Engagement & PeopleMetrics, 2006). Other studies report .... via Google Adwords/ Adsense, LinkLift, x-Adservice, Text-Link-Ads, Reviewme,. Trigami, Turn a.s.f. ...
Corporate Web 2.0: Opportunities and Threats Focusing on Small and Medium-Sized Enterprises (SMEs) Dr. Conrad Lienhardt npo-consulting.net – Zötlweg 7, 4020 Linz, AUSTRIA Published in: Research & Development. Proceedings FH Science Day 6th November 2008 FH OÖ, Linz Campus. Shaker Verlag, Aachen, pp. 454-459 ABSTRACT
Motivation: Enterprises see themselves increasingly confronted with the idea that before long there won’t be any corporate division or entire enterprise not affected by Web 2.0. Accordingly, enterprises are investing in Web 2.0 technologies with the intention of using social software, and an increased number of offers on the market will try to serve this demand. The very nature of Web 2.0 is such that everyone has his own idea of what it is, and it has no definite identity. Despite the many opportunities and great potential, there are still associated risks and threats that are either poorly communicated or not communicated at all. Results: Web 2.0 creates competitive advantages especially for Small and Medium Sized Enterprises. To achieve these advantages it is not sufficient to use Web 2.0 technologies while remaining in Web 1.0 economic management, strategy and culture. The challenge for enterprises is to integrate its principles of Web 2.0 and to change to Enterprise 2.0. To gain optimum competitive advantage, it is not simply a question of using special technologies, instruments and tools, but much more a question of culture. Enterprises need to create and establish a social sphere in which participation, collaboration and communication is supported at all levels without restrictions. This however makes it evident that Web 2.0 does not fit to all enterprises, but some principles can be adopted by Web 1.0 enterprises. conrad.lienhardt [at] npo-consulting.net
1
INTRODUCTION Craig Cline and Dale Dougherty coined the term Web2.0 in 2003/04. It found rapid and
far spreading recognition in connection with the Web 2.0 conferences organized by Tim OʹReilly, which first took place in San Francisco in 2004. A year later OʹReilly formulated a short definition of Web2.0: „Web 2.0 is the network as platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually‐updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an ʺarchitecture of participation,ʺ and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.“ (OʹReilly, 2005)
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WEB 2.0: FACTS Neither in technological regard, nor with view to its collaborative, participative
dimensions does Web 2.0 represent a completely new beginning. The technologies of Web 2.0 partly originate from older developments (e.g. RSS, XML, Blog, Wikis, etc.), but these have been pushed further, and use and accessibility have been simplified. Additional developments, like AJAX, have also been added. The social, collaborative aspects of Web 2.0 may not be understood as a completely new concept, which has precursors dating back to the 1960’s such as Usenet, Arpanets, Groupware, Computer Supported Collaborative Works (CSCW). However, on basis of the advanced technological developments in the Internet alone, in particular in the World Wide Web, the social, collaborative dynamics (interaction, participation, networking, sharing) have been able to develop successfully under terms such as social software and Social Networking System (SMS) within the last ten years. (Koch, 2008: S. 37‐58; Allen, 2004) Web 2.0 is associated with Wikis, Blogs, Real Simple Syndication (RSS), Video Platforms such as Youtube, Vod:Pod, Sevenload; networking platforms such as MySpace, Facebook, Friendster, Orkut, Bebo, Xing; photo sharing such as Flickr, Pod and Videocasting, social bookmarking such as Del.ici.us, Mr. Wong, Digg; search engines such as Google Search, Google Blogs, Technorati, with Google Adwords, Adsens etc. pp. Web 2.0 is often seen as a paradigm shift, which, however, is not really arguable yet. Web 2.0 has not replaced Web 1.0 and it will not do so in the next few years, if ever. Web 2.0 and Web 1.0 are overlapping by the behavior of the users and enterprises. The Hype around Web 2.0 masks the view on the curent spreading and use of Web 2.0 technologies in Europe, particularly in Germany. According to a study of Forrester Research (Q2/2007) in Europe, Web 2.0 is used to a significantly smaller extent than in the Asian‐Pacific Area. There are about 373 million users of Web 2.0 services worldwide (Strategy Analytics, 2007) and 78 million users in Europe (comScore World Metrix, 2007). This is best illustrated by the use of Blogs: In 2006 74% of Japanese Internet users read Blogs, whereas only 15% in Germany. (Edelman Change and Employee Engagement & PeopleMetrics, 2006). Other studies report even fewer. The current study
