0, it is clear that the next generation of web-based businesses will be very different.

Whereas a company such as Microsoft exists to develop products that it licenses to paying customers who deploy and manage them themselves, Google develops “services” that are accessible to anyone with a web browser, and paid for according to a sliding scale that reflects the relative “value” derived by the services’ user. In Google’s case this departure from the norm has allowed it to create an entirely new way of selling advertising space, and build a $160 billion business in a little over eight years.

Services 2.0

Other examples of what it can mean to be a Web 2.0 business include eBay, Amazon, and MySpace. The auctioneer, retailer and social networking website are each very different enterprises with distinct business models, but they are also each underpinned by one or more common features that are coming to be regarded as characteristic of the Web 2.0 organisation.

The most obvious of these is the web service model. Like Google itself, eBay et al are purpose built to operate over the web, and their “services” reflect this. The underlying application software, for instance, is always hosted remotely from the user – hiding its complexity behind deceptively simple user interfaces.

More than this, some of the service features, including the essential data needed to conduct a transaction or answer an enquiry, may be broadly distributed across the web and held in places that might not be owned or controlled by the provider. In these circumstances web services are essentially created on the fly – responding to the specific demands of individual users by dynamically discovering and deploying appropriate logic and data as required.

At the moment, true industrial-strength examples of this kind of dynamic web service delivery are few and far between. Indeed, talk of such web-driven service “mash-ups” greatly exceeds their creation and is likely to continue to do so until the standards effort needed to create the Semantic Web (see page 52) are more advanced. Nevertheless, the philosophy engendered by Web 2.0 businesses are already provoking great change, not least in terms of organisations’ perceptions of not only how IT services should be delivered, but also of how they may ultimately be owned and paid for.

Last year, according to Gartner, software-as-a-service (SaaS) accounted for just 5% of all business software deployments but by 2011 the research company expects this figure to be more like 25%. SaaS is changing the way that IT buyers think about software, and a major factor in its growth is the success that Google and other Web 2.0 businesses have had in convincing IT users that the web – rather than any specific set of physical hardware resources – is a fit and reliable platform for sophisticated software services.

Ultimately indeed, it is the underlying philosophy of Web 2.0, rather than so-called Web 2.0 technologies that may yet have the most widespread and lasting impact on corporate IT strategies. At the heart of this philosophy is a network-centric view of IT resources that rejects the traditional “walled garden” view of computer systems, and which some commentators have referred to as “architecture of participation”.

This open approach to the shared use of IT resources is already evident in the enthusiasm with which some organisations have embraced Web 2.0 concepts like Wikis and blogs.

Such “social network” based ways of information dissemination and management make a virtue of ideas, such as end-user management and control that contradict most traditional approaches to, for instance, content management.

See also: Web 2.0 adoption faces workplace challenges

Lee Biggins

Lee Biggins developed as an entrepreneur selling cold cans of fizzy drinks to fishermen on hot days, to running his own car washing empire as a teenager. This spirit carried through to the developmental...

Related Topics

Web 2.0