Web 2.0 The term Web . refers to a perceived
second generation of web development and design, that aims to facilitate
communication, secure information sharing, interoperability, and
collaboration on the World Wide Web. Web . concepts have led to the
development and evolution of web based communities, hosted services, and
applications such as social networking sites, videos sharing sites, wikis,
blogs, and folksonomies.The term first became notable after the Web.
conference in . Although the term suggests a new version of the World
Wide Web, it does not refer to an update to any technical
specifications, but rather to changes in the ways software developers
and endusers utilize the Web. OReilly has said that the . refers to the
historical context of web businesses coming back after the collapse of
the dotcom bubble, in addition to the distinguishing characteristics of
the projects that survived the bust or thrived thereafter.
WEB 2.0 – POTENTIAL IMPACT ON BUSINESS
INTRODUCTION
Over the past few years, there has been a proliferation of innovative web-based
services that have gained huge popularity in the marketplace (Flickr, LinkedIn,
MySpace, etc.). At the same time, some of the early web pioneers (eBay, Amazon
and Google) have established themselves as powerhouses in their respective
industries, and have evolved well beyond their original scope of business. Taken
separately, these companies appear to have little in common; however, when
examined together, these companies share several business model and use of
technology traits that are intriguing. For example, all have harnessed the power of
the web to:
• Create rich, meaningful user experiences
• Allow people to easily locate and collaborate with others of like interest
• Support the quick and easy creation of content
• Gather, store and leverage large amounts of information to create value
This change of focus – from using the web to deliver information to creating and
delivering robust services is often referred to as Web 2.0. The term Web 2.0 was
first coined by Tim O’Reilly (renowned author and publisher) to describe this
transformative use of the web, and has since gained wide adoption. As with most
advances, it is the confluence of the technology trends and business models that
makes Web 2.0 significant.
Understanding the competitive advantages presented by these web business
models and technology trends will give COMPANYABC the opportunity to better
leverage the web as a “platform”. The remainder of this paper will examine Web
2.0 and what makes it different from both business and technological perspectives,
and then explore the value proposition, and how COMPANYABC can best leverage
this trend.
WHAT IS WEB 2.0?
In the mid-1990s, the Web emerged as a disruptive force, changing the way
businesses communicate with their customers, suppliers, and employees while at
the same time enabling increased efficiency. With Web 2.0 there is an even more
significant shift occurring in business as we know it. The Web is now seen
increasingly as a ‘platform’ for innovation, interaction and service delivery. It has
developed as a collaboration tool, meeting space, service portal, and strategic
weapon, and companies ignore this market force at their own peril.
Maturing Wired &
Wireless
Broadband Public
Infrastructure
IT Savvy
Employees
Demanding More
From Technology
Software as a Service
(Saas): Massively scaleable
with relentless pressure for
continuous improvement
Innovative
Business Models
Based on Previous
Successes
Web 2.0
A Platform for
Disruptive Web-Based
Business Models &
Applications
Mashups: Quickly & easily
linking independent services to
create new capabilities
Rich, Responsive, Highly-
Interactive, Web-Based
User Experience: The user
experience of client/server
without the management
headaches
‘Variablize’ Who Pays for
Software: e.g., advertising
drives innovation – not
software sales
Harnessing the Collaborative
Power of the Masses: Social
networking and collaborative
technologies creating new business
opportunities
Figure 1: Web 2.0 Market Forces and Effects
As Figure 1 depicts, there are 4 primary market forces that are converging to
enable this shift:
1. The Web always promised access to information, but in the past, we were
limited by availability of bandwidth to the home or office. With the adoption of
both wired and wireless broadband, those limitations have been removed,
enabling ubiquitous access to new kinds of data as well as massively scalable
applications that serve hundreds of millions of users.
For example, using broadband “fat pipes”, Netflix and TiVo plan to join forces.
Subscribers who belong to both services will be able to download their Netflix
DVDs over the Internet directly into the TiVo boxes in their homes, instead of
receiving DVDs via the postal system. The infrastructure is being deployed
and all that remains is agreement on distribution licenses from the studios.
2. IT-savvy employees and customers are demanding more service offerings,
higher capabilities and enhanced performance from technology. Rather than
making due with what the market supplies, these savvy users are teaming with
suppliers to co-create value, fine-tune services, and dramatically change the
marketplace.
A recent CSC and Financial Times study of US and UK subscribers found that
two thirds of respondents had equipment at home that was as good as or
better than the equipment they had at work. These people are
COMPANYABC’s employees, suppliers and customers. They use advanced
technology (like Web 2.0 applications) on a regular basis, meaning that
consumer adoption drives them to aggressively apply new technology when
solving business problems.
3. Over the past decade (and especially the past few years), businesses have
gained a deep understanding of how to best leverage the Web.
There are established leaders with proven business models acting as a beacon for new
business opportunities. The lessons learned from these trailblazers have been
well studied and publicized, and the broader business community has taken
notice. More companies are leveraging the web to effectively partner with their
customers, suppliers, and employees.
Refer to Appendix A for examples of successful companies that leverage Web
2.0 concepts and principles. These include companies such as Google,
BitTorrent, Wikipedia, etc.
4. Standards-based architectures have been adopted that allow services to be
easily accessed and reused. In the past, integrating components from
different service providers required tremendous coordination and was very
costly. Now, users can combine components very quickly often without prior
coordination. Additionally, new technologies such as AJAX (Asynchronous
JavaScript and XML) and Intelligent Documents (refer to CTO’s white paper
Reducing Paper in the Enterprise using Intelligent Documents) enable much
more dynamic and user-friendly interfaces.
