The problem with Forrester's $4.6 billion prediction

The problem with Forrester's $4.6 billion prediction

Summary: Forrester has released a report indicating that Enterprise 2.0 spending will reach $4.

TOPICS: Collaboration
Forrester has released a report indicating that Enterprise 2.0 spending will reach $4.6 billion by 2013. ( I would offer a link but the one I have is broken.) I'm uncomfortable with the report though it hints at some interesting developments. Any prediction is based upon the way something is defined. In this case, Forrester define Enterprise 2.0 as:
A set of technologies and applications that enable efficient interaction among people, content, and data in support of collectively fostering new businesses, technology offerings, and social structures.
That's an incredibly loose definition and one that could be applied to any number of technology components from CRM through to supply chain management and pretty much anything in between. The fact is that with so many definitions floating around, I'm of the view that Enterprise 2.0 does not exist except in the minds of those who are selling technology components.  That's not a recipe for success. Companies buy technology to solve specific problems not technology that boils the ocean and yet that's what I imply from the way Forrester has defined the topic area. Forrester goes on to refine its understanding of Enterprise 2.0 to talk about internal collaboration and external marketing efforts supported by the current disparate toolsets that include blogs, wiki, RSS and widgets. The outward facing solutions we have seen emerging from the likes of Jive Software, ThoughtFarmer, HiveLive and others are making an impression in the market. Their place seems reasonably assured. Here, Forrester suggests that:
Megadeals with media ?rms like the Fox News Network and ABC are driving the market. The large audiences of major media ?rms, their breadth of demand for features, and their focus on video and other large ?le content create high technological demands, resulting in average deals more than 10 times larger than for non-media ?rms. These megadeals will almost completely dry up over the next two to three years as major media properties and brands become saturated with social media tools, forcing vendors to head down the long tail to smaller brands, smaller audiences, and smaller deals.
It is when Forrester strays into the collaborative workspace that I believe they're over reaching. They make the implicit assumption that major players like IBM and Microsoft will subsume Web 2.0 software into existing collaborative offerings. They argue that a combination of factors such as commoditzation, legacy and the marketing muscle of the incumbents will serve to make Enterprise 2.0 products "fade into the fabric of enterprise collaboration." Apart from the difficulty in getting adoption, to which I have referred elsewhere, I believe this is solving the wrong problem. Collaboration is about problem solving in the flow of business processes - or at least it should be. That's where cost sits and where all the automation in the world will not rescue the business manager. Enterprise 2.0 doesn't solve problems per se but it may serve to expose them. The question then comes, how does business go about solving the problems it has discovered? In many cases, this comes down to one of several things. Either a process is broken, in which case it needs re-engineering or it represents a barely repeatable process or BRP as compared to ERP. This is something my friend Sigurd Rinde likes talking about.  In a comment to his polemic on the issues, Sig has this to say about Enterprise 2.0:
One way to look at it is that collaboration tools / wikis are increasingly used for the purpose of getting those iffy processes into some kind of system. Not that bad in my mind but still sorely lacking the process part, so I cannot but see such as work-around solutions. I can hear some protest now, but process kills, cracks and ties up loose ends, process adds knowledge, process makes it possible to better the processes. And everything are process as in sequence anyway so why not accept and model it right away.
In short, Enterprise 2.0 as espoused by Forrester for collaboration purposes is only solving a small part of the business problem puzzle. Band-Aiding it to existing solutions is not the answer. Therefore, in arguing a case for growth, my sense is that Forrester has missed a trick. It has fallen into the evolutionary trap of assuming that existing processes will accommodate the new world of socially networked operations. If anything, the adoption of these technology solutions will raise the specter of how business process designed to release value is articulated through software. That alone could kill off many an otherwise worthy project as business managers stop to rethink what they need to build in order to solve the real problems of the day. Collaboration will go some distance, but without a fast track way of implementing BRP, it will represent a lot of wasted effort.

Topic: Collaboration

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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  • Processes not purchases..

