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Too many CIOs fail to ride the Web 2.0 technologies wave

It's more than just widgets. CIOs are now looking beyond the Web 2.0 hype and using the technology to reshape their companies.

Beware false prophets.

Riding on the coattails of Web 2.0 technologies are vendors who want your business -- and they're trying all sorts of tactics to get it. But experts warn: Stay away from vendors that promise a Web nirvana in a box.

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"If a vendor is telling them, 'Here is our Web 2.0 solution,' that's an illusion that needs to be dispelled," said Ray Valdes, research director of Internet platforms and Web services at Stamford, Conn.-based research firm Gartner Inc. "Web 2.0 is not something you can buy and implement."

Many CIOs will believe they are buying a competitive advantage by investing in vendor solutions based on Web 2.0 technology, such as Ajax and RSS. Valdes said this approach might give a company a short-term advantage, but competitors will quickly nullify that advantage by adopting similar technology.

Some vendors are selling products labeled "Web 2.0" technology. But when it comes to Web 2.0, technology is just a means to an end. The real business value lies in what the technology enables: better collaboration among users. In fact, a growing number of companies are developing new business models to take advantage of the collaboration that Web 2.0 technologies empower.

Valdes warns that while the products allows companies to build Web 2.0 applications, a company will also need to know how to use those apps to encourage the social interaction that is integral to the concept. It's "more than just the technology," Valdes said.

It's nice to add widgets such as Ajax and RSS to your website, but companies also have to find ways to realize the social aspect of Web 2.0, to attract users, to encourage them to contribute content, to create metadata with tagging and social bookmarking, and to build intellectual capital.

Unfortunately, Valdes said, many CIOs are missing out on leveraging the social aspects of Web 2.0 because they are oriented toward procuring ad-implementing technology, not re-engineering a company. In a recent research report, Valdes suggested that 80% of Global 1000 companies will have tried Web 2.0 technologies by the end of 2008. But only 20% of those companies will successfully adopt the "nontechnology attributes" of Web 2.0, such as metadata and content produced by users.

The social aspect of Web 2.0 "can lead to a new kind of business," Valdes said. "It can lead to new markets. It can lead to new sources of revenue. It can build up as a situation where an organization has assets and equity that other competitors don't have, and therefore they have a sustainable competitive advantage. Those assets and equity are not necessarily financial. They are intellectual property."

When CEO Steve Kaufer founded in February 2000, he launched a search engine for the travel industry that morphed into a $100 million company by leveraging Web 2.0 technology (although the term Web 2.0 wasn't coined until 2004.)

Originally Kaufer envisioned the now classic first-generation online business, where users have one-to-one relationships with the service provider. Users would search for information they needed for planning a trip. They would find the information, book their travel plans and quietly move on.

"We were going to be the travel search engine for the Web," Kaufer said. "People who wanted to find out anything about travel would use our database for all the best links. But the model morphed pretty quickly into collecting commentary and being more of a community site."

Today features more than 5 million individual user reviews of hotels and travel destinations. Users can read reviews and then click on links to online travel agencies. Those companies then pay lead referrals to Needham, Mass.-based TripAdvisor LLC.

Kaufer included the option for users to write reviews from the very beginning, but he didn't anticipate then that it would eventually become the heart of his business.

According to Gartner's Valdes, in the days of Web 1.0, a consumer would go to an online travel site and see the official information about a hotel and make a reservation. leverages Web 2.0 technology to allow users to share information, warts and all. They get a more complete picture, they can make a better decision, and they'll be getting greater satisfaction with the service.

[The social aspect of Web 2.0] can lead to a new kind of business.
Ray Valdes
research directorGartner Inc. could have settled for some fancy features using Ajax and an RSS feed, but it was the idea of letting users contribute reviews that really added value to the company, not the fancy widgets. It's now a company whose greatest asset is the social interaction among users, according to Valdes. That's the heart and soul of Web 2.0. Any company can be a portal for travel. But 5 million user reviews takes it from Web 1.0 to Web 2.0.

A CIO can't just slap Ajax-powered features onto a customer-facing website and expect to duplicate this success, Valdes said.

Of course, Web 2.0 always carries with it certain risks, and CIOs might have to sell the concept to the guys upstairs.

"In some cases you can think it's a good business strategy to go after this Web 2.0 phenomenon and others in the business might say, 'Sorry we don't think it's appropriate,'" Kaufer said. "If the objection is, 'This is going to hurt our sales,' that is an extremely valid objection. Understand why it would hurt sales."

Kaufer said the Web 2.0 label slapped onto a software package can mean anything to anybody. It's important that CIOs identify what customers would want from user-generated content and other social aspects to the technology. He said the social aspect of Web 2.0 might have nothing directly to do with selling a product, but it can create branding opportunities and build relationships with customers.

Web 2.0 "might scare some people, but you can try a lot of things out and it's technically not that hard," Kaufer said. "It doesn't need to be a major push for the company."

Let us know what you think about the story; email: Shamus McGillicuddy, News Writer

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