For example, Prudential Real Estate was able to quickly create a new webbased
application (a.k.a., Mashup) using the Google Maps and Google Earth
services. Since Google’s application programming interface is open to the
public, extensive coordination and meetings were not necessary. Instead,
Prudential Real Estate quickly created and deployed a new AJAX-enabled
application that displays listings on an interactive map,
http://map.prupref.com/.
This convergence of market forces has forced the web to evolve from an
information and transaction based tool, into a platform for new disruptive business
models and applications. The disruption comes from leveraging the web to
challenge many of the tenants of traditional business models. For example, at the
end of 2005, global advertising expenditure was estimated at about $600B. Google
has become a darling of Wall Street by managing to capture just 1% of that
advertising spend. They went from being a simple search engine to Web 2.0
powerhouse by giving away software services like search and Gmail to consumers.
Now widely adopted and a household name, Google is competing with Microsoft to
host email for business domains. Moving forward, expect vendors to increasingly
provide a wide array of enterprise capabilities especially those capabilities that
allow them to capture data about users and offer targeted ads. The Web 2.0 model
profoundly changes the economics of the software business, and dramatically
changes the methods we use to reach consumers. The impact of these changes
will be felt across all industries, and in business arenas of all sizes.
The right side of Figure 1 organizes the impacts of Web 2.0 on businesses and
applications into 5 areas. Details on the impacts are offered below.
HARNESSING THE COLLABORATIVE POWER OF THE MASSES
When companies traditionally think of IT applications, back office systems that
automate repetitive processes (e.g., accounting, procurement, back office, etc.)
typically comes to mind. However, Web 2.0 applications are highlighting
applications that support far more complex and dynamic business processes.
These are collaborative applications that include social networking, idea sharing
and expert/knowledge locators. Companies, like P&G, IBM and Microsoft, are
leveraging these collaborative applications to develop and introduce new ideas,
products, services and practices (refer to the CTO paper titled Strategic Innovation
and the Impact on Collaboration Technologies).
According to Tim O’Reilly “the value of the software is proportional to the scale and
dynamism of the data it helps to manage” , is a fundamental principles of Web 2.0.
In other words, if a company can amass a comprehensive and flexible database of
information, the value of the service will increase greatly. With an estimated 75
million users and estimated revenues of $200M this year, MySpace is probably one
of the best examples of this principle. MySpace has become the predominant
virtual hangout for teenagers. MySpace attracts teens to the site by making it easy
to use, and enabling self-expression and social networking. Using the information
provided by members, MySpace is able to target advertising to its 75 million users.
The service provided is merely a means of accumulating information that is
leveraged into advertising opportunities and revenues.
Another O’Reilly key principle is “the service automatically gets better the more
people use it”. This is certainly true of MySpace, but also applies to companies
such as BitTorrent. BitTorrent has become one of the leading peer-to-peer
networking systems for file sharing of music, movies and software files. The
company takes a radical approach to decentralization. Every client is a server and
files are broken up into fragments that can be served by multiple locations. The
result is that the more popular the file, the faster it can be served. For BitTorrent
(and other Web 2.0 companies), success comes from understanding what Chris
Anderson has labeled “the long tail – the collective power of small sites.”
Information can be amassed and distributed to the edges, with the key to business
value being the algorithmic management and application of the information.
The concept of data assembly by the masses, and leveraging that collective power
is applicable to traditional companies, such as COMPANYABC, especially in the
area of advanced collaboration:
• Prediction Markets are based on the notion that a marketplace is a better
source for insight and predictor of the future than individuals. Companies such
as Microsoft, Eli Lilly and Hewlett-Packard are bringing the market inside, with
workers trading futures contracts on such "commodities" as sales, product
success and supplier behavior. HP's business-services division ran a pilot with
14 managers worldwide, attempting to determine the group's monthly sales and
profit. The pilot was so successful (in one case, improving the prediction 50%)
that it has since been integrated into the division's regular forecasts. These are
excellent examples of how technology is able to gather information from the
“edge workers” to improve performance.
• Wikis allow innovators to collaborate by quickly amassing content via a website.
Using browser-based AJAX technologies, wiki users can add new content and
links, alter existing content and reorganize the site. A wiki operates on a
principle of collaborative trust and self-policing, rather than on centralized
control. This decentralized approach is an important key to a wiki’s value
because it can quickly aggregate the creative energies of a broad group.
Wikipedia, a free, open content online encyclopedia created through
the collaborative effort of a community of volunteers, is the most well
known Web 2.0 wiki. Wikipedia has become one of the most popular
reference sites on the Internet, receiving approximately 60 million hits
per day. Large companies such as IBM, Microsoft, Dresdner Kleinwort
Wasserstein (a global 1000 investment bank) use wikis within their
organizations to capture and share the knowledge of their workers.
• Social Networking Tools help individuals develop, track, and share
personal and professional relationships. MySpace and LinkedIn are
well known examples. These Web 2.0 applications are used by
professionals to maintain personal networks, helping to network both
within business and social communities. Companies often encourage
social networking as a means of expanding relationships and driving
innovation. For example, expert locator systems, such as InnoCentive,
helps find experts on specific topics. InnoCentive maintains a network of over
70,000 problem solvers from around the world. Companies, like P&G, use
InnoCentive to tap into a talent pool residing around the globe to solve specific
scientific problems. InnoCentive is an excellent example of a Web 2.0 company
that is leveraging its database of problem solvers to create a business.
