Enterprise web 2.0 costs set to plunge

According to a new report by Forrester analyst G Oliver Young, the average deal size for web 2.0 tools including blogs, wikis, social networking and enterprise RSS is set to fall over the coming five years, despite an increase in the average number of licenses per business.

The decline in pricing comes on the back of an increasing communization of such software, bundling and subsumption--the inclusion of enterprise 2.0 features into vendors' existing products, negating the need for new standalone offerings.

The report said: "Traditional software vendors have moved aggressively in the direction of web 2.0 software; however, few are offering standalone products. Instead, most, like Microsoft and SAP, are rolling web 2.0 features into existing software packages; in many cases, they are providing the technology at no extra cost … many will make use of them and offset another purchase in the process."

Social networking will see a dramatic decline in pricing, with the cost declining by more than 50 per cent.

"Specialized tools that focus on alumni networks, new employee orientation, and cross-department collaboration may continue to command price premiums, but generally - without significant functional advances in these tools - Forrester is not optimistic: we expect average deployment spend to fall by more than half to $15,300 per customer over the next five years," the report added.

A price drop in blogging will see the software making the smallest dent in CIOs' budgets of all enterprise 2.0 tools. The average cost of a deployment - $14,100 in 2007 - will fall to $6,500 by 2012.

Wikis, too, will see a price drop - from last year's average deployment cost of $16,000 to $7,400 by 2013, with new open source and software-as-a-service entrants into the wiki market helping to drive down the average cost, despite an increased adoption among enterprises.

Meanwhile, the cost of podcast syndication software, enterprise RSS and widgets are also expected to decline over the long term. The only enterprise 2.0 tool to buck the trend is the mashups, where prices will double as the market matures and the technology breaks out of its traditional heartland of the IT department and is taken up by the business at large.

Who will benefit from these plunging prices? The usual roster of software heavyweights looks likely.

"CIOs will look to large incumbent vendors to provide web 2.0 features and functionality to their enterprise over the next five years," the report noted.

However, CIOs are still willing to switch their alliances if their enterprise web 2.0 supplier is not doing the job. "This is a huge advantage but not a guaranteed success… do not assume that CIOs will not look elsewhere if your technology is not up to snuff," the research added.