Businesses are missing out on Web 2.0, says Gartner

While Web 2.0 offers many new opportunities for companies to grow their business, few enterprises realise how to implement the full range of capabilities to succeed, according to new research by Gartner.

By 2008, the majority of Global 1000 companies will quickly adopt several technology-related aspects of Web 2.0, according to the market analysts. But they will be slow to adopt the aspects of Web 2.0 that have a social dimension, and the result will be a slow impact on business.

The challenge is that Web 2.0 is not just a set of technologies, but also has attributes that have a social dimension: new business models, user-contributed content and user-generated metadata, more open and transparent business process, simplicity in design and features and decentralised and participatory products and processes.

"While it is straightforward to add specific technologies, such as Ajax or RSS to products, platforms and applications, it is more difficult to add a social dimension," said David Mitchell Smith, vice president and Gartner Fellow.

"Adding these new aspects requires rethinking the design of the system and possibly its target audience," he continued. "It is therefore more challenging than a cosmetic makeover to the application via Ajax, because it can imply significant changes to the development process, business model and perhaps even the mission of the system under construction."

However, missing out on the non-technology aspects of Web 2.0 means that many organisations will also miss out on some of the positive business benefits, he warned.

Web 2.0 represents a fundamental shift toward a more open, flexible and participatory model for creating content systems and business models. Its application can reduce costs, enhance adaptability and create new business opportunities. However, success requires a structured evaluation of its impact on people, business process and technology.

"By enabling decentralised innovation, Web 2.0 catalyses rapid user/consumer-driven change, which will accelerate market share growth for companies that exploit it,” Mr. Smith said. “Web communities provide rich new interactions among employees, business partners and customers that can either support or threaten the enterprise, depending on how these interactions are managed. In addition, web architecture provides an adaptable technology model and requires significantly less-expensive infrastructure to deliver these benefits.”

Gartner analysts said the broad impact of Web 2.0 is potentially compelling and confusing and can be broken down into three key focal points that deal with technology issues, people issues and business issues:

Web architecture focuses on the web’s technology architecture and development model which is a subset of service-oriented architecture (SOA) that provides a globally linked, decentralised model that is network-centric and extensible. It is currently characterised by technologies such as Ajax and composite applications delivered as “mashups” — a website or web application that combines content from one or more sources, such as merging Google Maps with data from Fandango.com.

Web community focuses on the fundamental shift in how people are using technology to interact with one another and with businesses. Web community is a participatory approach in which users are not simply service and content consumers, but also act as content and application creators becoming networked collective intelligence. Web communities are characterised by the use of collaborative authoring models (wiki, blogs and podcasts) and social network community models (MySpace, TopCoder). As the number of participants and types of collaborative models continues to grow, power will increasingly shift to the consumer, forcing businesses to proactively market to and analyze community influencers.

Web business focuses on the web's business processes and deals with a fundamental shift in how businesses deliver value. It is distinguished by empowering third parties and consumers to repurpose content and services in new and unique ways. It relies on an open and extensible business ecosystem, embracing greater reliance on and collaboration with externalities. In addition, it employs new legal structures for intellectual property such as open software licensing, as well as new economic paradigms such as advertising, usage and subscription, as well as derivative revenue models like revenue sharing. Web business models will enable nimble new competitors to succeed and challenge established enterprises to adapt to survive.