Belt-Tightening In Corporate IT Spending Will be Good For Web 2.0

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1. Technicle
   

   January 25th, 2008 at 10:59 pm

   True and echo.

2. dishonestrealtor.com
   

   January 25th, 2008 at 11:05 pm

   i agree..good post

   joe
   dishonestrealtor.com

3. Troll
   

   January 25th, 2008 at 11:35 pm

   erick, is that image photo of that waist yours?

4. Jason Hall
   

   January 25th, 2008 at 11:37 pm

   I really doubt that corporate users will see web-based office products as a way to save money, at least in the short-term (when it matters). Despite the fact that Google Docs or Zoho or even OpenOffice are free products, there is a definite cost of switching from Office, namely that you have to train people to use something different.

5. Silicon Valley
   

   January 26th, 2008 at 12:11 am

   Perhaps Web 2.0 is more appropriate for firms not having an investment in client side software. But it is very unlikely that firms will go from one the other with their investments in their current software and infrastructure.

   What they might not do is upgrade their current software - or be more aggressive about negotiating licenses. Also open source may become more acceptable for some limited needs

6. Chris Heath
   

   January 26th, 2008 at 12:12 am

   I agree with the last post the real costs and the reson Microsoft dominate is the retraining of users. Also Microsoft provides a one stop package, even though I’m not a fan of Ol Bill

7. max
   

   January 26th, 2008 at 12:18 am

   Very few Web 2.0 start-ups have offerings suitable to enterprises.

   The other problem is the mentality. Those brain-dead, frozen-in-time CIOs, Enterprise Architects and other dinosaurs of the corporate world do not understand “sign up and use” businesses. They want sale people with glossy brochures, contracts, endless presentations, negotiations, whatever else they do to fill the day.

   I see small businesses signing up without questions asked and prosper using our system. The larger ones always have to call you 20 times, spend an hour on the phone asking ridiculous questions and telling you how big and important they are to go and stuff it up anyway.
   You can’t do sales and enterprise level support with a lean web 2.0 business model. It will just eat up all your revenue.

   But yes, I agree, it may help in some respect.

8. Neil
   

   January 26th, 2008 at 12:56 am

   Erick, I think we’re still on shaky ground here. Consumer adoption of social Web apps still hasn’t proven to be lucrative in many scenarios outside of a Yahoo/MS/Google acquisition. If this continues to be the case throughout 2008 (Facebook, all eyes are on you), we’ll find the press will start to question the business proposition behind these services. As soon as that happens, they’ll spook out the corporate buyers of ‘enterprise 2.0′ services, big time.

   At the moment, corporate IT seems to be buying into ‘enterprise 2.0′ apps through PowerPoint presentations detailing the success of Facebook, MySpace, YouTube, blogging, and wikis (even Second Life!?!). There’s loads of guys doing this, and just as many execs are buying in to it all - lot’s of them are high on last year’s FT headlines.

   There’s room for doing great things with social networking in business applications, but it’s far from proven. We need to hear about company XYZ hitting an all-time-high, all thanks to their latest social networking initiative.

9. Alex
   

   January 26th, 2008 at 1:28 am

   SaaS!!!!!!!!!

   Companies like Salesforce will thrive!

10. Rajeev
    

    January 26th, 2008 at 3:06 am

    With offline workings using gears, even connetivity is not an issue.

    http://tekno-world.blogspot.com

11. Frank Daley
    

    January 26th, 2008 at 3:15 am

    To those who’ve commented about the cost of re-training as a real obstacle to organizations moving from Microsoft Office to a lower-cost or free solution, shouldn’t the question rather be: What are my ongoing costs of continuing to deploy Microsoft Office (that will also likely also involve some training costs) versus the ongoing costs to deploy a lower-cost or no-charge solution?

