Enterprise 2.0 may be defined as the use of the unique capabilities offered by cloud computing technologies and Web 2.0 concepts for improving inter-organizational communication and reaching a vast pool of potential customers now using Web 2.0 platforms. As many organizations perceive these two goals as part of their long-term corporate strategy, there is no doubt that this relatively new market has enormous potential, as is apparent by the increasing demand for Enterprise 2.0 offerings in the past few years.
Currently the increase in demand for Enterprise 2.0 solutions is almost entirely fueled by corporate level IT buyers within large organizations. With hundreds of millions of potential customers using Web 2.0 services and applications on a daily basis, these organizations desperately seek new ideas that will allow them to capitalize on these developments. Fearing that they will be left behind, many organizations opt to spend a tiny fraction of their IT budgets on untested solutions, thus driving the current demand. Most of these solutions are attempts to use recreational-oriented Web 2.0 applications such as web-page builders (WCM), social networking, wikis, microblogs, RSS, chat-rooms, and mash-ups. to improve internal organizational work processes. However, many organizations quickly learn that most of these solutions are difficult to align with existing business practices and organizational culture, and choose to return to the old and tested desktop solutions.
Currently, corporate IT buyers within large organizations are slow (and will remain slow in the near future), at embracing new internet technologies geared toward improving business processes as they are mostly conservative in their business practices; have major (and justified) integration and security concerns with web-based solutions, and have no real or imminent need for such solutions. Also, large organizations represent only 2-5% of enterprises in developed economies. For all of these reasons, relying almost solely on corporate IT buyers within large organizations to provide the main impetus driving the Enterprise 2.0 market forward may prove to be shortsighted.
The fact remains, however, that the Enterprise 2.0 concept addresses real and viable concerns, as represented in several ongoing processes:
- The gradual shift to web-based work environments – cloud computing is the future (perhaps the most pertinent indicator of this is the fact that Microsoft’s Office 2010 suite will also become available as a cloud-based service).
- The change in the nature of the work environment – a growing number of people work outside the traditional office environment. For these home-based workers and telecommuters the PC, laptop, Smartphone and web services are the main tools of their trade.
- A generation shift – the paper/desktop generation is out, and the web generation is in.
- A growing focus on improving business performance by encouraging collaboration.
- The desire of organizations to capitalize on their existing web presence by using new Web 2.0 concepts such as social networking, microblogging, RSS, mashups, etc.
After taking into consideration the current realities in the Enterprise 2.0 market as described above, it is our contention that in order to address the challenges created by these processes, the target markets should be redefined along two lines: targeting home-workers and telecommuters; and, targeting micro businesses and SMEs.
Targeting home-workers and telecommuters
Home-workers and telecommuters are defined as self-employed persons or paid employees of companies who do all or some of their work from home. In the US as well as other developed economies, it is estimated that between 40-50% of the working population hold jobs that can be conducted from home. Currently in the US more than half of the self-operated businesses are home-based. This amounts to about 10-12 million self-employed persons. Of the paid employees, only about 10 million (about 9% of the working population) do so most or part-time. The same general statistics also apply in the EU.
Although, even today, these figures are sufficient to sustain a viable industry, with the advent of information-oriented sectors as the main economic drivers, as well as with the advancement in remote-access and especially web-based technologies, the number of home-based workers and telecommuters is rising quickly. In a 2009 report, Forrester Research found that in the next five years 43% of the workforce in the US, or more than 50 million workers, will telecommute to some extent. They also report that even today, 59% of employees’ work time is spent at places in other than at their own desk in their office. According to Gartner Dataquest, in 2007, more than 12 million employees telecommuted more than eight hours per week, up from about six million in 2000. Gartner predicts the number will hit nearly 14 million by 2009, and by 2011, expectations are that 46.6 million corporate employees globally will spend at least one day a week teleworking, and that 112 million will work from home at least one day a month. Gartner expects this number to continue to grow.
Indeed, many businesses, especially in the service-related and IT industries, find it cost effective and sensible from a business point of view to allow a rising portion of their workforce to telecommute to some extent. This rising trend also generates a growing demand for new technological innovations that facilitate a home-based work environment. Cloud computing technologies are ideal for this type of setup.
Nonetheless, as of today the leading Enterprise 2.0 vendors attempt to offer organizational wide solutions that are ill-equipped to address the needs of home-workers and telecommuters. Most existing solutions offer supposedly ‘enterprise grade’ versions of Web 2.0 applications such as internal corporate wikis and social networking that in their original form were designed for recreational rather than professional uses.
