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Web 2.0 Will Get Big Enterprise Bucks
The market for social business technology will grow to $4.6 billion by 2013, but the big players may not be those we know today, according to a new report.
Posted Apr 28, 2008
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Web 2.0 technology is garnering increasingly more attention in the business world, and that attention will translate into market growth. Enterprise spending on Web 2.0 technologies will reach $4.6 billion globally by 2013, according to a new report from Forrester Research. "Global Enterprise Web 2.0 Market Forecast: 2007 to 2013" predicts that of the various technologies (defined by Forrester as those which "enable efficient interaction among people, content, and data in support of collectively fostering new businesses, technology offerings, and social structures."), social networking, mashups, and RSS will lead the spending.

Enterprise 2.0 is still a relatively small part of the overall market, but that will quickly change. "While the spending by enterprise-class companies -- firms with 1,000 or more employees -- will touch $764 million in 2008, the collected expenditure on social networking, RSS, wikis, blogs, mashups, podcasting, and widgets will grow at a compound annual rate of 43 percent over the next five years," writes G. Oliver Young, Forrester analyst and report author. Of those seven technologies, social networking takes the lion's share, accounting for an estimated $258 million in 2008, more than that of RSS and blogs (the next two spend leaders) combined.

Though the majority of enterprise Web 2.0 projects are focused on internal audiences and internal productivity, "[w]hen we look to actual expenditure, however, the disparity is much less pronounced," Young writes. "Forrester forecasts external enterprise Web 2.0 expenditure to pass internal expenditure in 2009 and ultimately dwarf internal expenditure by nearly a billion dollars in 2013."
Forrester narrows the definition of enterprise Web 2.0 to make it distinct from Web 2.0 by removing consumer services like Facebook and Twitter, as well as discounting advertising expenditures on those consumer services. Both relate to Web 2.0, but neither fits an enterprise for purposes of the report -- the former are free services that corporations don't pay for, and the latter provide no access to social technology. Enterprise marketing, collaboration, and productivity are included.

There are dissenting opinions about Forrester's research, revolving around what it calls the ultimate goal of "[using] technology like Ajax, rich Internet applications, blogs, wikis, and social networks to foster productive, advantageous behavior among employees, customers, partners, and other networks," as well as the Forrester definition of Web 2.0. "That's an incredibly loose definition and one that could be applied to any number of technology components from CRM through to supply chain management and pretty much anything in between," writes Dennis Howlett, enterprise software expert, on his blog. "The fact is that with so many definitions floating around, I'm of the view that Enterprise 2.0 does not exist except in the minds of those who are selling technology components. That's not a recipe for success."

Young contends that while the ultimate impact of Web 2.0 will be enormous, the majority of today's hot firms will burn out. "What may ultimately prove to have more value to these firms is the knowledge about how to run a successful SaaS business -- which the vast majority of vendors offer," he writes. "The fundamental problems of optimizing a multitenancy architecture, setting customer service-level agreement (SLA) expectations, and developing an effective sales channel and partner ecosystem are problems that nearly all software markets will face over the next decade. For the vendors that do it well, disaggregating expertise about the medium from Web 2.0 content is likely to provide far more value than wikis and blogs ever did."


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