Using Web 2.0 to Reinvent Your Business for The

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Enter prise W eb 2.0Dion H inchcliffe

Janu ary 29th, 2009

Using W eb 2.0 to reinvent your businessfor the eco nom ic downtur n

Posted by Dion Hinchcliffe @ 5:27 pm

We are very fortunate that, given the generational challenges we face today, we have tools thatthose that came before us could not possibly imagine.At this point it’s more than clear that 2009

will be a challenging year for a great many businesses. Most organizations these days are now actively engaged in activities that are taking a look at what they can do to make the best of thecurrent economic situation.

Some business leaders will be looking at paring things back to the basics while a different sort will be looking at entirely new avenues to survive and thrive. The decisions we make now can greatly affect what happens to our organizations going forward.

The good news is that most enterprises actually have a fair number of compelling options rightnow if they are willing to think outside the box. While some might look at the social aspects of things like Web 2.0 as marginal subjects when things get tough, nothing could be further from thetruth when it comes to the deeper implications of Web 2.0 in the enterprise. Many of the moretransformational aspects of the 2.0 era now have extensive groundwork laid for them, areavailable in genuinely enterprise-ready solutions/pilots, and many have just been waiting for theright situation; the driving need for businesses to change and transform in the face of radically different business conditions.

Why is Web 2.0 particularly interesting right now for the enterprise? Web 2.0 has always been

ng Web 2.0 to reinvent your business for the economic downturn | En... http://blogs.zdnet.com/Hinchcliffe/?p=223

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about making the most of the intrinsic power of the network and whatever is attached to it. Thiscan be people (social computing and Enterprise 2.0), low-cost dynamic Web partners (open APIsand cloud computing), the world’s largest database of information, lightweight integration(mashups and Web-style SOA), or maximizing the value of the network itself (the network effectsthat everyone talks about), and much more. These collectively represent better, more efficient, andless expensive ways to accomplish things that we previously used to do without the network’s helpor with methods that didn’t take advantages of how the network works.

Read this year’s Enter prise We b 2.0 pre diction s for 2009 for more per spective onthis topic.

Fortunately, our businesses have become so thoroughly network connected that the inherentefficiency of most 2.0 approaches will now work just as well inside the firewall as outside, thoughthere still remain a few differences.

So what does this mean to the harried businesses looking for new approaches to creating value in achaotic and unpredictable time? How can this help in cutting costs or driving growth? Here aresome practical ways that 2.0 approaches can help organizations grapple with the challenges of

2009. Though some of these have an IT slant, many of them are strategic approaches to Web 2.0that most organizations can embrace across their lines of business to capture substantially betteroutcomes.

Note that the struggle with many of these, as with so much of Web 2.0, is that there is a major shiftin control, a much higher level of transparency, and an openness that many businesses can beuncomfortable with. However, to organizations that are willing to overcome these largely political,cultural, and mindset challenges, significant opportunities are available for the taking, often forrelatively modest investment.

Str ategic use of W eb 2.0 for gr owth and re silience As always, this is not an exhaustive list, though it’s a good start, and only gives a sense of thepossibilities. I pointedly left out important areas like mobile, despite prognostications like mine orothers lately that it’s a hot subject; it is, it’s just not fundamentally transformative enough at thispoint. I am sure readers will contribute more below in TalkBack.

Move to lowe r-cost online/SaaS versions of enter prise applications. - Face it,paying for yearly upgrades and new license fees is a major, recurring budget line item mostorganizations would like to eliminate now that most companies have a computer in front of

every worker. Open source software is an option and is certainly cheaper up front, until thesupport costs and other factors come in. There are, in fact, numerous lower-cost optionstoday for virtually any type of business software but unless it’s browser-delivered, or even

better, externally hosted as SaaS, you can’t use the provider’s economies of scale to drivedown the full range of costs from deployment of upgrades and technical support to hosting,

backups, and management. In general, moving to SaaS for anything that isn’t strategic to the business is the best place to start if you’re trying out externally hosted apps for the first time.

Strategic applications might be more difficult to migrate to a SaaS model both from acustomization and change management standpoint as well as from concerns aboutgovernance, reliability, compliance, and regulation. Retraining and data migration are a cost

component in SaaS scenarios but are manageable in today’s increasingly online and datastandardized world. How much will you actually save? The numbers vary, but recent reportssay that moving to a SaaS version of your Customer Relationship Management (CRM) system

will save the average firm 25% to 40%, a number that likely translates well to other types of

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business applications given the core nature of CRM to most enterprises. A good place to get asense of the options for SaaS versions of traditional business applications is to look atMonolab’s excellent Office 2.0 database.

