When It Comes to Web 2.0, CIOs Favor the Familiar

Ann All

Almost a year ago, I wrote about a Forrester Research survey that found a majority of CIOs wanted a suite of Web 2.0 tools from a single vendor, preferably a well-known entity like Microsoft or IBM, rather than a collection of Web 2.0 technologies from different companies.


I remembered the survey when reading a post by ZDNet's Dennis Howlett, in which he responds to a Go Big Always post by Sam Lawrence, who writes that the software playing field is shifting to favor tech start-ups rather than incumbents like Microsoft, SAP and Oracle. Howlett's response is, essentially, don't be so sure. He writes:

... it is a foolish person who is prepared to bet against IBM, SAP, Oracle and Microsoft. The fact they have yet to establish infrastructures that allow them to credibly include the full gamut of social software (with the possible exception of IBM) doesn't mean they won't or can't.

This is all quite timely, considering SAP's apparent missteps in introducing a software-as-a-service version of its flagship product called Business ByDesign, which I wrote about last week. A reader commenting on my blog wrote:

In a world where a CIO can build what they need more quickly than explain it to a consultant, or instantly get a niche application and customize it in minutes there really is no market for a tool like SAP.

Not so fast. I have to agree with Howlett. Rightly or wrongly, corporate America tends to resist risk-taking. As the Forrester survey emphasized, business executives like to work with companies they know. They trust companies like IBM and Oracle to convert consumer tech innovations into products that suit their needs -- which are not the same as those of consumers. Where it makes sense, the deep-pocketed incumbents will buy start-ups producing technology useful to their customers' purposes, writes Howlett.


Indeed, Tim O'Reilly, the guy generally credited with coining the phrase Web 2.0, seems a bit worried about the same idea. As SFGate.com reports, O'Reilly told attendees of the recent Web 2.0 Expo that the advent of cloud computing -- seemingly the "next big thing" in Web 2.0 -- will likely favor behemoths like Google, Microsoft and Amazon. Says O'Reilly:

The paradox in Web 2.0 is that applications built off open, decentralized networks lead to concentrations of power.

O'Reilly emphasized the importance of getting vendors to produce systems based on open, rather than proprietary, technologies. The SFGate.com reporters at the event also noted that old-school vendors like Oracle, IBM and Microsoft were a far more visible presence than any start-ups. As they point out, this is partly due to simple economics. Few start-ups can afford "a large, plush booth." Right, and this reinforces the idea that these suppliers may be outside the comfort zone of many executives.


Of course, this doesn't mean the incumbents won't face challenges. Their existing infrastructures are strongly tied -- too strongly, perhaps -- to the platform approach. In addition, companies like IBM face competition from free alternatives like Facebook, points out a Forbes article.


This is why, says IT consultant Karen Wohl, incumbents will focus on enterprises rather than SMBs. While SMBs might be OK with using Facebook or Blogger to boost internal collaboration, bigger companies will likely favor products like IBM's Lotus Connections, which provide similar functionality behind a corporate firewall. Says Wohl:

Very large enterprises aren't used to letting their information be used in ways that are less than formal, like these Web applications. They're concerned about the 'what if' part of the equation. So they need that more secure environment.

As the article explains, IBM is "out-Webbing even Web-based companies like Google," with its employees serving as an internal focus group for emerging applications. IBM has 350,000-plus employees. According to Forbes, 24,000 of them use Facebook. Then there's LinkedIn (155,000), internal blogs (10,000) and wikis (15,000). IBM also collects ideas from employees online in big collaboration-fests it calls "Jams."

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May 27, 2008 3:36 PM Mike Brittain Mike Brittain  says:
>>"Indeed, Bill OReilly, the guy generally credited >> with coining the phrase Web 2.0, seems a bit worried >> about the same idea."Er... I think that's *Tim* O'Reilly, not Bill O'Reilly. Reply
May 28, 2008 4:19 PM Robert Robert  says:
You mention companies like IBM and Microsoft as big names that will play in the Enterprise Web 2.0 game but what about Cisco? I know, it sounds a little far fetched but they're no slouch when it comes to capitalizing on emerging market trends.Mike Mitchell, Director of Technology Communications at Cisco was once quoted as saying, "Web 2.0 is about Collaboration. The early phases of Web 2.0 were text driven. However, collaboration is more powerful when you can add richer elements like voice and video. Web 2.0 in the Enterprise should equal unified communications." In fact, unified communications shares a number of core principles with Web 2.0. You mentioned O'Reilly Media - if you were to redraw their meme map for unified communications it would look very similar in that the principles and concepts are the same, UC just puts them in a different context.So I'd suspect that you'd have to include Cisco as a possible big name player in enterprise Web 2.0. After all, they are a global market leader in unified communications. Their purchase of Webex is enabling them to develop a strong SaaS story (or more importantly a strong Software + Services story). John Chambers has been banging on the Web 2.0 drum for 18 months...heck Cisco even bought up a couple of social networking sites a couple of years back as well (Utah Street and 5 Across). Reply
May 28, 2008 6:30 PM Ann All Ann All  says:
Oooh, how embarrassing. Guess I inexplicably had conservative commentators on the brain when I wrote this post. Thanks for the sharp eyes, Mike. And Robert, I would certainly include Cisco in this category. Your points are spot-on. Reply

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