Web 2.0 Market Update - ROI and Benefits Discussion

What’s happening with Web 2.0 in the enterprise?

With the slowing economy - Web 2.0 is falling under the discretionary spending column due to the belt tightening underway in the industry. As a Goldman Sachs analyst put it, execs are “searching for solutions with a high and fast ROI,” a criteria that is not appropriate with emerging technologies.

According to a Computerworld story about the Web 2.0 market, 63 percent of IT pros say they expect Web 2.0 technologies to have a moderate or significant impact on their businesses over the next three years.

Based on our Helix client experiences helping companies advance their Web 2.0 and SaaS strategies - IT professionals are accepting Web 2.0 tools like: wikis, blogs, podcasting and RSS feeds because their personal usage of these tools is growing. Not surprisingly, however, junior IT professionals are more familiar with Web 2.0 tools than senior management and are keen to unlock these capabilities into the workforce, while companies still battle over :should we make social mediated tools available in the workplace?

According to the Forrester Research, while 80 percent of respondents say that IT is funding Web 2.0 projects, this drops down to an estimated 60 percent, because of the line-of-business projects it thinks are still happening under IT’s radar.

Measuring ROI for Web 2.0 is a difficult topic. According to Forrester research, 22 percent of respondents have not measured the business value of Web 2.0 technologies. The most popular methods of assessing value are traditional measurements such as ROI, employed by 41 percent of companies, and employee productivity surveys, used by 27 percent of companies.

It is very difficult to sit down and create that traditional ROI measurement where you can talk dollars and cents. The benefits are softer benefits … a lot of productivity benefits spread over a lot of different resources.

There appears to be a clear relationship between awareness of tools and their perceived business value. Among the strongest performers in the survey: discussion forums, with 70 percent of respondents saying they yielded moderate or substantial business value; wikis (67 percent); and podcasts (62 percent). Earning fewer votes of confidence were mashups, with 41 percent of respondents saying they provide business value, and tagging (42 percent).

Forrester Research analyst G. Oliver Young said earlier this month about ROI when discussing a Forrester report that indicates a growing acceptance of Web 2.0 technologies among IT personnel that: It is very difficult to sit down and create that traditional ROI measurement where you can talk dollars and cents. The benefits are softer benefits … a lot of productivity benefits spread over a lot of different resources.

While Forrester’s report offers a bullish outlook on Web 2..0, others are less positive. A Robert Half Technology survey shows decent adoption rates and high interest among CIOs for some Web technologies, and strong aversions to others.

According to that survey, 34 percent of CIOs use videoconferencing today with another 18 percent planning to adopt it in the next five years. Also popular were online training, with 47 percent of respondents using it now and 13 percent planning to add it within five years, and collaborative work spaces (Microsoft’s Sharepoint is the example offered by ZDNet’s Larry Dignan), with 24 percent using it now and 19 percent expecting to add such tools.

But check out the Robert Half numbers of CIOs taking a pass on technologies: tagging software (67 percent), blogs (72 percent),wikis (74 percent) and virtual worlds (84 percent). ZDNet’s Dignan expresses surprise at the lack of love for wikis and speculates that maybe they are popular among in-the-trenches types such as software developers and project managers but not among CIOs.

While adoption of Web 2.0 technologies is growing, just 21 percent of companies are satisfied with them, found a McKinsey survey. Twenty-two percent of respondents say they are dissatisfied with such technologies, according to a Network World story about the survey, while the majority of companies are apparently still on the fence. That’s hardly a ringing endorsement.

Among the barriers to adoption: company doesn’t understand the potential financial return (the ROI thing, again), cited by 28 percent of respondents; corporate culture doesn’t encourage Web 2.0 use (22 percent); and company doesn’t provide enough incentives to adopt or experiment with Web 2.0 technologies (20 percent).

More importantly - why do companies adopt Web 2.0 technologies? The top three reasons, according to McKinsey: managing knowledge (83 percent), fostering collaboration (78 percent) and enhancing company culture (74 percent).

What we believe people are missing though in measuring Web 2.0 Value is Brand Risk and Reputational Risk and Talent Attraction Risk -- there are many other harder measurements in collaboration and Web 2.0 business models that people continue to miss out on realizing and communicating.

Sometimes it is just hard to teach and old dog new ways of looking at possibilities that are are new.