Big firms buy in to Web 2.0 spin

The world’s largest companies are rapidly waking up to the revenue-generating
potential of Web 2.0 internet services that promote online collaboration and
information sharing.

In the main, corporates are focusing Web 2.0 development efforts on the
creation of online communities designed to help with product marketing or
development. These investments are being widely augmented by the establishment
of blogs (web logs) and
wikis
(collaborative online publications) to initiate conversations and share
knowledge between company employees and third parties.

Corporates are not jumping on the Web 2.0 bandwagon because they love
bleeding edge technology, but rather because they believe that interacting and
collaborating more closely with customers and partners will boost growth and
profitability.

According to new
Economist Intelligence
Unit (EIU) research, almost 80% of large enterprises believe that Web 2.0
technologies can improve revenues and margins. This EIU research, which was
sponsored by FAST, was based on a survey of 406 senior executives from companies
with average sales revenues of $2.5bn. It reveals that corporates are
increasingly viewing Web 2.0 technologies as must-have additions to augment
their existing communication channels.

“Web 2.0 is no longer bleeding edge,” said Harvey Koeppel, chief information
officer and senior vice president at Citigroup’s Global Consumer Group in New
York. “Now it is leading edge.”

“We were surprised by the level of excitement among big firms concerning the
commercial possibilities presented by Web 2.0,” added Dan Armstrong, editor of
the EIU report, Serious business: Web 2.0 goes corporate.

“Our survey respondents and interviewees saw Web 2.0 as an opportunity, not a
threat, and were extremely creative in applying the idea of the collaborative
network to their own products and processes.”

Dissenting voices
Armstrong concedes, however, that there are some dissenting voices among this
chorus of approval for Web 2.0. Compared to CEOs and the rest of the C-level
executives, CFOs lag behind in support of Web 2.0 initiatives. CFOs, according
to the research, are less likely to view Web 2.0 as transformative, less likely
to think that it will affect all parts of the business and less likely to say
that it will change the company’s business model. They are also less optimistic
than their C-level peers about Web 2.0’s potential to increase revenue and
margins.

But it is apparent that this scepticism is not holding back widespread
corporate adoption of Web 2.0 technology. Almost eight out of ten companies
surveyed by the EIU see the collaborative aspects of Web 2.0 as a way to
increase corporate revenue and/or margins. In terms of cutting costs, 30% of
companies expect Web 2.0 tools to trim customer-service and support costs.

“Instead of a call centre with 5,000 people, you could have one with 2,000,”
said Citigroup’s Koeppel, because customers can find their own answers to
questions online.

Online community
To help achieve such bottom line benefits, most companies are focusing on online
community building. In the EIU survey, 71% of firms said that they are already
using, or plan to use, online communities for things such as marketing and
product development within the coming two years.

Nearly 60% of large companies are now inviting customers to contribute
content that explains, supports, promotes or enhances their products, or plan to
do so within the coming two years. About half of companies say they are, or are
planning to, treat customers as co-developers of products that are in a constant
state of improvement.

Blogging, in particular, is being touted as a very effective, low-cost
marketing and brand building tool. For example, in 2006 the world’s largest car
manufacturer, General Motors, followed its launch in 2005 of a blog called
FastLane with a second blog called FYI.

Bill Betts, manager of web services at GM in Detroit, said the car giant
wanted to “change the perception that GM is a giant corporation that is
impersonal”. So, in addition to the executives who blog on FastLane, GM put
employees from factories and offices on the blogging front lines at FYI. “It has
put a human face on the corporation,” said Betts. “We’re very pleased that we’ve
got the return we’ve hoped for and maybe even more than that. This has been
money well spent.”

When it comes to boosting profits and sales, most companies expect to get the
biggest return on Web 2.0 investment from new business. Around 38% of companies
polled by the EIU expect to use Web 2.0 tools and methods to boost revenue
through customer acquisition. One-quarter of respondents expect Web 2.0 to
increase revenue through product and service innovation.

The future for corporate Web 2.0 adoption appears bright: most executives
expect Web 2.0 methods and tools to be the single biggest factor changing the
ways their companies interact with customers, according to 68% of the EIUs poll
respondents.