The effectiveness of the attempts to implement these solutions on an enterprise-wide level is highly controversial, and even more so, such solutions provide no real added value to home-workers and telecommuters. This large and rapidly growing market is highly complex, comprising of many types of potential customers with various types of needs. Rather than following the current trends, players who wish to tap into this promising market must completely rethink the way cloud computing and Web 2.0 concepts can be used to address the changing needs of users within this market. Players who in the next few years will succeed to introduce tools that will effectively address these needs may find themselves reaping enormous rewards.
Targeting micro businesses and SMEs
According to a recent survey of business owners in the US, about 20 million businesses, (almost 80% of all firms) are self-operated. Of this figure about 89% are very small businesses comprising up to 20 employees, and approximately 8% are SMEs employing a staff of between 20-100 employees. All together, self-operated and SMEs employ about 60 million people, or about half of the workforce in the US generating almost 30% of the US’s GDP. A similar trend is also characteristic of all other service-oriented information economies (In the EU for instance, SMEs employ about 65 million people who generate about 50% of the EUs overall GDP).
The vast majority of people are employed in service industries, with a large proportion of these represented in information-based professional industries. Other indicators show that in information-oriented developed economies, SMEs are a major driver for innovation and entrepreneurship. All in all, the number of knowledge-workers employed by micro and small to medium businesses in the developed, as well as the developing, world is enormous.
Unlike large organizations, potential customers in these sectors are more open-minded and are quick to embrace new technologies; they lack complex managerial hierarchies and internal organizational politics, and are less bound by cumbersome corporate decision making processes. They are less concerned with integration and security issues, they run on tighter budgets that warrant openness toward cost-effective solutions that may replace existing expensive and cumbersome legacy business solutions, and finally, a large proportion of these businesses are home-operated thus heavily relying on the Internet and mobile devices as a work tool.
For all these reasons, cloud-based business solutions (Enterprise 2.0) are ideal for addressing the needs of micro and small to medium sized organizations; they are highly cost-effective and easy to implement, they usually do not require any special technical skills to set-up and put into service, and they offer easy ways to reach new markets. Despite these facts, studies show that awareness and adoption rates of Enterprise 2.0 solutions by micro and SMEs are very low, with almost 70% of such operations not even aware that such solutions are available to them.
Except for a few niche players, the major players in the Enterprise 2.0 market target mostly the corporate IT buyers of large organizations. This strategy is skewed in two respects: it fails to address the special needs of home-workers and telecommuters and it fails to efficiently target the huge pool of potential customers operating and working within micro and small to medium organizations.
Currently almost all players in the Enterprise 2.0 market line-up with industry leaders in attempting to market social networking usability to corporate customers. However, it is our belief that in the span of the next five years or so, players who will resist the urge to join the pack and present innovative out-of-the-box solutions targeting the needs of both home-workers and telecommuters, as well as those in micro and small to medium organizations will become the future leaders in a potentially huge market.
Eyal Engelhardt Ari, PhD
Co-Founder & VP Product at IncrediCube
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 See: Sarah Perez, “Enterprise 2.0 To Become a $4.6 Billion Industry By 2013″, http://www.readwriteweb.com/archives/enterprise_20_to_become_a_46_billion_industry.php; see also: McKinsey and Company, “How businesses are using Web 2.0: A McKinsey Global Survey”, http://www.mckinseyquarterly.com/information_technology/management/how_businesses_are_using_web_20_a_mckinsey_global_survey_1913
 See, for example: Jakob Nielsen, “Social Networking on Intranets”, http://www.useit.com/alertbox/social-intranet-features.html; Gartner, “Magic Quadrant for Social Software in the Workplace”, revised edition 24 November 2009, pp. 1-2 (for an online full text version, see: http://www.gartner.com/technology/media-products/reprints/microsoft/vol10/article4/article4.html; See also: T.D. Wilson, “The nonsense of ‘knowledge management’”, http://informationr.net/ir/8-1/paper144.html; See: Susan Scrupski, “State of the Enterprise Market: Slow and Unsteady”, http://www.readwriteweb.com/enterprise/2009/04/state-of-enterprise-market.php
 For the US statistics, see: http://www.census.gov/epcd/www/smallbus.html; for the EU, see: http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/special_topics/small_medium_sized_enterprises_SMEs
 See: Sarah Perez, “Enterprise 2.0 To Become a $4.6 Billion Industry By 2013″.