of the Deutschen Telekom‚ Deutschland Online 07’ reports 7% in 2006 (Deutsche Telekom, 2008) and 11% in 2007. (Gscheidle, Fisch, 2007) This means that in Germany the number of Blog readers is significantly less than the number of Blogwriters in for instance China (19,5%). The number of active Bloggers in Germany is about 3‐6%. Video platforms and social networking sites like Youtube, MySpace, Facebook have performed better. (TNS Infratest Forschung GmbH, 2008). Therefore statements concerning the spread of Web 2.0 have to be regarded differently. The same applies to the use of Web 2.0 technologies and applications in socio‐, demo‐ and psychographic consideration. Wiki and Blog users are senior to users of social networking sites, who are often described as Young Hyperactive, Young Strollers or Routined Geeks. (Oehmichen, Schröter, 2007: S. 7) There are fewer female users who add content and publish material online than men, and their disposition to collaborative online work is significantly smaller: 77% of women find this less or not at all interesting versus 63% of men. (Gscheidle, Fisch, 2007: S. 399) Since the current spreading and use of Web 2.0 in Europe is much smaller than the hype around Web 2.0 one can generally assume that the use will increase and will gain considerably. 69% of experts questioned in the study „Deutschland Online 5“ estimate the value of Internet forums and communities, especially concerning intensifying customer relationship, at high or very high. The knowledge aggregation and distribution also plays an important role. Thereby the importance of Wikis and Blogs will increase, and for instance corporate communications and human resource marketing will profit. (Deutsche Telekom, 2008: S. 35; TNS Infratest Forschung GmbH, 2008: S. 322; Young, 2008b) Studies focusing on the use of Web 2.0 in Small and Medium‐Sized Enterprises (SMEs) draw a less consistent picture. A worldwide survey of executives by McKinsey concludes that enterprises with fewer than 500 employees are less interested in Web 2.0 technologies. 68% of SMEs do not use such technologies, 59% of them because they do not see any necessity or sense in using social software. (Pütter, 2008)
3
CORPORATE WEB 2.0, ENTERPRISE 2.0 The use of technologies, dynamic and social, and collaborative dimensions of Web 2.0
by enterprises for the use of their web Services is commonly called Corporate Web 2.0. The terms Enterprise 2.0 and Business 2.0 point out the integration of Web 2.0 principles in parts of or whole enterprises. Even during the early beginnings of Web 2.0 the opportunities and challenges of its use by enterprises were already being discussed. In „Architecture of Participation“ O’Reilley asks, „How do you take advantage of the new Web 2.0 landscape to build your business? How can you make your customers your evangelists ‐ or better yet, how can you let your customers build your business altogether? What are the roles of new communication tools like blogs, RSS, and social networks?”(OʹReilly, 2004). 3.1
Recommendation, Word of Mouth, Monitoring/ Research
Web 2.0 is a challenge for all enterprises, because they cannot simply ignore its dynamic and potenal. According to recent surveys for the ‘Arbeitsgemeinschaft Online‐ Forschung e.V. (AGOF)’ in Germany 39,87 Million internet users have used the internet to get product information, that is 97,4% of internet users in all. (AGOF, 2008) More than half of the consumers being asked in a survey by ‚Deutsche Telekom’ answered that they trusted more in product descriptions and the experience of other consumers communicated especially in Internet forums or communities than they relied on information provided by the enterprise itself. (Deutsche Telekom, 2008: S. 37) In addition to customer systems of evaluation, the exchange of experience and word of mouth recommendations in the social sphere of Web 2.0 is of special importance, in particular for export‐oriented enterprises and again for those who are engaged in Asian or American markets. The 95 theses of the Cluetrain Manifest, formulated in 1999, anticipate significant impact of Web 2.0 on its cultural condition. One of leading key sentences is: „Markets are conversations“ (Thesis 1). Thesis 11 and 12 stress the power of consumers towards enterprises: „People in networked markets have figured out that they get far better information and support from one another than from vendors. So much for corporate