Use Enterprise 2.0 to capture the know ledge and know -how of employees. The bad news: If you haven’t embraced Enterprise 2.0 across your organization already, then you’re aren’t going to be able to take advantage of this for a while. The good news: There notime like the present to start enabling the network to learn. Enabling open, persistent,freeform collaboration amongst far-flung workers allows vast amounts of institutionalknowledge to pour out into visible places on the network where that information can then bestudied, reused, and learned by others including (perhaps especially) new workers down theroad.

In the mass layoffs taking place in organizations around the world, tens of thousands of yearsof built up expertise and capability are walking out the door, largely untapped; theknowledge residing in inaccessible places such as e-mail accounts, file servers, meetingnotes, and most devastating of all, in the minds of the departing workers. While blogs, wikis,and other Enterprise 2.0 tools can’t be a direct replacement for people, they allow

organizations to be highly elastic in terms of headcount while resisting the erosion of vitalcorporate culture, knowledge, historical context, and critical methods. You’ll also reap theother benefits of Enterprise 2.0 reported by many adopters: higher efficiency, moretransparency, better communication, and so on. Making your intranet a vibrant, evergrowing, worker-powered, two-way social media landscape is one of the surest investments

you can make in your organization.

2.

Strategically mov e IT infrastructu re to the cloud . Cloud computing is one of the bright areas of the tech industry right now, at least if you were measuring the hype.However, anecdotal evidence shows that there is broad interest in organizations reducing

their data center and infrastructure spending, despite many of the same challenges that givesorganizations pause about SaaS: Control, security, and lock-in.

There are many reasons to start moving business applications and data to the cloud:Businesses have to keep latent capacity on hand to deal with high-water marks for demand,leaving a lot computing and network infrastructure lying idle and underutilized. The same

businesses also can’t amortize the cost of purchases at nearly the scale that top-tier cloud vendors can, further driving up cost. Economies of scale are the name of the game in cloudcomputing and ready, on-demand access to them is what vendors provide, among othermore run-of-the-mill benefits such as simplifying capacity planning and encouraging a moreconsistent enterprise architecture. I did some back-of-the-envelope costs calculations on

moving to cloud computing in a post here last year and the results were eye-opening interms of savings. The bottom line: We are a ways from moving all our enterprise computingto the cloud but it’s high time to begin the process of moving today.

3.

Embrace ne w low-cost models for pro duction such as crow dsourcing. I exploredthis topic in detail in my recent exploration of the emergence of compelling new open

business models. There are numerous competitive and economic reasons to move tocrowdsourcing models for many aspects of modern business. These include using the vastaudience of people on the network as a primary source of innovation, research, and productdevelopment as well as customer support, sales, and marketing. Almost anything that you

can outsource you can crowdsource for less and with more robust results, although with lesspredictability.

Crowdsourcing does require a certain set of skills however, that is very different fromtraditional corporate hierarchical command-and-control, which works well even in

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outsourcing relationships, but much less in a social computing environment. Whilecrowdsourcing is providing increasingly impressive stories of late (see the aforementionedopen business models article), it’s also clear that some organizations will be a failure with itand that primarily online firms will have the most success. The latter live and die by theirunderstanding of the network and tend to understand this model better. So, trying to do a lotmore in your organization with a lot less this year? There are dramatic cost savings and leapsin innovation that can be tapped with crowdsourcing, one of the most potent Web 2.0

business models. If you aren’t doing it now or considering it, put it on your short list.

Lowe r custom er service costs by pro-active use of online cu stomercommunities. These days all of your customers are online. All of them. Are you truly engaging them, supporting them, and creating a rich community of shared interest around

what you’re doing? Chances are you’re not. Few large companies have created successfulonline communities around their products and customers have largely had to create them ontheir own until very recently. I took a look at the state of online customer communities a few months ago and things haven’t changed much.

Despite early promise that CRM costs will drop and customer satisfaction will rise for

comparatively small investment in online communities, most organizations have beenpainfully slow to move to them, almost complacently so. Though there is a definitely skill capin creating and nurturing successful online customer communities, it’s not so large that itcan’t be crossed fairly quickly when there is a need. And there is very much a need today.

With the rank and file of the customer service and account representative ranks of organizations shrinking rapidly in many cases, now is time to provide your customers anentirely new and largely superior channel for communication, collaboration, and workingtogether and amongst themselves. Organizations looking to minimizing customer disruptionduring staff turnover, lowering customer servicing costs across the board, and retaining thecustomers they still have must look to robust online customer communities in 2009.

