May 26, 2009

Web 2.0 is NOT the new Coke: Understand its value and get your enterprise ready

Can Web 2.0 positively impact business value?
CIOs and CEOs listen up! Web 2.0 is not going anywhere. This is NOT the new Coke that many hope it is. This is the beginning of digital socialism. The sonner IT realizes this, the faster it will be able to truly become a strategic partner of the business. Agreed that it is difficult to measure ROI for Web 2.0 or social media implementations but can you afford to not leverage the underlying concepts and technologies to empower your employees, untap hidden networks, enable better collaboration, and foster innovation?
Business today requires change and Web 2.0 has the potential to positively impact your business. So stop making excuses and just go for it!! And here's why (in business terms) -

Web 2.0 technology

What does it do?

Impact

Value Driver

Wikis

Allow users to contribute and share information available in real-time

Improve corporate/shared service efficiency

Reduce cost of internal business interactions > Lower Operating Margin

Social networks

Decentralize decision-making and let solutions evolve through collaboration

Increase staff productivity

Improve asset productivity > Higher Asset Turns

Mashups

Aggregate online content sources within and outside the enterprise to create new, richer services or situational applications

Increase integration efficiencies

Reduce total cost of integration > Lower Operating Margin

Blogs

Improve the ability to provide instantaneous feedback on products and services

Acquire new customers and retain current customers

Higher volume > Grow revenue

RSS feeds

Subscribe to digital content, such as news feeds, podcasts, or blogs

Improve customer interaction efficiency

Reduce cost of external business interactions > Lower Operating Margin

Web services

Help analyze and make decisions faster by making it possible for different business systems to talk to each other

Improve execution capabilities and increase business adaptability

Improve information utilization à Grow revenue

Rich internet applications

Rich user experience by bringing the interactivity of desktop applications to the web

Retain and grow current customers

Higher volume > Grow revenue


*Note: The table lists one benefit for each Web 2.0 technology in order to demonstrate its business value. The benefit may not necessarily be the most popular application of the technology.

The democratization of supply and consumption may threaten the traditional enterprise, thereby classifying Web 2.0 as a disruptive trend. However, enterprises that leverage the long tail will reap the benefits of open, continuous innovation – a sustainable competitive advantage.

So what will it take? And is your enterprise really, really ready?

As consumers and knowledge workers become more internet savvy and collaborate for information, enterprises should be better prepared to adopt Web 2.0. Today’s mainstream consumers are taking control – wanting to help each other and solve each others’ problems. Not only are consumers demanding intuitive, engaging, and relevant digital experiences, knowledge workers (consumers within the enterprise) are also demanding richer user experiences with customizable business process applications that can talk to each other. Gone are the “green screen” days of the mainframe within the enterprise. The confidence around web based technologies to run the business and the maturity and comfort of the work force using these technologies are compelling drivers for early adoption of Web 2.0.

To fully benefit from Web 2.0 technologies within the enterprise, the enterprise will not just need to be comfortable with web-based technologies, but will also need to adopt the following socially-driven business principles:

  • The enterprise leverages the web to diffuse enterprise boundaries, resulting in –

a) less vertical boundaries (flatter organization structures),

b) loose horizontal boundaries (more cross-functional interactions),

c) external boundaries (customer and enterprise interactions), and

d) shrinking geographic (global business units) boundaries

  • The enterprise considers open innovation as a key strategic driver to leverage the wisdom of the knowledge worker and needs of the customer for sustainable growth
  • The enterprise promotes the culture of collaborating, sharing, and knowledge creation.

Once bitten by the internet revolution, the enterprise will be shy to take advantage of the Web 2.0 trends and welcome it within the enterprise. Also the decentralization of control may cause reluctance in Web 2.0 adoption, however the value created by improving the productivity of the knowledge worker and building customer loyalty far outweigh such risks.

As Web 2.0 revolutionizes innovation with its emergent, unstructured, collaborative approach, this will probably need to be one of the most influential strategic initiatives for web-based innovation within the enterprise. To reap the benefits of Web 2.0, the management needs to create a receptive culture and a common platform for a collaboration infrastructure. Interactions should be guided and not controlled. A transitional, informal rollout of the technologies is recommended more than a formal procedural change. Web 2.0 will definitely need the support from leadership but this [unstructured, let it collaboratively evolve] path to value should not be treated like just any other strategic initiative. This path does actually pledge a truly non-replicable, sustainable competitive advantage for the enterprise.

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Avinash

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