Enterprise 2.0 industry matures as businesses grapple with its potential

Some of the big IT news over the weekend was the announcement that Forrester predicts that the Enterprise 2.0 space will be a $4.6 billion industry within 5 years. ZDNet's Larry Dignan had the full breakdown yesterday on Forresters bullish outlook while Dennis Howlett immediately took umbrage with Forrester's conception of the Enterprise 2.0 marketplace using a "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 between."

Certainly that's the challenge of pinning down something with a term that still doesn't have industry consensus after two years, yet seems destined to be a vitally important space that our businesses are going to be moving to over the next few years. Enterprise 2.0 itself was originally defined by Harvard's Andrew McAfee a couple of years ago in careful detail (early timeline) about something he called freeform, social, emergent software applications (such as blogs, wikis, but many others as well.) The enterprise software industry began carrying the banner ever since, applying Enterprise 2.0 to the next generation of countless marketplace offerings, often whether or not they were any of the things that seemed to make this new type of application unique and special.

Read The State of Enterprise 2.0, a thorough summary of this new software space.

The intent of creating this new term, however, was to capture a very significant change in the way that people use networked software, regardless of it was the genuine retooling of "big box" traditional IT software suites or the infiltration of subversive Web 2.0-style consumer applications across the firewall. Careful market segmentation for research tracking purposes and the debate over the inclusion of traditional, top-down IT systems into the definition of Enterprise 2.0 can be interesting exercises. But such efforts also miss the big picture and the long-term potential of this potentially potent new generation of enterprise software applications.

In my studies of Enterprise 2.0 adoption, there are two major methods by which these new applications take hold. The first is the traditional model where the IT department or some part of the business decides at a high level to adopt these new tools and begins the process of evaluation, acquisition, deployment, training and adoption. This is the traditional model that most IT large-scale software acquisitions still use today.

The other model is where individuals take it upon themselves to find the best solutions to a given problem at hand and solve them creatively and collaboratively at a grassroots level. This is becoming increasingly more common, particularly in organizations that are less strongly hierarchical and I've identified this story in many large organizations, from AOL's stunningly rapid viral adoption of MediaWiki (the open source platform that runs Wikipedia) to the story of a large utility company getting ready to roll out Enterprise 2.0 only to find that the majority of departments had already adopted a solution on their own.

This second form of adoption is one of the hallmarks of this new model for using software to solve business problems and it speaks volumes to how different they are from the previous generation of applications. So it's worth spending a little time understanding exactly why and how they are so different. To explain this, I often refer to John Hagel's excellent work on push vs. pull systems that goes directly to the heart of why 2.0-era software applications seem so different from the software we've used before to solve business problems.

In other words, we seem to be coming from a push-based era of command-and-control management and are heading into an era where more and more work is being conducted using a decentralized pull-based model that's more scalable, efficient, and leads to increasingly innovative outcomes. This also demonstrates how the network effect driven model of the consumer Web can actively remake the internal IT landscape as competitive entries in the form of SaaS applications, mashups, and enterprise cloud computing. Thus these new software models can not only co-exist but will thrive and even push out existing "IT approved" applications.

New trends fostering Enterprise 2.0: More social, more adoption

And despite some parts of the enterprise community still debate whether applications like Facebook, Twitter, Friendfeed, and other social networking and media applications will have any lasting relevance to business, we are however tracking several important new trends this year:

The first is that more companies are adopting 2.0 tools intentially (for better or worse as we'll see). 2008 is going to be the broadest year yet in terms of Enterprise 2.0 adoption and Gartner is reporting that half of all companies investing in 2.0 this year will be doing so for the first time.

The second is that the Enterprise 2.0 industry continues to look at the consumer Web as the model for how to make these applications work best. The upcoming release of the respected Enterprise 2.0 platform, SocialText, adds true social graph capabilities and will adopt OpenSocial as a model to leverage the fast-growing consumer ecosystem around social networking apps. We're seeing a similar trend in other Enterprise 2.0 offerings as well in an attempt to bring the richness and robustness of the social computing ecosystems in the consumer world to the enterprise.

The results of pull-based software models

While most of us are familiar with traditional top-down methods for prescribing the use of IT to solve problems, it's the new organizational capabilities that Enterprise 2.0 and pull-based models for working and achieving business goals that will be interesting to most businesses. What do these "new capabilities" appear to be at this stage? The picture is just emerging but it looks as these are some of the potential results:

• Ad Hoc Processes and Problem Solving. While prescribed policy and procedures will always have a place, workers on the ground often need to make on the spot decisions and develop their own solutions to problems as they occur rather than waiting for one to be developed. Enterprise 2.0-enabled environments can give workers access to the right information and talent to solve their problems and enable solutions.
• Cross-Pollinating Innovative Methods. Pull-based systems are good an enabling innovation, particularly across what are known as weak ties in far flung parts of an organization. Enterprise 2.0 tools are good at flatting the organizations and leading knowledge stream from every corner, allowing the sharing and leveraging of ideas not possible before.
• Competition-Driven Outcomes. In the top-down hierarchical model of management, there is less competition for ideas, solutions, and especially software. In a decentralized, bottom-up environment, multiple solutions can emerge and the best ones can win.
• Pervasive Social Computing Interactions. We are just beginning to understand how social computing is transforming the work landscape, as it already has the consumer world. A highly social enterprise seems to enable a higher level of collaboration, communication, organizational awareness, which leads to the improvement of processes depending upon these activities.
• Situational Software Solutions. Self-service is a classic hallmark of 2.0 solutions. The organic use of blogs and wikis to create simple dashboards and mashups is a commonly recurring theme in organizations deploying Enterprise 2.0 tools. Now, more and more businesses are looking at the potential for putting software creation directly into the hands of workers to enable solutions to be created for business situations as they occur.
The bottom line is that regardless of what it's called, the industry around enabling pull-based business models and Enterprise 2.0 applications is going to be growing significantly over the next half-decade. These solutions will come both from the top of the organization as well as from the edge of the organization and will often have to be disentangled at the middle as these new applications cross-over into the highly-regulated "core" infrastructure of IT. The challenge will be learning how to apply these new models effectively to business while not strangling them with the traditional aspects of enterprise software that can greatly limit their potential and have led to poor outcomes and excessive structure in the past.

The good news: Most likely they will be hard to stop as Web 2.0 applications become increasingly commonplace in our organizations over the next few years. The bad news: Most organizations will take years learning how to create environments that fully allow the leverage of these tools.

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