More organizations shift to Web 2.0 while IT departments remain wary

A couple of recent announcements from two large, very well-known organizations provides an interesting data point on how Web 2.0 is affecting the product designs and business processes of otherwise very traditional institutions.  Both USA Today and the U.S. Patent and Trademark office have recently unveiled strategies for letting their users use two-way Web capabilities to contribute directly to the products and services they offer.  And many other mainstream companies, such as Pepsi as well as GM and XM Radio have been exploring externally-facing Web 2.0 concepts in their products for a while now.

This means that if you get an employee to spend an hour to contribute to an internal Web 2.0 application, that's an hour of their regular work that doesn't get done.At the same time, a recent InformationWeek survey of IT departments are showing considerably wariness for doing the same thing inside the firewall with employees, with over half being either skeptical or wary of the utility of Web 2.0 apps in the enterprise.  The biggest concerns: Security, little expertise with Web 2.0 products, integration issues, and unclear ROI top the list.  In other words, the group inside most organizations that's most familiar with IT and software, is thinking carefully before deploying things like Enterprise 2.0.

This is an interesting contrast, with a growing list of companies cautiously but clearly testing out the Web 2.0 waters with their customers while remaining largely on the fence for its use inside the enterprise.  Certainly, many organizations likely believe that consumer facing sites that extensively leverage user generated content, mass participation, and social networking have been proved to work on a large scale by sites like MySpace and YouTube.  And that organizations have already purchased and deployed countless IT tools that were already designed support internal business processes, ad hoc collaboration, and information capture and storage. 

Another probably contributor to the increasing use of customer-facing Web 2.0 applications by large organizations is simple competitive pressure.  This is something that IT departments have only recently started facing in a serious fashion with outsourcing and other budget diversions in the enterprise as business units decide that they can do better by pitting their internal IT suppliers with external ones.  Thus, because of industry competition, a company's external products tend to improve faster and be more innovative since the concern over the displacement and dislocation of falling behind one's competitive peers is often pronounced in many industries.  Competition is usually much less, and often non-existent, for internal IT products.

Sources of content such crowdsourcing and other explicit harnessing of collective intelligence -- the latter which is the core principle of Web 2.0 according to leading Web 2.0 proponent, Tim O'Reilly -- are often irresistible to businesses since these sources of content, innovation, and creativity are currently cheap and abudant when compared internally produced sources.  Compare the cost of producing an hour of broadcast TV content with sites like YouTube; at last count YouTube captures 65,000 videos per day at the relatively low cost of a just a few million dollars a month.  Of course, the quality and degree of business control over the outcome of crowdsourced products is very, very different with both models but their asymmetry in terms of total worker volume is clear.

Consumers as Producers: Mass Production from the Edge of the Network

From this, it's become relatively apparent then that Web 2.0 can give us tools that make the struggle between centrally produced content and user produced content a no-brainer: users can usually do far more with far less that we can with our dedicated business infrastructures.

From this perspective, the advantages are clear: getting anywhere from to a few thousand to tens of millions of people shaping, contributing, and organization your products and services instead of just your employees.  You might not need as many employees either.  And while some of decried the quality and reliability of products and services, with every new "Wikiscandal" causing fresh criticism, the fact is that the open source community and sites like eBay have discovered ways to govern their contributing user communities and achieve consistent, long term success.  Open source products are often much higher quality and eBay, while have some problem with fraud, remains very successful with the help of its carefully managed reputation system.  These stories inform us that when quality and reliability are vitally important, there are ways of guarding an Architecture of Participation from hacks, gaming, exploits, and other negative uses.

This paints an interesting and relatively compelling story for applying Web 2.0 to the public, but it doesn't help us understand if Web 2.0 concepts like crowdsourcing actually work well in the enterprise.  For one thing, instead of recruiting people who have previously had no relationship with you and cost-effectively aggregating their time together to create large levels of new output, employers have a zero-sum game with Web 2.0 inside the firewall.  This means that if you get an employee to spend an hour to contribute to an internal Web 2.0 application, that's an hour of their regular work that doesn't get done.  It might very well be a useful hour, but it's not clear that it won't distract from the overall objectives of the organization while also siphoning off more precious employee time in an unprioritized way.  Thus, the best that Web 2.0 and Enterprise 2.0 applications like blogs and wikis can do it increase the productivity of existing business processes by improving efficiency as well as allowing them to self-improve through emergent structure and behavior.

One last lesson this gives us is that it might very well be better to recruit and harness end users, a virtually limitless supply for large organizations in particular, than it does to attempt to achieve additional marginal gains in productivity from the employees we already have, as attractive as the untapped productivity story is in the Web 2.0 era.  Just look at the newstories on Digg, Netscape.com, and now USA Today, the comments represent a a much, much larger and richer set of information than the articles they point to.  So to Patent and Trademark Office is looking at harnessing user contributions with patent submissions.  Amazon with product reviews.  And so on; there are many other examples, not to mention different strategies.

Figuring out how to crowdsource with a viable business model can be hard.  Read how Next New Networks is creating a hybrid of traditional media and social media to combine user generated content using a strategy that will be acceptable to advertisers.  

So the question becomes will public Web 2.0 get ahead of our internal adoption of Enterprise 2.0?  And is it because IT still doesn't have enough internal competition?  One reason I suspect the latter is probably true is that I have heard numerous stories from large corporations in the last couple of months: Users aren't waiting for Web 2.0 tools in the enterprise, they're brining them in the back door in the large.  One large company I work with recently discovered that they had over 40 rogue wiki installations; seemingly proving that IT departments are failing to provide the tools that workers want.

How about it?  For traditional businesses, will Web 2.0 capabilities offered to public actually get ahead of internal Enterprise 2.0 deployments in the near term?