Web 2.0 can help companies reduce costs, but enterprises that have not yet taken advantage of such technologies are unlikely do so in the current downturn as they view investments in such projects as an "experimental" cost, say analysts.
Steve Hodgkinson, public-sector research director at Ovum, said companies that already deploy Web 2.0 do realise its potential as a cost-saver. However, he does not see any great swing towards the use of Web 2.0 as a cost-saving strategy by firms not already using such technologies.
"In some ways, the reverse may be a more common reaction: companies cutting back on anything that seems experimental or discretionary," Hodgkinson told ZDNet Asia in an email interview.
Agreeing, Shivanu Shukla, industry manager at Frost & Sullivan, said that while many enterprises realise what Web 2.0 can potentially do for them, a lack of successful enterprise deployments has discouraged businesses to look more seriously at Web 2.0.
According to Hodgkinson, such companies risk being caught in a catch-22 situation — they need to cut costs so they stop taking risks and reduce the number of IT people working on innovative projects. "But you need to have innovative people who are prepared to take risks to mobilise the Web 2.0 projects which can lead to sustainable cost reductions."
That said, smaller and more innovative companies are finding ways to use Web 2.0 to grow more quickly and to achieve operational productivity way beyond the levels that would be possible using earlier technologies, he said.
For example, Shukla cited web conferencing as a tool that has helped companies reduce travel cost and improve team productivity. "Using the web for internal as well as customer-facing communications is becoming increasingly popular."
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As email and web chat capabilities become more popular for customer interaction, some companies are also evaluating Web 2.0's video and blogging capabilities to create customer communities. "These communities help customers by resolving queries via this channel rather than calling the contact centre, thus leading to reduced costs for the company," Shukla explained.
Clear returns needed
When enterprises use web-based applications, their intention is to save costs. Companies are therefore more inclined to spend on those applications where the returns on investment (ROI) are obvious, he said.
"However, for areas where the ROI is unclear and intangible, such as customer experience, Web 2.0 applications have failed to see strong adoption," said Shukla.
Hodgkinson said there is an emerging body of best practices about how to tackle Web 2.0 projects. "Companies should make sure they go into this with their eyes open rather than just learning on the job. Web 2.0 projects are still largely experimental, so they need to be tackled the right way to avoid the risk that they end up being an additional new cost… rather than a source of cost savings."
Shukla said that successful deployment of Web 2.0 also depends on employee and customer participation. Businesses need to ensure that the applications are user-friendly and easy to access and use.
For customer-facing applications, companies need to be vigilant of the content that customers share and should therefore put relevant policies in place. Security concerns around these applications need to be addressed to ensure that customer data and confidential company information are secure from threats.
Talkback
Remind me again of the cost savings when your business grinds to a halt because a single point of failure (server) in some unknown remote location barfs.
P.S.
Probably because a bean counter thought the hosting company could increase its profits by installing 25% more hardware than the cooling system was specified for.
In realising the potential for Web 2.0 to help firms cut costs, the experience of web conferencing highlights a number of critical elements if vendors are to successfully convince end-users of its ability to deliver, at a time when any IT investment is being put under the microscope.
No matter how advanced the technology or theoretically attractive the benefits, it will not be taken up across the organisation if it is hard to implement, understand or use. The best conferencing tools address this by incorporating intuitive, single touch controls, for example, supported by top quality training. Similarly, such tools are more likely to be used if they are integrated into services in common daily use across the business and offer the ability to join without downloads, which can otherwise exclude third party participants.
The other hurdle which many solutions fail to overcome is key is an ability to demonstrate rapid, and provable, return on investment. In addition to cost-effective on-premise solutions Software-as-a-Service (SaaS) options can ensure RoI is achieved without massive upfront investment. Transparent, flat-rate charging also enables the business to manage on-going expenditure.
Together with tools such as carbon calculators, this allows time, cost and environmental savings to be measured on a departmental basis. By working with a one-stop shop solutions provider to ensure both the right solution and the right usage, this will ensure the organisation maximises the quality of collaboration enterprise-wide - both internally and with third parties - at the same time minimising travel and other associated meetings costs.