    The reality is that for many organizations, the cost of re-training will be less than the ongoing licensing costs paid to Microsoft. When the costs are extrapolated over three years, organizations will begin to wake up to the fact that Microsoft has been milking them for decades, and that even with all the re-training costs, they will save money by migrating to another solution such as Google Apps, OpenOffice.org, or perhaps even IBM’s Lotus Symphony product.

12. Mike Sanders
    

    January 26th, 2008 at 4:44 am

    Ditto, on Microsoft milking companies (and individuals) for decades… Lots of IT shops are still operating fully-depreciated hardware, with much leaner crews, with agressively priced software from the likes of IBM, Oracle and so on. These guys aren’t running enteprises, because they are stupid.

    If someone wants appls like these, I always point them to open-source products, like OpenOffice… Until Microsoft responds to the requirements of their customers, instead of their boardroom, I’ll keep re-directing their customers to open-source apples… Speaking of Apple(s), XP is my last MS/OS… I’ve had the MS-ring in my nose for 25 years and I never even considered buying an Apple, because I could not afford one, until now. If I must get training, new appls and more hardware, I cannot think of a better time to consider what Steve Jobs is making, these days… OS/X.

13. Baher
    

    January 26th, 2008 at 5:02 am

    I think this “recession” is a result of a realization by most corporates that over-charged over-inusred IT solutions provided by known IT giants are overrated and does not bring out tangible real-world results compared to the cost.

    And as evolution goes, when environmental changes take place, only the “evolved” species will remain on the scene.

    I wrote more about it here http://technozzle.com/?p=61

14. gregory
    

    January 26th, 2008 at 5:06 am

    advertising slowdown, that is the one i want to see analyzed

    because the whole ad-supported model is not sustainable

    (unless of course producers of products increase at a faster rate than commentators on producers of products… think that will happen?)

15. Steel
    

    January 26th, 2008 at 6:46 am

    @Neil

    How do you even think about comparing Dell, IBM, Oracle with the puny likes of Facebook, MYSpace, and Youtube in terms of business software. Most of the people usig these site really could care less about business. They’re there to
    “hook up”. Geez……

16. User447
    

    January 26th, 2008 at 7:38 am

    Actually swapping out new solutions is VERY expensive TCO-wise. It’s probably the MOST expensive thing you can do in a company.

    I would venture to say that they are going to use existing software and licenses people are trained for more efficiently, and try to run them to the bone or simply delay upgrade fees.

17. josh
    

    January 26th, 2008 at 8:03 am

    anybody read carr’s “the big switch”. i just picked it up the other day and this is the basic premise of his entire book. good stuff.

18. Sridhar Vembu
    

    January 26th, 2008 at 8:04 am

    It is useful to remember that both Salesforce & WebEx thrived during the last recession - in fact they were relatively unknown during the last boom. Cost was a major part of the reason.

    It is not an all or nothing proposition: adopting a suite like Zoho doesn’t mean abandoning or throwing away the investment already made. With our MS Office plug-in that is exactly the message we are touting - don’t throw away, augment. Adoption can be very tactical and very gradual. And that business-at-the-margins is more than sufficient for new vendors to thrive - at the time of their acquisition by Cisco, WebEx was pulling in about $250 million a year, which wouldn’t qualify as a rounding error for Microsoft, but a nice chunk of change for a new company.

    Sridhar Vembu
    Zoho

19. Jason M. Lemkin
    

    January 26th, 2008 at 9:13 am

    I’d like to believe this is true for us, but I suspect the opposite will be true. In the last downturn, the typical M.O. for corporations was a KISS (1) stop spending and (2) don’t add any new vendors or products. Right now, larger corporations at least are excited about 2.0 concepts as way to innovate. That might change in a heartbeat. 2.0 products which bypass or do not impact IT do have a chance to benefit from an ‘IT freeze’, but I suspect those that have IT as at least a stakeholder will be seriously challenged.

20. Annie Rodkins
    

    January 26th, 2008 at 9:43 am

    @Sridhar Vembu — good point about Salesforce & WebEx.

