Opinion: Enterprise-level Web 2.0 apps are coming. But first large companies need to understand the value proposition (not the feel-good proposition) of Web 2.0.My first job after college—after I came back from Tuscany where I killed pigs for four months (true story)—was working for a small software company in Virginia. The company was founded in 1994, and its client roster was impressive: four of the big five accounting firms, Blue Cross Blue Shield, and IBM, just to name a few.
During my two plus years there, we went from 14 employees to a high of 50-plus, received a round of funding, and turned a web-enabled thin client piece of enterprise software into an elegant, Web-based solution.
During those two years, guess how many new clients we won? Zero.[1]
It wasn't for lack of effort from the salesforce, or for lack of a good product. No, the companies we were selling to were all huge national or multinational corporations. Our software required the agreement of several of the buyer's departments, from the guys rockin the pinstripes (the execs) to the guys rockin the mustaches (the facility managers). What we needed was a shorter sales cycle, a very, very big salesforce, or some combination of the two.
And that, in a nutshell, is why there are so few enterprise "Web 2.0" applications. It's often difficult and costly to sell to big business. On the other hand, it's relatively easy to explain the value proposition of a free online calendar. Maybe that's why there are so many.
The enterprise is a slow-moving behemoth. Because of their bureaucratic and hierarchical structure, ideas largely flow from the top down. An enterprise company is not unlike a planned economy, and therefore it's nature is nearly antitheitical to the open community/conversation paradigm that is Web 2.0.
Recently, there's been some discussion on the Web and in conferences exploring the idea of Web 2.0 in the enterprise. The upcoming SPARK and Mix06 conferences in Las Vegas (the original gambling 2.0) are just two examples.
Those conferences will doubtless explore some of the other issues affecting adoption of Web 2.0 technologies and ideas in the enterprise:
1. Enterprise software needs to be personalized for each company, and enterprises have also invested heavily in legacy software. Products for the long tail and SMB market, where 72 million businesses spend $5k or less each year, are a much easier play.
2. Enterprise IT groups are entrenched. For example, Ziff's IT group is a Windows shop. No matter how much I complain, I won't ever get a PHP-based blogging app.
3. The "innovation from the bottom up" paradigm of Web 2.0 is inherently unpredictable, and thus risky to invest in.
4. No standards. For example, blogs are a relatively old Web 2.0 technology, and yet only today did Six Apart announce an initiative to make trackback a standard.[2]
5. Hosting is still scary. Exhibit A: Salesforce.
The good news is that the Web 2.0 idea is schooling a new generation of corporate management and executives in the benefits of service-oriented architecture (SOA), Software as a Service (SaaS), and beyond. Phil Wainewright and Dion Hinchcliffe are doing a great job in their respective blogs following this discussion.
Enterprise-level Web 2.0 apps are coming. But first large companies need to understand the value proposition, not the feel good propostion, of Web 2.0.
Next Page: Examples of enterprise-ready Web 2.0 apps.
Are there currently any enterprise-level Web 2.0 apps out there? Sure, there are quite a few. If I had to place my bet on anything, it'd be on companies that enable connectivity between open applications on an enterprise level. For instance, I've heard good things about Strikeiron.
Other apps to note are below. Some aren't totally enterprise-ready, but they're a good indication of where the market is heading/has gone:
1. Zimbra
I met these guys briefly at the Web 2.0 conference last year. If you were there, you remember how the crowd went wild when they demonstrated automatic address mapping and automatic recognition of key items in e-mail like purchase orders and telephone numbers. This is a true enterprise mashup app. But, while I've never been around a Zimbra server installation, I imagine the change management and personalization process for each company is a substantial undertaking. Not a dealbreaker to be sure, but nonetheless something that investors and inventors consider before investing or inventing. Mike Arrington also recently profiled a similar company called Foldera.
2. Adobe Flex
Plug and play app creation. More powerful than Flash. Like Zimbra, Flex has a great GUI. Another great thing Macromedia did before being scooped up by Adobe was changing the licensing model for adopting Flex. They understood that enterprise adoption was hard, so they made licensing flexible to get a foot in the door.
3. Microsoft Office Live
While this suite is aimed at the SMB market where Microsoft derives 40% of their revenues, Microsoft execs have mentioned that there's no reason the services couldn't eventually scale to the enterprise level.
4. 24SevenOffice
I've seen these guys mentioned on a few blogs, but haven't spoken with them myself. They tout themselves as a web-based "economy and administration system," but I think they mean web-based back office, including customer relationship management tools, invoicing and tracking tools, scheduling, etc.
5. Salesforce, Netsuite
These two companies are increasingly at loggerheads, especially now that NetSuite has upped the ante by offering the NetFlex Applications Program, which allows third-party vendors to tap into information in NetSuite and supply that to their applications.
Web 2.0 is coming to the enterprise. It will take good faith efforts on the part of all departments involved, But good companies know the value of teamwork. And teamwork, after all, is the original mashup.
[1] Technically, I think we won one client, but we had yet to implement our software beyond the test phase when I left.
[2] Six Apart is a good company with a good business plan, and I applaud their efforts. My point is not to criticize them, but to illustrate the lack of standards.
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