    Fascinating read Dennis, trying to find actual report on Forrester site.
    I quoted you in my post here and also JP Rangasami, some interesting parallels in your respective posts on the importance of establishing processes and concepts/goals before deciding on technology purchases.
  • RE: The problem with Forrester's $4.6 billion prediction

    See my response here:
    Scott Quick
  • RE: The problem with Forrester's $4.6 billion prediction

    The really funny thing to me (with the caveat that I don't have access to the Forrester research) is that even if Forrester is right, and as you quote, Enterprise 2.0 products "fade into the fabric of enterprise collaboration", it appears to be hugely disingenuous for it to then argue that this is a $4.6 billion market. With Forrester's assumption in mind, the "market opportunity", such as it is, would appear to be largely just a rebadging of an existing opportunity. It's not a new market at all that Forrester appears to be measuring - more the speed with which an existing opportunity is recast.

    This kind of forecasting is always a bit dodgy, and quite often is done on purpose. The big number grabs the headlines, but the underlying predictions are a lot less interesting than they appear.
  • RE: The problem with my $4.6 billion prediction

    Hi Dennis,

    My apologies for the delayed response; I've been buried this past week with the Expo. I wanted to quickly take a minute or two and answer some of the concerns you raise here about the market sizing report I released earlier this week.

    To respond to your first concern, how the market was defined, I first off agree wholeheartedly: how a market is defined is critical. In my case I sized the in a bottom up fashion, not a top down one, as I think you are assuming. Instead of trying to figure out the size of the enterprise Web 2.0 market ??? by the way, ZDNet in general seems to have misunderstood that I was not just sizing the "Enterprise 2.0" market as Andrew McAfee defines it but instead looking at both collaboration and productivity as well as marketing spend ??? I sized the individual technologies that are typically considered to be associated with Web 2.0. Specifically I looked at blogs, wikis, RSS, social networking, podcasting, mashups, and widgets. There was some debate as to what to include here ??? there are no RIAs or discussion forums ??? but I had to draw lines someplace. In addition I looked at each technology across two implementation types ??? internal facing and external facing ??? and three geographies ??? North America, Europe, and Asia Pacific. In all I created 42 little S-curves, and summed them up to one large number.

    The second major concern you have, the assumption that major technology vendors will subsume Web 2.0 technology into other applications, is one that is clearly already playing out. Microsoft offers wikis and blogs in Sharepoint, Fat Wire is offering wikis, blogs, widgets, and podcasting in its Web content management solution, SAP is offering widgets and wikis, and so on and so forth for 20 other vendors. This trend will accelerate with two major consequences. First, in short order very few firms will need to specifically acquire Web 2.0 technology; in nearly all cases some vendor will have already brought it into the enterprise in one form or another and, even more likely, the enterprise will have more blogs, wikis, and widgets than it knows what to do with. Second, each vendor ??? with the major exceptions of Microsoft and IBM ??? will not offer these tools destinations in themselves as they are today, but instead will deploy them in context and as part of another process (I have a report coming out that articulates this point in the next couple of weeks). In this way we expect Web 2.0 tools to make existing processes more efficient. I again wholeheartedly agree that these tools are not some miracle salve that will solve major business process problems; they will make existing processes more efficient, warts and all.

    I think in general what surprised me most, and where I think much of your concern comes from, is the notion that $4.65bn is a big number; it's not. In fact it is a terribly small number. To wit: Forrester expects that global corporate spending on technology will hit $1.7 trillion in 2008 (IDC and Gartner have nearly identical numbers). Software alone will hit $364 billion. My projection for Web 2.0 in 2008 is little over 0.2% of the software spend, and is not even worth pointing out for spending overall. While that proportion will grow over the next few years it still will not break 1.0% of the overall software market. Of that total, two-thirds is going to be external facing Web 2.0 spend.

    I hope those details add some context to the report any my analysis, and I will be sure to send you a copy of the full report to dig into (if any other readers would like a copy as well just let me know at oyoung AT If you can't tell, discussing and debating this sort of stuff is one of my favorite things to do so thank you for the opportunity to discuss the finding and your contrarian view. I'm very happy to see your blog is not just another echo chamber!
  • RE: The problem with Forrester's $4.6 billion prediction

    Dennis: you state "They make the implicit assumption that major players like IBM and Microsoft will subsume Web 2.0 software into existing collaborative offerings." I could have sworn that IBM and Microsoft were developing and selling products and services into the collaboration workspace -- also referred to by some folks as "Web 2.0." Maybe I'm wrong...