From an enterprise perspective, Web 2.0 provides technology that better supports
‘tacit interactions’ among knowledge workers. Tacit interactions typically involve
two or more people applying judgment or insight to complex communications or
problem solving. Based on a study conducted by McKinsey & Company, tacit
interactions account for 41% of all U.S. worker activity (measured by number of
jobs) and are growing the most rapidly. However, only 24% of software
investments support such interaction, indicating an untapped potential opportunity.
The software required to support tacit interactions is very different from traditional
‘transaction enabling’ software. Tacit interactions require software that increases
access to data and information, supports decisions, improves communications, and
supports multi-party workflow and collaboration1. Web 2.0 applications have shown
themselves to support these types of requirements. Using a Web 2.0 approach,
COMPANYABC could better support a dynamic knowledge sharing environment.
Web 2.0 allows workers to quickly accumulate information using wikis and blogs,
amass and share information from user interactions, and combine multiple sources
of information using Mashup technology (more on Mashups later in the document)
to deliver rich, insightful and relevant business information.
SOFTWARE AS A SERVICE (SAAS)
There are thousands of web-based software services popping up on the Internet.
Figure 4 was created by CSC’s Leading Edge Forum using information provided by
Software as a Service (SaaS) Sightings, Directory and Showcase – a website that
tracks important SaaS businesses, trends and enablers.
Figure 4: Major SaaS Vendors
While SaaS may sound very similar to the Application Service Provider (ASP)
model of the past, SaaS has some significant differences:
• Many of the early ASPs were venture backed startups attempting to
disintermediate large, well established businesses. While there were only a
handful of successes (e.g., salesforce.com), these successes have spurred
innovation. It is now the software companies (big and small) that are providing
their own software using a hosted model. For example, SAP and Oracle will not
only sell you software, but they will now host it for you – i.e., “a one stop shop.”
This has the potential to fundamentally change how companies deploy software
(e.g., renting the software versus buying). There are even vendors, like Cast
Iron Systems, that will sell Integration as a Service (IaaS), allowing companies to
easily integrate across different SaaS providers and internal systems. It is hard
to imagine a software vendor in the future that will not provide an option for SaaS
– either directly or via a third party.
Note: The market may be finally catching up to COMPANYABC’s vision of
leveraging third party vendors to externalize applications.
• In a SaaS model, vendors know that users can more easily switch if they
become dissatisfied. This pressure creates a need for fast-paced, continuous
improvement. Leveraging Web 2.0’s standards-based, easily-integrateable,
hosted software architecture, vendors can deliver enhancements/upgrades on a
much more frequent basis.
Businesses will no longer wait months or years for software enhancements; rather, enhancements will become available on a
continuous basis, creating a software architecture and delivery model that aligns
with the business demand for ‘agility’.
• Even well-established vendors, such as SAP with Netweaver and Oracle with
Fusion, are working to componentize and upgrade their packages to take
advantage of the Web 2.0 software architecture. Componentization is intended
to make software solutions easier to integrate.
• SaaS has been most readily adopted by small to medium size business, but
large companies are starting to follow suit. For example, companies Like AMD,
Staples, Coldwell Banker, Time Warner, Nokia, and Yamaha use salesforce.com
to support their Customer Relationship Management (CRM) processes.
Companies have cited that salesforce.com is less than half the cost to run and
maintain when compared to tradition CRM software such as Siebel. Others
claim that salesforce.com is actually easier to connect to ERP applications, such
as SAP, when compared to traditional CRM software.
In summary, software companies are being pressured to build and deliver their
solutions in a highly scaleable, easily integrateable, on-demand manner. This
environment creates new sourcing opportunities, better business agility, and faster
deployment opportunities for COMPANYABC. Not only should the costs of
deployment and on-going management decrease, but the manner in which software
is funded could change dramatically (refer to the section titled ‘Variablize’ Who
Pays for Software).
‘VARIABLIZE’ WHO PAYS FOR SOFTWARE
As mentioned previously, vendors are likely to provide a wide array of enterprise
capabilities in exchange for data that lets them target advertising – profoundly
changing the economics of the software business. At the end of 2005, global
advertising expenditure was estimated at about $600B – that’s approximately 4 to 5
times what is spent on software. This leads some analysts to consider whether
software has become a “loss leader” in some categories, and ask the question:
what other software can be provided as a service in order to engender trading
partner loyalty, or to accumulate information that can be leveraged to generate
value?
Even Microsoft (one of the companies that benefits most from the current software
sales model) is offering Windows Live and Office Live, online versions of its marketdominant
operating system and desktop productivity software. Microsoft is initially
targeting small business (companies with 10 or less people) with these services
and funding is based solely on ad placement (no cost to the user). Google and
MySpace are examples of companies that provide a free service (search and email
in the case of Google and social networking for MySpace) for the sole purpose of
targeting advertising. Basic accounting and back office software being offered for
free, or highly discounted, is likely to be just months (and not years) away.
RICH, RESPONSIVE, HIGHLY-INTERACTIVE, WEB-BASED USER
EXPERIENCE
Whether they are mashups or custom web-based applications, Web 2.0
technologies allow for a much more robust user experience than traditional web
applications. To understand why this is significant, let’s first review the past:
• Early corporate computing ran on mainframes that provided a poor user
experience – i.e., character-based green screens and no graphics. Additionally,
the architecture was primarily “polling driven” – i.e., the user did not receive
information unless they hit enter. Operational management of these systems
was relatively mature because mainframes were highly centralized and
homogenous.
• In the mid-1980s, client/server computing emerged. The Graphical User
Interface (GUI) provided a superior user experience and replaced the green
screen, polling-driven architecture. These GUI screens could receive messages
from servers, update their displays and notify users of business events in realtime.