5.

Reduc e application d evelopment an d integration time/expen diture s with ne w platforms and techniques. Over the last few years, the Web community has developedhighly innovative new models for creating and integration software together to cope with thescale and complexity of the online world, which with which most enterprises pale incomparison. Application development has moved to dynamic languages and new productivity-oriented platforms such as Ruby on Rails, Python/Django, Grails, and many others. Relational databases have been challenged by new successors such as documented-oriented databases like CouchDB and distributed computing/storage systems like Hadoop.

All of these are mature, high capable, and new ways of tackling the enormous challenges thatlarge-scale computing requires and that most enterprises aren’t even aware, much lessembracing.

Then there is ongoing story of enterprise mashups which bring lightweight integration andcomposite application development, often by end-users, directly to lines of business. See thislist of mashup providers, most of which are offering highly capable solutions. What bottomline benefits will all of these bring beyond being to tackle problems you couldn’t before?Most of them will dramatically drive down the cost of application development, famously inthe case of Rails, by as much as an order of magnitude. Integration is also one of the largestcosts of software development and mashup approaches on the Web have been created out of sheer desperation and while a fair amount of success. Of course, these gains get dulled when

shoe-horned into traditional software development processes, but if you are willing to think outside the box and move closer to the edge of innovation, there are major gains to be had.

6.

Open your su pply chain to partners on the Web . By building on top of existing7.


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investment in SOA and enterprise architecture, your organization could open up its SOA totrading partners, something that CIOs have reported wanting to do en masse for several

years now. But with open APIs and Web services, it’s now possible to do in such acost-effective fashion that it could end up being one of the major growth areas of our

business. I covered this important Enterprise Web 2.0 topic recently so I won’t go into detailhere, but if you want double-digit growth during the downturn in whatever otherwise staidindustry you are in, there are few more powerful 2.0 techniques for doing it than turning

your business into a strategic open platform on the network. Open APIs do requirenon-trivial investment and serious organizational commitment to flourish but there is agrowing body of evidence that they are new business delivery channel to be reckoned with.Overhauling an d reinven ting p aper and digital workflow . Going beyond lipserviceto green business, transforming how we carry out processes is essential in driving down costsand increasing business agility. For example, the government has long known that poorpaper and digital workflow chews up people, infrastructure, and energy like few otheractivities. The DOE reported in 2006 that US paper making alone used 75 Billion KWH andU.S. data centers and servers using another 61 Billion KWH of electricity, never mind thatprint and digital media supply chain costs can represent as much as 35% of every dollarspent by public and private organizations, exclusive of labor. This is an indictment of bothphysical and electronic workflow inefficiencies today. And, again, without an impetus toimprove, there won’t be increases in efficiencies. But the current business climate is drivingus towards just such refactoring activities.

I use the word refactoring since there also isn’t any budget for big bucks, big bang businessprocess re-engineering. Refactoring is a means of “redesigning in place” and it’s a perfect

way to describe a more rapid, recombinant “editing” of existing workflow using tools that arefar more user-driven. The enterprise mashup tools above are a good example of a Web 2.0platform that can address this challenge and so are Enterprise 2.0 tools which are emergentand freeform by definition and can adapt dynamically to the changing processes and

structure of the workplace. Social networks and their activity streams are increasingly providing a means to start creating emergent workflow as well, though they are not as faralong as mashups and Enterprise 2.0 in being able to address this opportunity today.

8.

The modern technology landscape is an enormous one and the pace of technological change isonly increasing, greatly challenging the 21st century organization which still tends to adopt new things in a top down manner. However, we are very fortunate that, given the generationalchallenges we face today, we have tools that those that came before us could not possibly imagine.

Web 2.0 models offer one of the most potent ways we presently have to regroup, reorganize, andsystematically improve what we’re doing in terms of private enterprise, government, and public

service. Right now is a very exciting time indeed to be in business, for better or worse.

Which way do you see the IT and business winds blowing? I encourage you to offer your owninsights on how to use 2.0 models (or other ideas completely)) to create better business outcomesin 2009 below in TalkBack.

A veteran of software development, Dion Hinchcliffe has been working for two decades with leading-edge

methods to accelerate project schedules and raise the bar for software quality. See his full profile anddisclosure of his industry affiliations.

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Using Web 2.0 to Reinvent Your Business for The