    When we hear Web 2.0, most of us think Facebook, Flickr, Digg… I imagine that’s not what Erick is talking about here.

    The point is that recession will be good for SAAS, and more generally for “IT-AAS”, and that can only be good news for Enterprise 2.0. Having said that, I agree with Max; enterprise 2.0 needs to grow up if it wants to play with the big boys (aka enterprises). Really a good opportunity for all.

    Actually I wouldn’t be suprised to see a rush of 2.0-ish acquisitions by big IT shops. GigaOM highlighted that EMC launched an enterprise version of online backup service Mozy (http://webworkerdaily.com/2008/01/26/weekend-coffee-break-5/). Now *that’s* what I’m talking about!

21. Web 2.0
    

    January 26th, 2008 at 9:46 am

    I think it would be VERY useful to mention what sites are already being used by Enterprise companies such as Salesforce.com, Netsuite, Siebel On Demand , Right Now, SuccessFactores, Business Objects On Demand and soon to be SAP On Demand, Microsoft Live CRM. Don’t look so much at productivity suites, look at CRM or other On Demand Applications.

22. Karel Lukas
    

    January 26th, 2008 at 10:45 am

    We’re seeing large firms move very slowly — but they will move. They’re locked in to term contracts and not pleased with the quality of service they are getting. I think many will evaluate web 2.0 carefully and make the move. On the SMB/SME side, we’re seeing strong adoption of Yugma. The idea of a high-quality instant web collaboration tools that are easy to adopt and use, compatible across different platforms and applications, and are priced inexpensively is very appealing to them. Companies that meet these SMB requirements will do well.

    Karel Lukas
    Yugma

23. Arnold leung
    

    January 26th, 2008 at 11:26 am

    My company develops intranet and content management solutions on top of the Drupal open source platform, and we have been seeing a steady increase in coroporate use open source software over the past years.

    In the past, big companies would only consider Microsoft products for pretty everything, but now they are more open to other sources. Looking at Drupal, 5 years ago, no one knows about it. Nowadays, tons of sites including the a few Universal Studio sites are on it.

24. Chris Waters
    

    January 26th, 2008 at 12:40 pm

    Most of the early comments on this article miss the point. Web 2.0 products tend to be tools rather than complete solutions. Frequently they can be used to augment existing solutions, without needing the existing solution. The price point (often free) tends to make them very attractive to individual users who are trying to get the job done.

    As belts tighten I think that people will be even more likely to look to online alternatives to solving their business problems. @Sridhar Vembu’s comment about Salesforce and Webex thriving during the last downturn is spot on.

    Chris
    Paglo - The Search Engine for IT

25. Kin Lane
    

    January 26th, 2008 at 1:06 pm

    Now we have to convince all the IT directors and executives that 2.0 is a good idea for their IT.

    We are getting passed the buzz factor of 2.0 so hopefully this will help them all see value.

26. darknight247
    

    January 26th, 2008 at 5:56 pm

    Working at a SaaS startup, it’s going to be wild but interesting ride this year and this article points out most of the reasons why. Being on the front line and speaking with single marketers from all types of industries, it seems need is driving them to think out of the box and are looking for things that are more economical and efficient. Another major selling point between our company and many of the other larger, more established companies is customer service. Seems that even in the cold, logical world of PPC management and optimization, their is a need for a human touch. Long live Enterprise 2.0.

27. Don Jones
    

    January 27th, 2008 at 4:45 pm

    Erick, I agree with your main thesis, but remember that the “good” part usually comes after the “painful” part…

28. Ian Kemmish
    

    January 27th, 2008 at 11:42 pm

    “The pay-as-you-go pricing of Web-hosted software might have greater appeal to IT managers on a restricted budget”

    Ah, how soon they forget! The recession of the early 1980’s (admittedly deeper than any we’re likely to face now) was the biggest single catalyst in the death of pay-as-you-go commercial timesharing and the birth of the modern DP department.