Unfortunately, operational management of applications spread across
thousands of desktops became unwieldy.
• In the mid-1990s, the web began to emerge. Users were happy to abandon their
GUIs for a “graphics friendly” interface with a browser. It seemed like a
reasonable tradeoff. However, in many ways, the basic browser is more akin to
the mainframe in that data was only refreshed when the executed a command
that explicitly repainted the entire visible page. Operational management of the
web was simple as most processing occurred on centrally managed
infrastructure (once again, more akin to the mainframe).
Fast forward to today… New technologies such as AJAX provide a rich, interactive
user interface similar to client/server without the operational management
headaches. AJAX applications run within a standard browser using standard web
technology such as JavaScript, Dynamic HTML, Cascading Style Sheets and XML.
Figure 5 contrasts an AJAX application versus a classic web application. In a
classic web application, almost all processing occurs on the server, meaning users
endure painfully slow and frequent page re-draws. As the user interacts with an
AJAX screen, only changed information is passed back and forth to the server via
XML messages. Information can be edited as it is entered and only portions of the
screen need to be refreshed dynamically as the server sends additional
information. Google Maps is an excellent example of an AJAX interface (one of the
first that helped spur AJAX adoption). In another example, the new MSN web
email client is expected to have spell-checking as you type using AJAX.
One of the most significant ramifications of this technology is that over time AJAX
user interfaces can be used to replace existing client/server applications (e.g., the
SAP client), further reducing the need for rigid control of the desktop and giving
employees more choice (i.e., AJAX supports the COMPANYABC PassPort
initiative).
Figure 5: AJAX versus Classic Web App
One note of caution: Because AJAX applications download JavaScript to the
browser, careful design and attention to performance is required. It is estimated
that a complex AJAX screen might require an initial download of 400K-600K of
JavaScript to the browser (once downloaded caching can reduce the future impact
somewhat). While this does not appear large by broadband standards, it could be
significant over a dial-up link. Therefore, it is important to understand the types of
network connections available to the end users and design accordingly.
Standardizing on compact / reusable AJAX libraries where possible is considered a
leading practice. Also, not all web screens or applications need to use AJAX.
Basic informational screens and simple data capture can be satisfied using
standard HTML forms. Use AJAX when a more dynamic, interactive experience is
needed.
MASHUPS
A mashup is a web application that seamlessly combines content from more than
one source into an integrated experience. Content used in mashups often come
from public / third party sources, like eBay, Amazon, Google, Windows Live and
Yahoo, as well as a company’s existing applications/databases. As mentioned
previously, Prudential Real Estate created a mashup by combining content from its
internal real estate listings database and Google Maps (Figure 6 shows a screen
shot of the mashup).
Mashups take advantage of Web 2.0’s componentized, easily
integrateable software architecture. Mashups require minimal
technical knowledge, spurring innovation from both
technologists as well as tech-savvy users, and they
dramatically change how web application user interfaces are
developed.
The benefits to end users are obvious, but the service
providers also benefit greatly by leveraging the collective
power of smaller websites to drive traffic to them (i.e., creating
an eco-system of smaller websites that depend upon their
service). Amazon Web Services and Google Maps API are
good examples. As more applications start to follow the Web
2.0 architecture, the ability to create mashups that drive value
and site visits will increase exponentially.
Mashups by their nature create external dependencies. If a
software service is unavailable, the mashup cannot function.
This risk makes corporations very uncomfortable, especially
when leveraging publicly available services like Google Maps.
Google provides their service free of charge, but Google is not legally liable to
achieve a specific service. Google’s goal is to provide 24x7 365 days availability
and mass scalability to handle peak processing load (they have been highly
successful this far). In this model, companies trust Google and depend on market
forces to keep Google honest (i.e., if Google encounters problems, users will switch
to other services). This approach requires a fundamental shift in thinking for
companies. According to Doug Neal of CSC’s Leading Edge Forum, “It is your
legacy culture, not your legacy technology that will be the biggest barrier to gaining
from Web 2.0.”
Figure 6: Prudential Real Estate Mashup
Consider that Google does not own the patent for the method they use to rank Web
pages in order to improve searches – Stanford University licensed the technology
to Google. It’s not just the “end user” companies that are forced to think differently.
While mashups create tremendous opportunities for vendors to rapidly innovate,
vendors need to think differently on sources of intellectual capital. In the past,
vendors would strive to develop patents that they would use to protect their
solutions – patentable ideas became the differentiator. While this is still good
practice, innovations are coming from multiple sources at an ever increasing rate.
Therefore, companies must also look to external sources for innovations versus
always attempting to maintain control of ideas and innovation in their space.
Mashups deliver collaborative and compelling value, and there are new applications
on the web exploiting this technology every day.
The ability to quickly create mashups has the potential to greatly change the
economics of software development. Applications that previously were thought to
be too costly or too complex may now become feasible. This is an important
change management consideration. As mashups and service-oriented applications
are deployed, both business users and IT staff must be made aware of the
possibilities and the new development metrics, as well as the value proposition.
WEB 2.0 PRINCIPLES
An Internet Week article by Howard Greenstein summarizes key differences
between the Web 1.0 and Web 2.0 models, mainly around the trend towards more
dynamic, interactive, user-driven and -supplied content (figure 7).
Figure 7: Web 2.0 – What’s Changed?
