RESEARCH INFORMATION TECHNOLOGY

Web 2.0 Acquires Genuine Business Credentials

By Deborah Asbrand

Until now, Web 2.0 technologies were little more than a curiosity for enterprises. Popular, yes, but there was no clear business use. Today, more companies use blogs, Wikis, video, instant messaging, TelePresence, Web conferencing, and other Web 2.0 technologies to keep pace with rapid market changes.

Companies want easy and real-time connections to supply partners, consultants, design specialists, and-of course-customers. The new technologies have found a natural place amid that drive for collaboration.

Yet how to best determine the new tools' return on investment remains one of the frequently asked questions from business executives about Web 2.0 technologies, says Jeremiah Owyang of Forrester Research. To demystify Web 2.0's value, Owyang advocates a return to business basics. That is, do not try out the new technologies just because everyone else is, and because they seem relatively simple and inexpensive to implement. Have a plan.

"To a degree, pretty much every enterprise can leverage conferencing and collaboration."

— Ira Weinstein, Wainhouse Research

First, Know Your Objectives

"The first question is, what is your objective?" advises Owyang, a senior analyst at the Cambridge, Mass.-based company, in a recent video interview. "What are you trying to accomplish by launching the blog or the social network? Are you trying to connect with customers, reduce your sales cycle, or reduce your support costs?"

With specific goals in mind, companies can measure the tools' results against them. "If you're trying to reduce your support costs by letting your customers self-support each other, how many calls did not go into the call center because of this tool?" Owyang asks. "How much information was put in there by customers? How did they rate it?"

Taking a page from one of the Internet's most popular consumer sites can also help companies evaluate the new tools' value. "The 'most viewed' tab on YouTube can be applied to the enterprise, too," says Cisco Vice-President of Corporate Communications Architecture, Jim Grubb. "You can make assumptions about how valuable information is by how often it's accessed." A product brief that becomes the most read among employees, for example, can pinpoint where a company needs to deploy additional internal documentation or ease-of-use resources.

"When people join groups, it says something about the person and about the group," he says. "Groups have a tendency to maintain information because they're passionate about it." Grubb points to an enterprise Wiki created by Cisco employees who use Macintosh computers. "It's only 80 to 90 pages, but it tells you everything you need to know" about connecting a Mac to the Cisco internal network, he says. "Six thousand Macs on the Cisco network, and we're spending zero on IT to support it."

Such economics are convincing companies to expand their Web 2.0 investments. A 2007 survey conducted by New York-based consulting firm McKinsey & Company found that more than three-fourths of those executives plan to maintain or increase their investments in technology trends that encourage user collaboration, such as peer-to-peer networking, social networks, and Web services. The global survey, published in The McKinsey Quarterly, polled 2,847 executives, 44 percent of whom hold C-level positions.

Seventy percent of these execs reported using a combination of the technologies to communicate with their customers. Just over half of respondents use one or more Web 2.0 technologies to help manage knowledge internally. Just under half use the tools to design and develop new products, for example, setting up systems to gather and share ideas (see chart, "Collaboration Is Key".

Collaboration Is Key

Web 2.0 technologies help companies with communication, knowledge management, and product design and development.

Source: The McKinsey Quarterly

Start Small

Partsearch Technologies is an example of a company that started small with Web 2.0 and is now an enthusiastic convert. The Manhattan-based inventory broker's successes with a customer-service chat room and a Wiki, as well as a forthcoming Web-services project, show off the new technologies at their best: harnessing the company's talents to forge tighter bonds with the service representatives and consumers who are its customers.

Through its online catalog, Partsearch tracks eight million spare parts for everything from kitchen appliances to pocket-sized MP3 players. In 2007, it had $60 million in revenues. Customer-service reps who have mastered the enormous system, recalling parts numbers and other details with ease, are invaluable to the company. They are also crucial resources to call-center operations.

An appreciation of that expertise led to a clever blend of human know-how and technology, and to Partsearch's Web 2.0 foray. To make the best use of their co-workers' experience, the call-center staff tweaked job descriptions to create "parts experts," representatives who, rather than handle incoming customer phone calls, instead receive instant-message inquiries from other call reps on obscure parts, tricky features, and any other challenging questions that customers dial in with.

Old-Fashioned Business Results

The new collaboration helped Partsearch leverage the knowledge it had developed among employees and disperse it throughout the call center. The form of collaboration may be modern, but the effect is old-fashioned business results: The increased efficiency earned Partsearch a five-percentage point increase in sales.

Glenn Laumeister, chief executive of the seven-year-old company, is the first to credit his staff for devising the grassroots solution. "I had no idea that it had started," he says. "It was an incremental evolution driven by the people who were using it."

With the newly refined call-center data in hand, employees continued to innovate. They created a homegrown knowledge base, or Wiki, tailored to Partsearch's business. Now, for example, when a customer inquires about the safety of a lithium ion laptop battery, the call-center rep can turn for answers to the knowledge database's section on battery chemistry.

Laumeister estimates that knowledge-management software would have cost $100,000. "We did this without having to buy any software," he says. "What's great about it is that it was the employees' idea. They built it." That makes it the antidote to a common enterprise problem. "Too often," says Laumeister, "someone in corporate gets an idea for someone in the call center to use a new technology. They buy and deploy it-and no one uses it."

Next, the company expects to deploy an integrated Web-services system that Laumeister says will allow repair companies to connect directly with Partsearch's inventory database.

TelePresence and Web Conferencing

Customer demand for innovative products and services is fueling the investment in the new Web 2.0 technologies, including high-definition TelePresence and Web conferencing. Nearly 30 percent of companies polled in a 2008 survey by Cisco point to buyer demand as their motivation for exploring video and other Web 2.0 tools.

Visual collaboration tools like TelePresence are helping companies save millions of dollars in travel costs, claim the new productivity that results from reduced travel, and boost their business performance with such advantages as getting new hires up to speed more quickly.

"To a degree, pretty much every enterprise can leverage conferencing and collaboration," Ira Weinstein, a senior analyst at Wainhouse Research in Duxbury, Mass., said in a video interview. He says one consulting client reports that videoconferencing allows it to interview five times more candidates while slashing interviewing costs by 70 percent.

Weinstein says most large companies have enough bandwidth to run videoconferencing, TelePresence, and Web 2.0 tools. They are also adapting video delivery based on network capabilities and embracing high-performance videoconferencing among branch offices, a lower level of performance among smaller offices, and desktop conferencing to home users.

"The realization is that they're going to expand the network and strengthen the infrastructure over time to enable this," says Weinstein, "but they don't want to miss out on the benefits today."