Where is Business 2.0? Part 1: External applications

There's more to Web 2.0 than students ranting in the blogosphere. In this feature on Business 2.0, Andrew Collins takes a look at how Australian businesses are using Web 2.0 principles and philosophies externally.

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Given Web 2.0's history, the corporate world would be forgiven for thinking it is something to pass over. So far it's given us convicted sex offenders trawling for ripe pickings on MySpace, teens intimating murderous ambitions on blogs and, just recently, a bizarre case of the near-omniscient Wikipedia extending its abilities to precognition, with news of the death of an American wrestler's wife appearing on Wikipedia more than 14 hours...

before the body was discovered by police.

But there's more to Web 2.0 than the sensational and controversial. The term "˜Web 2.0' represents both the technologies and philosophies involved, and can lend itself to a number of business applications. These are roughly divided into those used externally to interface with customers or partners, and those used internally for collaboration.

Internal collaborative applications are usually in the form of a "˜wiki' — an editable web page — allowing companies to create repositories of information. This is based on the principle of "˜collective intelligence': the idea that minds working in unison are more productive than minds working apart. Web 2.0 interjects at this point, enacting the principle by allowing any authorised user to author or edit information in a relatively simple way, with little or no training.

External applications revolve around blogging, user-generated marketing campaigns or some other kind of information-sharing or "˜conversation'. Italian motorcycle manufacturer Ducati, for example, set up a series of wikis and blogs for employees, allowing a level of transparency between various parts of the company. Given the success of this internal undertaking, the company then brought down the wall separating its customers from the project, allowing anyone to access the information and give input. This appealed to the hardcore fans and the campaign was considered a success.

With the broad potential use for Web 2.0, you might think that Australian companies would be jumping on the bandwagon, blogging and wikiing all over the place. But no, it would seem that corporate Australia on the whole has an aversion to the phenomenon, and there appears to be more to it than a fear of being overcome by a deluge of comments on their MySpaces from the many garage bands which are "about to break through to the big time, man".

But according to Ovum's research director Dr. Steve Hodgkinson, their reticence to engage with customers via Web 2.0 might lead them into danger. He talks about the ramifications of Web 2.0 in terms of a pub conversation.

There are people gathered at the pub down the road, goes the metaphor, chatting about your product or service. Hodgkinson asks: would you, as a company, prefer to go on down and chat to your customer base about their concerns, directing the flow of conversation? Or would you prefer to remain ignorant of their comments, and allow the conversation to fester and stew in your absence?

Adam Radford, systems engineer at Cisco, agrees that companies risk alienating their target audience if they don't deal in terms of customers' changing information expectations by embracing Web 2.0.

"There is a great risk, as the change in demographics and adoption of technology will see fundamental changes in how companies reach their customers," says Radford. "Consumers are moving towards subscription models, where they control the information that reaches them."

Social networks strategist Laurel Papworth also agrees, warning corporations they'll be "˜blitzed' if they don't offer customers avenues of expression. To demonstrate the effects of neglecting Web 2.0, she points to the story of Sky Handling Partner, a cargo handling company.

The company allegedly misplaced one customer's luggage, leading the customer to publish a blog filled with profanity alongside the company's name. The entry was featured on the social bookmarking website Digg, which lead ultimately to a vast number of Digg users visiting the blog.

Thanks to all those click-throughs from Digg, the blog is one of the top results returned by Google when someone searches for the company's name. Few companies would enjoy such profane publicity.

Similarly, Papworth believes Optus and BigPond made a grievous error in not contributing to the Australian broadband discussion board, Whirlpool. Had they placed their own representatives on the board at or soon after its inception, says Papworth, the telcos could have allayed some of the hate directed towards them on the website, which any Whirlpooler will tell you is now quite substantial.

"If you don't participate, you don't get respect," she explains.

Senior analyst David Cannon, IDC, views the Whirlpool scenario a little differently, labelling it a "storm in a teacup". The Whirlpool user base comprises only a tiny per cent of the total number of BigPond and Optus subscribers, says Cannon, as well as being isolated from the mainstream media; the big telcos simply don't need to care.

But while Optus and BigPond might be large enough to ignore thousands of storming customers, certainly the thousands of small to medium sized businesses in Australia would pale at such customer dissatisfaction, and the thought of it spreading.

NEXT: the benefits of internal corporate Web 2.0 use, what's to be afraid of by adopting it, and whether or not any of it actually matters!

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