Taking advantage of Web 2.0 will require cultural and behavioral shifts within an
organization. To help ease the transition, this section outlines guiding principles
from Web 2.0 thought leaders Marc Strohlein and Tim O’Reilly
Marc Strohlein of Outsell, Inc. has outlined a set of principles for Web 2.0
entrepreneurs:
• Think Streams, Not Documents. The future of the Web lies in feeds and
streams, not traditional documents. This requires a significant shift in the
mindset of content providers, most of whom are well-steeped in the creation and
distribution of discrete documents, but less experienced in the continuouspublishing
arena.
• Think Platforms. The Web is no longer just a way to present your site to the
world – it is a living, breathing platform for entertainment, business, and
commerce, and failure to recognize that will cripple content providers’ attempts
to remain viable.
• Think Open. One salient characteristic of platforms is that they level the playing
field for vendors and competitors. Web 2.0 is the platform for “cooperation,” in
which content vendors and service providers note their core competencies and
partner with others who may have been traditionally seen as competitors.
• Think People-Power. Clients are no longer just “the people that buy your stuff.”
They not only want, but will demand, to participate interactively with your
content, products, and services. Trying to cut them out of the action is both futile
and illogical, as inclusion will both enhance products, and improve loyalty.
Content providers should experiment with blogs, wikis, folksonomies, and other
tools to find ways to expand reach and improve effectiveness.
• Think Services, Not Products. One of the challenges that could hold back
many content providers from leveraging the full power of the Web 2.0 is a focus
on their offerings as “products,” not services. The new, on-demand Web 2.0
requires a view that melds content, software technology, and people into
blended service solutions.
Tim O’Reilly offers an additional set of Web 2.0 principles:
• The Long Tail. Small sites make up the bulk of the Internet's content, while
narrow niches make up the bulk of the Internet's possible applications.
Therefore, leverage customer-self service and algorithmic data management to
reach out to the entire web, to the edges and not just the center, to the long tail
and not just the head.
• Data is the Next “Intel Inside ®”. Applications are increasingly data-driven.
Therefore, for competitive advantage, seek to own a unique, hard-to-recreate
source of data. Avoid becoming a commodity provider.
• Users Add Value. The key to competitive advantage in Internet applications is
the extent to which users add their own data to that which you provide.
Therefore, do not restrict your "architecture of participation" to software
development. Involve your users both implicitly and explicitly in adding value to
your application.
Network Effects by Default. Only a small percentage of users will go to the
trouble of adding value to your application. Therefore, set inclusive defaults for
aggregating user data as a side-effect of their use of the application.
• Some Rights Reserved. Intellectual property protection limits re-use and
prevents experimentation. Therefore, when benefits come from collective
adoption, not private restriction, make sure that barriers to adoption are low.
Follow existing standards, and use licenses with as few restrictions as possible.
Design for "hackability" and "remixability."
• The Perpetual Beta. When devices and programs are connected to the
Internet, applications are no longer software artifacts, rather, they are ongoing
services. Therefore, do not package up new features into monolithic releases;
instead, add updates and new features on a regular basis as part of the normal
user experience. Engage your users as real-time testers, and instrument the
service so that you know how people adopt and use the new features.
• Cooperate, Don't Control. Web 2.0 applications are built from a network of
cooperating data services. Therefore, offer web services interfaces and content
syndication, and re-use the data services of others. Support lightweight
programming models that allow for loosely-coupled systems.
• Software Above the Level of a Single Device. The PC is no longer the only
access device for Internet applications, and applications that are limited to a
single device are less valuable than those that are connected. Therefore, design
your application from the get-go to integrate services across handheld devices,
PCs, and Internet servers.
WHAT DOES THE IDP VENDOR LANDSCAPE
LOOK LIKE?
It is nearly impossible to find a software vendor these days that has not jumped
onto the Web 2.0 bandwagon.
• SaaS Vendors. As discussed in the Software as a Service (SaaS) section,
thousands of vendors (big and small) are providing their software using the SaaS
model.
• Hosting Services. Many of the traditional hosting firms and system integrators
are getting into the game. They are aligning with software companies to provide
SaaS hosting services. While this may be transparent to the consumer of the
service, it is important to make sure a reputable hosting provider is supporting
the service.
• Platform Vendors. Platform vendors provide tools that enable people to build
Web 2.0 software. These tools fall into three broad categories:
o Web Services tools provide infrastructure to software developers that enable
the creation of service oriented applications that are more modularized and
easier to integrate.
AJAX User Interface tools that enable the creation of rich user interfaces that
are delivered via a browser. They typically provide a development framework
and reusable JavaScript libraries that help speed development.
o Mashup tools enable developers (often non-IT professionals) to create
mashup web applications as described previously.
Platform vendors come in all sizes. IBM and Microsoft both support web services
and AJAX tools. Other smaller vendors provide niche tools. Even companies
like Google are releasing the tools that they use to build AJAX applications like
Google Maps and Gmail to the public for free. The number of vendors
supporting Web 2.0 development is large and dynamic – a signal of an
innovative, growth market.
WHAT ARE THE OPPORTUNITIES FOR
COMPANYABC?
Figure 8 illustrates the five key impact areas for Web 2.0 as outlined above, and
groups them into potential themes for Game Changers.