rhetoric about adding value to commoditized products.“ „There are no secrets. The networked market knows more than companies do about their own products. And whether the news is good or bad, they tell everyone.“ (Searls, Weinberger, Locke, 2000) Enterprises that do not take this into consideration or ignore this risk face enormous troubles. There are numerous prominent examples out there. (Lang, 2006) Enterprises therefore should make use of a consistent and systematic monitoring of their and their products’ reputation in the Internet and use this information as feedback for prosumers. It is important to react quickly and appropriately to critics, negative reports and consumer feedback. Blog monitoring for instance should be as normal as conventional media monitoring. On the other hand, Internet forums, communities or discussions in the Blogsphere or on social networking sites can push the image or promote products of an enterprise. The effects on the corporate success are evident. Appropriate strategies are necessary to succeed. This requires familiar knowledge of cultures and dynamics of social networking systems and their communities as well as the gardening of conversations in Web 2.0. The communities and their users punish enterprises that try to manipulate the social sphere in the Internet. Thus the phrase „How to exploit Web 2.0 for market intelligence” is counterproductive. (Digimind, 2007) 3.2
Online Advertising
Some enterprises try to advertise on best frequented Blogs, social networking sites or sharing portals by using conventional online advertising strategies. But conventional advertising e.g. via banners is not really appropriate to Web 2.0. Many enterprises, including Small and Medium‐Sized Enterprises, prefer advertising via Google Adwords/ Adsense, LinkLift, x‐Adservice, Text‐Link‐Ads, Reviewme, Trigami, Turn a.s.f. to address their target audience. These advertising intermediaries offer technologies for contextual advertising not only for Web 2.0 but with great success also in the social sphere. Using an appropriate strategy and knowing how to filter out the target markets and audiences effectively can allow these intermediaries to support
enterprises efficiently. Bloggers for instance also profit from this advertising, and their revenue from this shows how successful it works. Advertising in the social web is not necessarily confined to that sort of advertising. A latest example for another strategy is the cooperation of MySpace (Germany) with Gruner+Jahr. In an separate Content‐Box (www.myspace.de/laufsteg) the ‘fashion‐, body‐care and boulevard‐affine users’ from MySpace will be shown news and advertising from the three Gruner+Jahr Labels Brigitte, Gala and Bym to bring them to fashion, people and beauty. (Pressrelease, Gruner + Jahr, 07.07.2008) 3.3
Use of instruments and tools.
The number of enterprises that use Web 2.0 instruments and tools besides online advertising is growing fast. According to a McKinsey survey, 20‐30% of European enterprises use or plan to use Blogs, Wikis, RSS and social networks. (McKinsey & Company, 2007) Technologies are generally used in the intranet for enterprise communication with contractors, partners and customers, and for customer relationship and knowledge base management Web 2.0 technologies are generally used in the intranet, but the culture of Web 2.0 and its principles are largely not integrated. Enterprise 2.0 is more a buzzword than reality. Focusing technologies, instruments and tools, to „exploit Web 2.0 for market intelligence“ provokes defence on the part of the social sphere and this can cause conflict. Even if social networking sites are hosted by enterprises, users don’t accept exploitation and dictation: “This strategic denial of authority resonates with the apparently free practices of users as they engage with these sites uploading content, selecting information to retrieve or sharing in community norms. On Web 2.0 sites, the authority of the user is allowed (at least the appearance of) full expression while that of the corporate owner is diminished.”(Jarrett, 2008) 3.4
Participation und User Generated Content (UGC)
User Generated Content is described by the OECD as “i) content made publicly available over the Internet, ii) which reflects a certain amount of creative effort, and iii) which is created outside of professional routines and practices.” (Wunsch‐Vincent, Vickery, 2007) The drivers of this development are technological (e.g. rapid diffusion of
