Web 2.0 and Enterprise 2.0

Posts tagged ‘Business Model’

Enterprise 2.0 and Web 2.0 technologies

What is Enterprise 2.0? How are organizations using Enterprise 2.0 principles in a significant way? Why organizations are using Web 2.0 technologies to improve collaboration across the enterprise. 

Enterprise 2.0 Definition

The term “Enterprise 2.0” is the next generation of enterprise content management (ECM) to knowledge workers using network software within an organization or business. It was credited with was being coined by Harvard Business School Associate Professor Andrew McAfee in the spring 2006 issue of the Sloan Management Review (SMR) article – Enterprise 2.0: The Dawn of Emergent Collaboration. In his blog, “The Business Impact of IT” (2006), McAfee defines Enterprise 2.o as the use of emergent social software platforms within companies, or between companies and their partners or customers. In other words, Enterprise 2.0 uses Web 2.0 technologies in the organization to create a competitive business advantage. It builds the network to help to connect like-minded people together, including employees, business partners/suppliers and customers. As well, it helps to share the internal and external information easily.

This interview video clip shows how Andrew McAfee identifies “What is Web 2.0/Enterprise 2.0?” and explains the keys principles of Enterprise 2.0.

Enterprise 2.0 Characterics “SLATES”

In 2006, Andrew McAfee introduced his “SLATES” mnemonic to indicate the six key components of Enterprise 2.0 technologies. As well, this acronym “SLATES” forms the basic framework of Enterprise 2.0.

  • Search – search technologies
  • Links – to link information together for easy access such as hyper linking and Mashup technologies
  • Authorship – to able everyone to contribute such as Wiki and blogs
  • Tags – to categorize content such as social bookmaking
  • Extensions – to allow users to extend their applications and to make intelligent system recommendations.
  • Signals – to inform or alert users of the updates via feeds technologies or email alerts.

According to Dion Hinchcliffe’s article “Web 2.0 definition updated and Enterprise 2.0 emerges” (2006), SLATES describes the combined use of effective enterprise search and discovery, using links to connect information together into a meaningful information ecosystem using the model of the Web, providing low-barrier social tools for public authorship of enterprise content, tags to let users create emergent organizational structure, extensions to spontaneously provide intelligent content suggestions similar to Amazon’s recommendation system, and signals to let users know when enterprise information they care about has been published or updated, such as when a corporate RSS feed of interest changes (ZDNET, 2010).

Enterprise 2.0 Technologies

There are some common Web 2.0 tools and technologies that always relate to Enterprise 2.0 in business. On the Internet are wikis (examples QEDWiki or MediaWiki), blogs (examples, Blogger or WordPress), social networking (facebook or LinkedIn),  micro-blogging platforms (examples, Twitter or Yammer), social bookmarking sites (examples, Delicious or Scuttle), mash-ups and gadgets.

Enterprise 2.0 Study Case

This week i am going to look  into a company that has incorporated Enterprise 2.0 into its organization. One of the best examples for a company like this is Oracle Corporation (see Figure 1.0).

Figure 1.0 – Oracle Corporate

The Oracle Corporation is the world’s second largest independent software company that specializes in developing and marketing enterprise software products – particularly database management systems (DBMs). According to Thomas Kurian, Oracle’s senior vice president (VP) of server technologies development, “The company believes Enterprise 2.0 technologies can transform the way companies share information and work together. (InformationWeek, 2007)” In other words, Oracle uses Enterprise 2.0’s principles such as “SLATES” to help its organization to create an interactive and collaborative business environment, products and services. 

Oracle combines the use of tools for search information more efficiently (see Figure 2.0), uses links to connect all information together to create a useful information ecosystem of content (see Figure 2.0); allows for the content information authoring and content categorization by tagging (see Figure 2.0). As well, it allows users to know when the content is updated via Feeds like RSS and alerts (see Figure 3.0).

 Figure 2.0 – Oracle Blog Home using Enterprise 2.0 Characterics “SLATES”

 

Figure 3.0 – Oracle Blog Home using Enterprise 2.0 Characterics “SLATES”

Enterprise 2.0 Business Model

Today, Enterprise 2.0 technology is challenging traditional business designs and changing the existing old economic business models with new Web and the rise of mass collaboration. Wikinomics is one of new economic models of the twenty-first-century digital economy. It is a rephrasing of Coase’s Law which was attributed to Ronald Coase in 1937. The term “Wikinomics” is popularized by Don Tapscott and Anthony D. Williams‘s book, Wikinomics: How Mass Collaboration Changes Everything, published in December 2006. It describes the effects of extensive collaboration and user-participation in the marketplace and the corporate world (Whatis.com, 2008). In other words, it is a new way bring people together on the Internet and leverages the power of collaboration.

Authors Tapscott and Williams claim the following four key drivers are the central concepts of wikinomics in the enterprise.

  • Openness – to create a collaborative environment, to share information with others and to maximize the transfer of ideas.
  • Peering – to encourage everyone to be the co-producer to contribute.
  • Sharing – to share any innovation and improvement, as well as, the development of ideas, creations and strategies.
  • Acting Globally – to actively interact with community and attract people all over the world.

This interview video clip shows how Don Tapscott how Wikinomics impact on business and startup opportunities.

Enterprise 2.0 Business Model Case Study

This week i am going to look  into one of the best examples of Wikinomics in Motley Fool (see Figure 4.0).