Software as a Service (Saas): Massively
scaleable with relentless pressure for
continuous improvement
Mashups: Quickly & easily linking independent
services to create new capabilities
Rich, Responsive, Highly-Interactive,
Web-Based User Experience: The user
experience of client/server without the
management headaches
‘Variablize’ Who Pays for Software: e.g.,
advertising drives innovation – not software
sales
Harnessing the Collaborative Power of the
Masses: Social networking and collaborative
technologies creating new business
opportunities
Web 2.0 Impacts
Potential Game
Changer Themes
Strategic Innovation via
Advanced Collaboration
Software Externalization &
Cost Reductions
Improve the User Experience
& Cost of Software
Figure 8: Potential Game Changer Themes
STRATEGIC INNOVATION VIA ADVANCED COLLABORATION
As described in the CTO paper titled Strategic Innovation and the Impact on
Collaboration Technologies, ‘strategic innovation’ refers to the complex and
dynamic processes through which a company develops and introduces new ideas,
goods, services, and practices. In today’s competitive marketplace, accelerating
the pace of strategic innovation has become a key business objective. Many
research organizations including McKinsey, Gartner, and Forrester believe that
systemizing repetitive, transaction-oriented processes has already achieved many
of the ‘big wins’, and will begin to yield a lower return on investment (i.e., the big
benefit systemization projects will be ever more difficult to find). Therefore,
they conclude that IT must shift its focus to developing and implementing more strategic
business processes.
As Figure 9 indicates, IT needs to rethink and transform its focus in order to deliver
solutions that better support strategic innovation. Web 2.0 services and
technologies present an opportunity for COMPANYABC to better support tacit
interactions, enabling a more dynamic knowledge-sharing environment. The
opportunities that fall under this theme are the same as those identified by the
current collaboration game
changer. Adding a Web 2.0
spin to that game changer
would enhance interest in
and the value proposition of
advanced collaboration.
SOFTWARE
EXTERNALIZATION &
COST REDUCTIONS
SaaS and variablizing who
pays for software are
consistent with
COMPANYABC’s long-term
goal of externalizing
software. In fact, it is likely
that COMPANYABC’s vision
was ahead of its time and
that the marketplace is finally catching up.
While some large companies are using SaaS, they tend to focus on a specific
process area such as salesforce.com for CRM. A business change initiative like
Process Fitness might be able to leverage SaaS, especially when you consider the
smaller R&M business units like Air COMPANYABC, COMPANYABC Marine and
Retail. A large program, similar to Process Fitness, may not focus on lower priority
areas until later. Therefore, SaaS presents an opportunity to accelerate the
benefits of the program and lower costs via externalization. Since many SaaS
vendors provide integration into systems like SAP, SaaS should be seen as
complementary to COMPANYABC’s SAP-focused strategy.
Other areas to consider are Indirect Procurement and Supply Chain. Many SaaS
vendors (such as Ariba) offer procurement portals that enable companies to
aggregate spending via a centralized procurement model and can help to ensure
that “off contract spending” is reduced, thereby better leveraging COMPANYABC’s
buying power. Given the enormous dollar amount COMPANYABC spends on
indirect procurement each year, even saving a small percentage could yield large
returns. SaaS may present an opportunity to unlock that savings potential, while
utilizing a lower cost model than traditional procurement applications.
Lastly, COMPANYABC supports a large network of retail outlets/franchises. SaaS
may provide COMPANYABC a better vehicle to deliver CRM and merchandising
systems to these retail outlets, driving further cost savings. Given the large number
of Retail outlets, this approach could significantly lower IT support costs,
provide enhanced functionality, as well as customer data collection opportunities.
Additionally, systems will be easier to maintain and upgrade as new features,
functions, and fixes could be rolled out to the franchises as they come available.
An additional opportunity for COMPANYABC to consider is developing web
software services. For example, COMPANYABC Retail Marketing could create and
promote a web service that lists COMPANYABC retail locations, making it freely
available via the Internet. The web service would enable anyone to create a
mashup that displays COMPANYABC retail locations. For example, the American
Automobile Association (AAA) could combine COMPANYABC retail locations, fast
food locations and traffic reports via a Google Map for travelers. Additionally,
COMPANYABC could promote its ‘retail location service’ with third party providers
of navigation systems such as TomTom, making it easy for TomTom customers to
find COMPANYABC locations. COMPANYABC could go a step further and use the
mashups and/or TomTom to promote special offers (e.g., a free coffee with a fill
up). Such service offerings made available on a variety of internet enabled devices
(mobile phone, pda, etc) could be used for finding COMPANYABC locations realtime,
and present a compelling differentiator for consumers.
IMPROVE THE USER EXPERIENCE & COST OF SOFTWARE
The underlying Web 2.0 technologies (e.g., AJAX, Mashups and service
orientation) provide a viable technology that could be used to ‘revitalize’
COMPANYABC’s externalization of applications agenda. As the cost of creating
web applications that leverage, extend, and combine existing functionality are
lowered, new/innovative solutions can be enabled and delivered via the web.
In the past, the ‘user experience’ of an application might be severely compromised
in order to deliver functionality via the web, creating an obstacle to externalization.
Web 2.0 technologies eliminate this obstacle because the trade-off between
externalization and usability is nullified. In fact, Web 2.0 has the potential to greatly
improve the user experience because it can combine functionality and data sources
quickly and cost effectively.
COMPANYABC should consider aggressively adopting Web 2.0 technology
standards and require both internal and external DCT groups to adhere. This
approach will greatly enhance experience for users of systems delivered by DCT;
additionally, such systems will enable greater innovation, while at the same time
centralizing systems management as well as lowering operational costs.
For example, the U.S. government, wildlife conservation organizations and
universities are increasingly using RFID and GPS enabled handheld computers to
track the location of wildlife (e.g., polar bears). As that information comes publicly
available, COMPANYABC could create mashups that integrates wildlife tracking
information with COMPANYABC refinery and platform and pipeline location
information. Using Google Earth, COMPANYABC could create a web application
that enables workers (or the public) to visualize where wildlife resides in
relationship to COMPANYABC operations. The tool could help avoid negative
environmental impacts or could be used to quickly assess impacts in the case of
remediation.