broadband internet, Web 2.0 technologies), social, economic (e.g. competition, growth, customer retention) and legal (e.g. flexible licensing). UGC based normally on intrinsic motivation and does not target income or economic added value. Apart from that, UGC creates a market for businesses offering services such as hosting. This market is currently referred to as immature and volatile by Forrester Research. However, Forrester Research expects a growth of investments over the next five years, reaching $ 4,6 billion globally by 2013 with social networking, mashups, and RSS capturing the greatest share. (Young, 2008a) UGC not only allows one to publish his own content, but also to edit, change, remix, recombine, sample and mashup any content with advanced licensing agreements. This allows users to create, detect, and spread trends very quickly within the highly communicative social web. The social web has the potential to be faster and more ‚intelligent’ than enterprises or even experts. Surowiecki points this out in „The wisdom of Crowds“. (Surowiecki, 2004), and Wikipedia is a good example of this. UGC intensifies competition especially in branches like music, photography, video, journalism, TV, parts of retail boosted by open source and creative commons. On the other hand some people think UGC is good for exploitation, to learn about the market and its consumers or profit by prosumers. Wikis, Blogs or social networking sites are launched and everybody is invited to join. And some people expect that is enough to motivate social dynamic, high traffic and virulent exchange with other communities through API or other technologies. Obviously some think founding communities or offering Blogs and Wikis is like creating a perpetuum mobile. Once pushed it keeps on running, but this does not work. Jakob Nielsen has formulated the 90‐9‐1 rule, which has been proved by experience again an again (especially in Europe). 90% of the users are so called Lurkers. That means they don’t get involved, but read, consume and stay passive, 9% publish or engage sporadically. And only 1% of the users can be counted on to produce content. After analysing and interpreting the results of the ARD/ ZDF online study 2007 Gescheidle and Fisch conclude: „For the average on‐liner Web 2.0 is a big
fund of new, free and interesting content, which is produced by few users. It is quasi ‚Web 1.0’ consisting of User Generated Content.“ (Gscheidle, Fisch, 2007: S. 405) If UGC is to be implemented in enterprises, for instance by launching corporate Blogging or corporate Wiki, the management has to take Nielson’s rule into consideration. Blogs, Wikis, communities and social networking sites have to be gardened even if the point of critical mass is overrun. The success of Web 2.0 technologies in enterprises depends on the corporate culture. The combination of strong hierarchies with fixed structures, restrictive communication rules, regulated access to knowledge and remaining fixed on faultless, frictionless work does not allow for a breeding ground of Web 2.0 culture. In such an environment it is better to stay Web 1.0. In the environment of Web 2.0, UGC participation and collaboration create a competitive advantage within an economy that is becoming ever more knowledge based. The corporate use of Web 2.0 especially in an Enterprise 2.0 will boost this advantage, but this does not suit every enterprise because of security reasons for example. Every enterprise has to examine the presuppositions for Web 2.0 and choose what technologies and to what an extent they should be used based on that information. REFERENCES AGOF (2008): „AGOF ‐ Studie: Internet Facts 2008‐I“. [online] Available from: http://www.agof.de/studie.353.html (Accessed 17.07.2008). Allen, Christopher (2004): „Tracing the Evolution of Social Software“. : Life With Alacrity: Tracing the Evolution of Social Software. [online] Available from: http://www.lifewithalacrity.com/2004/10/tracing_the_evo.html (Accessed 3.07.2008). W. Buhse; S. Stamer (hrsg.) (2008): Enterprise 2.0: Die Kunst, loszulassen. 1. Aufl. Berlin: Rhombos‐ Verlag. Deutsche Telekom (2008): „Studie ʺDeutschland Online – Unser Leben im Netzʺ in Berlin veröffentlicht“. Digimind (2007): „How to exploit Web 2.0 for market intelligence. Web 2.0 for competitive and market intelligence“. [online] Available from: http://www.digimind.com/news/375‐how‐ to‐exploit‐web‐20‐for‐market‐intelligence.htm (Accessed 17.07.2008). Edelman Change and Employee Engagement ; PeopleMetrics (2006): „A Corporate Guide to the Global Blogosphere“. [online] Available from:
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