Figure 4.0 – Motley Fool

Motley Fool is an American private popular financial portal company which is dedicated to building the world’s greatest investment community. The company was founded in September 1995 by David Gardner, Tom Gardner and Erik Rydholm. It provides multimedia financial services, including financial solutions for investors through various stock, investing and personal finance products (Wikipedia, 2010). Motley Fool launched its website to help people to make better investment and financial decisions and to offer articles on stocks and investing. It uses its website as a communication platform to form an interactive and collaborative environment with the Enterprise 2.0 business model and the principles of wikinomics. In the spring of 2006, the Motley Fool launched its online community called – CAPS. This community (see Figure 5.0) allows everyone to become the co-producers of the community and to share their free knowledge and information with others. Sharing is the key to the community and it also enhances their core value proposition.

 Figure 5.0 – Motley Fool CAPS Community

In conclusion, technology and the Internet are making the world a smaller and more connected place (Terry Semel, 2009). However, technology is also changing the way people interact with others by social media and how companies incorporate Enterprise 2.0 technology into organizational structure to help create a competitive advantage. People are content co-producers in the community and more proactively participants in community activities. Information can be shared with like-minded people.

References:

Wikinomics. 2010. Whatis.com.

Motley Fool. 2010. Wikipedia.

Enterprise Web 2.0. D. Hinchcliffe (2006) ZDNet.com.

A. McAfee (2006) The Business Impact of IT.

Orace Pushes Enterprise 2.0. J. Hoover. (2007) InformationWeek.

Leveraging the Long Tail

The Long Tail is one of the most important business economic models of the 21st century, especially for online retail business. It first appeared in Wired’s article “The Long Tail”  in October 2004 and expanded into The New York Times bestseller book in July 2009 on the subject entitled, The Long Tail: Why the Future of Business Is Selling Less of More. The phrase “The Long Tail” was coined by Chris Anderson who is the editor-in-chief of Wired Magazine and a former jounalist for The Economist. In his book, “The Long Tail” (2006), he defined “The Long Tail” (see Figure 1.0) as a statistical curve showing the edge that digital sellers with infinite goods for niche markets have over retailers with limited goods for mass markets and he also used this term to describe the potential opportunity missed in traditional product development.

This video clip shows how Chris Anderson identifies the business model of “The Long Tail”

There are some characteristics of the Long Tail business model

  • More (unlimited) selection – provides a wide range of items/products from “niche markets” as well as “on-demand markets”
  • Lower price – more profitable due to the lower cost for digitial automated delivery and on-demand creation
  • Hits matter – items/products can be easier found by search engine and even online social community (Facebook, Twitter). In other words, more product promotion
  • Scale – more feasible compared to traditional retail stores. It can sell more items and provide online delivery
  • Low fulfillment costs – using digital storage to store data; storage itself is getting cheaper and online devlivery totally automated

The Long Tail Curve

Graph for The Long TailFigure 1.0 : Graph for The Long Tail Curve

In the graph – The Long Tail Curve (see Figure 1.0), the vertical axis (Y) represents the popularity or mass market appeal for an item and the horizontal axis (X) represents a particular product. The red area of the graph represents the traditional markets – the Head. The orange area of the graph represents the Long Tail.

In 2005, Tim O’Reilly in his essay What is Web 2.0, coined the popular term for new Internet services (next generation of Web) – “Web 2.0” and also defined “The Long Tail” as one of the core design patterns of these Web 2.0 Internet business models. O’Reilly describes it as, “the collective power of the small sites that make up the bulk of the web’s content.” AuctionInsights (2008) states that eBay was one of the world’s first “Long Tail” markets. Therefore, eBay is a good example of an organisation “Leveraging the Long Tail” through customer self-service.

eBay LogoFigure 2.0 : eBay Logo

eBay (see Figure 2.0) is owned by eBay Inc. which is an American company and was founded as AuctionWeb in September 1995 by Pierre Omidya. With more than 90 million active users globally, eBay is the world’s largest online marketplace, where practically anyone can buy and sell practically anything (eBay, 2010). In other words, eBay is the world’s leading Internet online auction and shopping website. It brings together millions of people worldwide every day and creates an online sales platform/marketplace for the sale of goods through the Internet and provides services for and by a dedicated community of individuals and small business owners. Since 1995, eBay has grown to have a presence in 39 markets (including partnerships and investments) with more than 90 million eBay.com users worldwide. The total worth of goods sold on eBay was $ 60 million, trading more than $2,000 worth of goods each second (eBay, 2010).

In Web 2.0 era, eBay has stayed successful by continued leveraging of The Long Tail through servicing numerous micromarkets and data management to reach out the entire websites, to the long tail and not just the head. The following items demonstrate how eBay does that :

  • enabling transactions of only a few dollars between single individuals; acting as an automated intermediary (Jim Petrassi, 2008)
  • millions of products not just from “on-demand market”, but also “niche market”
  • providing its services as a sales platform with traffic for other small business retailers to build their own e-businesses
  • compelling participation mechanisms like Feedback, Reviews & Guides and Rating system
  • extending functionality such as combining with traffic from search ads of Google and Yahoo to increase hits
  • acquired Skype to leverage its services to advertise eBay product listings
  • a search mechanism (search function) for consumers to purchase their interested Long Tail products
  • a venue for Long Tail sellers to sell their products to this marketplace

In conclusion, technology and the Internet are making the world a smaller and more connected place (Terry Semel, 2009). The Long Tail theory is changing the e-commerce economics model with shifting from the Mass-Market to Niche Economics.

References:

O’Reilly, T. 2005. What is Web 2.0.

The Long Tail. New York Times Ad. 2009.

eBay: Long Tail Marketplace or Commodity Exchange? Part 1. 2008. AuctionInsights.

eBay. 2010. eBay.com

The Long Tail. 2010. Wikipedia.

eBay. 2010. Wikipedia.

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