Other ideas for mashups include:
• Mashups provide a much faster vehicle to build both internal and external portals
than traditional development. For example, using Kapow’s mashup authoring
software, Deutsche Post was able to very quickly integrate numerous internal
websites (without having to change them) into a new integrated portal.
COMPANYABC could apply this same approach by combining the numerous
H/R and employee benefit websites into an integrated portal view using Kapow.
Because Kapow software agents can navigate and easily aggregate existing
websites, the underlying websites do not require changes, and the new
employee portal could be built and deployed quickly (typically in a few weeks
time).
• Mashups are an excellent vehicle for aggregating information, lending
themselves to numerous applications such as competitive intelligence and brand
management. For example, using a mashup, COMPANYABC could aggregate
and filter information from numerous web resources to understand how
customers feel about the COMPANYABC brand and the brand of competitors.
Because mashups enable changes ‘on-the-fly’, sources can be quickly added or
dropped, while the information can be aggregated in a consistent presentation
format. Such a dynamic data gathering application could be a useful tool for
COMPANYABC retail and commercial Marketing.
• With concerns about pandemics, most large companies are creating contingency
plans in case of an outbreak such as SARS or bird flu. Information from
governmental bodies like the U.S. Center for Disease Control (CDC) could be
fused with COMPANYABC’s database of facilities and workers, creating a
mashup that helps monitor the spread of a pandemic and its impact on
COMPANYABC workers.
• A severe weather impact assessment mashup is feasible by fusing
COMPANYABC facility information with weather forecasting information from
sources such as NOAA (National Oceanic & Atmospheric Administration). In
addition to current storm patterns, the mashup could also display historical
patterns and past impacts.
• Integrating, analyzing, and understanding information quickly helps
COMPANYABC IST traders make better decisions faster. Mashup technology
would provide IST the ability to quickly create web applications that integrate and
provide a graphic representation of information. For example, COMPANYABC
vessel location, cargo and weather information could be displayed via a Google
Earth display. Additionally, imagine extending the example to displaying not only
COMPANYABC vessel locations but non-COMPANYABC vessels as well. If a
public source of vessel location information (perhaps via satellite service or
information from port authority websites) could be located, the mashup could
also enable traders to monitor all vessel locations. Integrating COMPANYABC
internal data, as well as publicly available information could provide traders with
an edge in the competitive business of commodities trading.
APPENDIX A: CASE STUDY OVERVIEWS
As part of the research, CTO collected examples of Web 2.0 businesses and
applications. These examples help highlight the characteristics that identify a Web
2.0 offering. The examples provided originate from market and analyst research.
Google2
Google began its life as a native web application, neither sold nor packaged, but
delivered as a service, with customers paying, directly or indirectly, for the use of
that service. None of the trappings of the old software industry are present:
• No scheduled software releases, just continuous improvement.
• No licensing or sale, just usage.
• No porting to different platforms so that customers can run the software on their
own equipment.
Google is a massively scalable collection of commodity PCs running open source
operating systems plus homegrown applications and utilities that no one outside
the company ever gets to see. Google isn't just a collection of software tools,
rather it's a specialized database. Without the specialized data, the tools are
useless; without the software, the data is unmanageable.
Google's service:
• Is not just a server – though it is delivered by a massive collection of Internet
servers
• Is not just a browser– though it is experienced by the user within the browser
• Does not even host the content that its flagship search service enables users to
find
Much like a phone call, which happens not just on the phones at either end of the
call, but on the network in between, Google happens in the space between
browser and search engine and destination content server, as an enabler or
middleman between the user and his or her online experience.
BitTorrent3
BitTorrent, like other pioneers in the P2P (peer-to-peer) movement, takes a radical
approach to Internet decentralization. Every client is also a server; files are
broken up into fragments that can be served from multiple locations, transparently
harnessing the network of downloaders to provide both bandwidth and data to
other users. The more popular the file, the faster it can be served, as there are
more users providing bandwidth and fragments of the complete file.
BitTorrent thus demonstrates a key Web 2.0 principle: the service automatically
gets better the more people use it. While a more-centralized provider like Akamai
must add servers to improve service, every BitTorrent consumer brings his own
resources to the party. There's an implicit "architecture of participation", a built-in
ethic of cooperation, in which the service acts primarily as an intelligent broker,
connecting the edges to each other and harnessing the power of the users
themselves.
Wikipedia
Wikis allows innovators to collaborate as they all contribute to form the content of
a Web site. With a wiki, any user can edit site content, including other users'
contributions, using just a browser. Collaborators can alter existing content, add
new content and links, and reorganize the site.
The most well known wiki is Wikipedia, a free, open content online encyclopedia
created through the collaborative effort of a community of volunteers known as
Wikipedeans. It publishes content in over 200 languages (100 of which are
active) and has become one of the most popular reference sites on the Internet,
receiving approximately 60 million hits per day. Wikipedia is also increasingly
referenced and is considered a credible source by many publications, analysts,
and articles.
A wiki web site operates on a principle of collaborative trust, rather than central
control. This decentralized approach is an important key to a wiki’s value – it’s
what separates it from any old website (which is extremely centralized around an
administrator). The wiki community polices itself using powerful versioning tools.
If necessary, changes can be quickly backed out.
Flickr
Flickr, an online photo management and sharing site now owned by Yahoo, which
incorporates many Web 2.0 concepts into its user interface. By using
technologies such as AJAX, Flickr’s interface is unburdened by the traditional
“click and wait” behavior common to older web applications, where an update
action results in a delay as the entire browser screen is refreshed, because the
request must be transmitted all the way through to the web server and back.
