Small and medium businesses are quick adopters of Web 2.0, fueled by cost and performance pressures, according to a new study from AMI.
Posted Mar 12, 2007
While analysts continue to argue over the definition of Web 2.0 and many large companies avoid it like the security-breach plague, SMBs are willing and eager to go forth with Web 2.0 initiatives, according to a new report from Access Markets International (AMI) Partners. The study finds that 40 percent of all SMBs are already using Web 2.0 technology. AMI expects that, because even more SMBs are ready to integrate Web 2.0 into their business plans, this percentage will continue to grow.
The definition of Web 2.0 is still tenuous among professionals in the field. AMI defines the concept as, "the second generation of Internet based services, distinguished by the transition of static Web sites to a platform for applications development, creative opportunities for developers and ISVs to monetize new applications in new ways." Web 2.0 applications are often identified as mashups, weblog publishing, folksonomies, wiki software, social networking applications, and the use of microformats. These recently developed applications offer new ways for companies to reach out to and communicate with their customers via the Internet.
AMI's "2006-2007 United States Small and Medium Sized Business (SMB) Market Overview and Comprehensive Opportunity Assessments" finds that 40 percent of SMBs are currently using Web 2.0 sites for business needs. According to the study, 400,000 SMBs in the United States are already employing blogs or Webcasts for advertising or branding purposes, and 260,000 currently use podcasts to communicate with their customer base. Anurag Agrawal, AMI-Partners' chief operating officer, says, "It's extremely hard for [enterprises] because they can't take a small piece of [an] application for 2.0. For them it's a slow, gradual process. For a small business it's a very easy decision. All they need to do is go to a development platform that already exists."
Because SMBs traditionally have small, strained budgets, the inexpensiveness of Web 2.0 initiatives is very attractive to these companies. According to AMI, Web 2.0 gives SMBs the opportunity to leverage normally unaffordable applications. The study cites that as a marker of this trend, the adoption of SaaS is expected to rise from the current adoption rate of 14 percent to 24 percent by the end of 2007.
Another factor contributing to the acceptance of Web 2.0 from SMBs include the opportunity to multiply communication channels without raising costs. According to the study, over a million SMBs in the United States use mobile instant messaging while 400,000 use Skype (both free, Web-based services). Additionally, the study found that 20 percent of the companies surveyed use online communities and portals for doing business.
Agrawal says that he expects attention paid to Web 2.0 technology among small businesses to continue to grow in the upcoming year. However, he argues that to achieve success with these initiatives, SMBs should invest time into understanding what Web 2.0 truly means for their company. "Application vendors have to continuously educate these small businesses as to the utility of Web 2.0 applications," he says. "I think that education has not yet started."
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