Flickr features a user interface that is more responsive because of the AJAX
technology’s ability to pull data from the server after the page has loaded. This
creates a more interactive user experience which streamlines and enhances the
process of organizing and sharing large numbers of photos online. Flickr also
allows subscriptions to its users’ photo streams using RSS.
MySpace
MySpace is a social networking site. At its core are profiles that are connected by
links to friends on the system. These profiles are personalized to express an
individual's interests and tastes, thoughts of the day, and values. Music, photos
and video help users personalize profile, while also making it more appealing.
In addition to its social networking aspect, MySpace is notable for generating
interest from advertisers who wish to target users. According to Rachel Rosmarin
of Forbes, analyst Richard Greenfield of Pali Research estimates that News Corp.
(owner of MySpace) sells $13 million in ad revenue each month. MySpace has
also spawned a mini-industry of sorts around the customization of user profiles
and automation of networking-related tasks such as adding or searching for
contacts.
Microsoft Windows Live and Office Live
Microsoft is working on two products, "Windows Live" and "Office Live," that
create opportunities for the company to sell online subscriptions and advertising.
Both are targeted at smaller businesses and consumers. Windows Live is a set of
Internet-based personal services, such as e-mail, blogging and instant messaging.
It will be primarily supported by advertising and be separate from the operating
system itself. The Windows Live e-mail client will be AJAX-based and will feature
a look-and-feel similar to Microsoft’s existing Outlook program.
Office Live will come in both ad-based and subscription versions that augment the
popular desktop productivity suite. According to ZDNet’s Ina Fried, as of January
more than 70,000 people had signed up for Office Live.
Windows Live is built off published APIs. As such, it can be used as a component
in mashups along with content from other providers such as Google and Yahoo.
Amazon.com4
Online retailer Amazon.com has made a science of user engagement. Amazon
sells the same products as competitors such as Barnesandnoble.com, and they
receive the same product descriptions, cover images, and editorial content from
their vendors. However, Amazon listings have an order of magnitude more user
reviews, and offer invitations to participate in varied ways on virtually every page.
Even more importantly, Amazon utilizes user activity to produce better search
results. A prime example of users adding value, search results on Amazon
always lead with "most popular", a real-time computation based not only on sales,
but other factors that Amazon insiders call the "flow" around products.
Salesforce.com
Salesforce.com has established itself as a leading on-demand provider for sales
force automation (SFA) software by successfully combining the cost advantages
of a shared application service with the support and flexibility benefits of an online
sales application. The appeal of Salesforce SFA is its ease of use for
salespeople, and its ability to be customized by a wide range of user types (such
as business analysts or systems integrators) using the AppExchange platform.
AppExchange includes software development tools and APIs that enable the
creation of mashups that combine data from the Salesforce system with other web
services. For example, the company itself developed an app called Territory
Management, a mashup with Google Maps that takes customer records from
Salesforce’s database and maps various customer account information.
eBay
One of the Web 2.0 “lessons” is to leverage customer-self service and data
management to reach out to the entire web, to the long tail and not just the head.
EBay demonstrates this by enabling transactions of only a few dollars between
single individuals, acting as an automated intermediary. Thus it serves even the
“edge” users of the web, not just large organizations or other heavy-hitters.
Additionally, eBay's “product” is the collective activity of all its users; its
competitive advantage comes almost entirely from the critical mass of buyers and
sellers. In this way, eBay is following another central Web 2.0 principle:
embracing the power of the web to harness collective intelligence.
Recently, eBay has acquired internet communications company Skype. In
addition to leveraging Skype’s services to advertise eBay listings, there is also the
potential for the company to utilize Skype as a social networking tool, providing an
alternative to (or opportunity for) mass marketing.
Disclaimer
The information, views and opinions expressed in this paper constitute solely the author’s views and opinions and do not represent in any way CSC’s official
corporate views and opinions. The author has made every attempt to ensure that the information contained in this paper has been obtained from reliable
sources. CSC is not responsible for any errors or omissions or for the results obtained from the use of this information. All information in this paper is provided
“as is,” with no guarantee by CSC of completeness, accuracy, timeliness or the results obtained from the use of this information, and without warranty of any
kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.
In no event will CSC, its related partnerships or corporations, or the partners, agents or employees thereof be liable to you or anyone else for any decision
made or action taken in reliance on the information in this paper or for any consequential, special or similar damages, even if advised of the possibility of such
damages.
© Copyright 2008 Computer Sciences Corporationhttp://assets1.csc.com/lef/downloads/Web_Potential.pdf
Tim
Berners-Lee, inventor of the World Wide Web, has questioned whether one
can use the term in any meaningful way, since many of the technological
components of Web . have existed since the early days of the Web Web
development is a broad term for any activity related to developing a web
site for the World Wide Web or an intranet. This can include e-commerce
business development, web design, web content development, client side server side scripting, and web server configuration. However,
among web professionals, web development usually refers only to the
non design aspects of building web sites, e.g. writing markup and coding.
Web development can range from developing the simplest static single
page of plain text to the most complex web based internet applications,
electronic businesses, or social network services.For larger businesses
and organizations, web development teams can consist of hundreds of
people web developers. Smaller organizations may only require a single
permanent or contracting webmaster, or secondary assignment to related
job positions such as a graphic designer and or Information systems
technician.
Web development may be a collaborative effort between
departments rather than the domain of a designated department.
Keywords: Web 2.0, Social Networking, Collaboration, Consumerization, Softwareas-
a-Service, SaaS, Rich Internet Applications, RIA, Mashups, Wikis, Blogs,
Prediction Markets, AJAX