It seems pretty clear that the US economy is in the middle of a slowdown. Its depth, reach, and length are not yet obvious, and some folk still resist using ‘the R word,’ but leaner times are here, and might last a while.
During such times companies often throttle back their IT investments and hold off on big technology products. Some business leaders think this is the wrong thing to do — during the last recession, in 2001, Jack Welch said that "this is the moment to widen the gap" between GE and its competitors. "We are driving the hell out of IT spending… It’s the lifeblood of the company." But the fact remains that technology budgets typically get pared when times get tight.
Which make Enterprise 2.0 technologies and deployments all the more attractive, for three reasons. First, the tools themselves are ridiculously cheap compared to other enterprise-level applications. Some, like WordPress and Mediawiki, are even free. And even the commercial E2.0 tools aren’t going to break the bank. Last week Awareness CEO John Bruce and co-founder David Carter came to my MBA class. The students looked at Bruce a bit quizzically when he revealed his company’s pricing: $4k/month, regardless of company size, # of users, etc. Bruce is not running a charity, of course, and his approach to increasing revenue with each customer is clever. Awareness charges an additional monthly fee for each neighborhood that a customer establishes. A customer will only go to the trouble of setting up a neighborhood if the Awareness platform is valuable to them, so Bruce can plausibly argue that he’s charging for value delivered. Even if a customer sets up a Manhattan’s worth of neighborhoods, though, the monthly tab from Awareness is not going to be painful. I once heard the total spending on Intellipedia and the US Intelligence Community’s other E2.0 tools described as ’rounding error’ in any single agency’s technology budget. The tools of emergent, as opposed to imposed, collaboration are just not very expensive to purchase and install.
They also don’t need to be configured up front. The second reason that Enterprise 2.0 looks good during lean times is that its component technologies don’t need to be populated with data and business logic then extensively tested before they go live. The whole point of emergence is to start with something close to a blank slate, then see what… emerges. It makes sense, of course, to seed the platforms with initial content that will be compelling, draw in users, and encourage contribution, but this is entirely different than setting up CRM, ERP, SCM, and the other technologies that impose structure on collaborative activities. It takes a great deal of time and money to get these structuring technologies ready to go live. Here again, E2.0 looks like rounding error in comparison.
Third and finally, as business slows down workers often have more slack in their weeks. When this is the case it’s easier for them to find time and energy to participate in Enterprise 2.0. So lean economic times might be the right times to launch an effort to build an emergent social software platform.
Leave a comment and tell us what you think, and what you’re seeing. Is this the right time to proceed with Enterprise 2.0? Why or why not?
{ 11 comments… read them below or add one }
Thanks for the interesting read. I believe there has never been a better time to push Enterprise 2.0. When economy is slow a lot of companies tend to keep doing the same things instead of taking their business to the next level. Those who act anti-cyclical are often the winners in the long run. Even though deals like Microsoft’s $240 million investment in Facebook or Google’s 1,65 billion takeover of Youtube brought values of web-based companies to a new level, I believe there is still fear that a new dot-com bubble could burst. With relatively low trust in web-based businesses it would be logic to assume that companies cut spending on web technologies when a recession hits the country. However, I think that Enterprise 2.0 cannot be stopped and that those who take the opportunity right now – when the majority does the opposite – will be the ones that profit the most in the long run. ItÂ’s like you said .. “ Â… the tools themselves are ridiculously cheap“
On the face of it a reasonable observation/ prediction. I agree with the comments in terms of relatively lower levels of required financial investment, less commitment to a major project as compared with a project such as ERP. However these types of projects (web 2.0) do require sponsorship and some TLC (tender loving care). TLC may be in short supply over the coming months. I would have a concern that many web 2.0 projects may get a start but not get the required attention.
Hi Andrew,
I’ve posted some thoughts on the importance of information sharing using social networking tools here: http://contentedmanagement.net/blog/information-in-a-bear-market/
Regards,
Philippe
As business slows down it provides opportunity for both business and IT. If, in these slow times, businesses choose to exercise some choice, IT can exercise its resistance, as it also has time on its hands. If business elects to emerge, I envision many IT departments seeking to maintain its control over information and push hard on classic arguments for central control. I believe that history does show previous periods when business units chose to act independently of IT, sometimes beneficially. But, it seems that these breakouts generally get reabsorbed by the pack. Does talk of business emergence need to take on more depth of discussion to account for such existing conditions?
What is the goal of business emergence? If the goal of emergence it to breakout and stay out in front of IT, then I think discussion is necessary on what it takes to sustain the breakout. Where does business emergence take us? Is the real underlying issue of business emergence one of self control over information?
I totally agree that the technology that will allow building the enterprise 2.0 is really cheap (actually, it will probably be free at one point). The costs are linked to the change management projects that will need to be conducted in order to actually achieve enterprise 2.0.
The risk, to my mind, would be investing small in software and refusing to spend what is needed to conduct change. This could prove deadly, as what needs to be changed, organization, behaviours, leadership styles, will not evolve easily and it is these elements that will make or break enterprise 2.0
I have a hunch that lean economic times tend to reduce the entertainment options for the affected public. Money’s tight? Well we can’t go out to eat as much, drive to far away places, or party at the pub as much as some of us may enjoy during the fat times. – So I’d offer that the end users participation, readership for blogs + websites in general may increase to fill the gap. – Another reason to invest in social media now, possibly easier to reach your audience.
I agree. In a difficult business environment it is even more important than ever to tap into the collective intelligence of the workforce, to stimulate lateral thinking and innovation. Equally, in the same way that an individual’s blues can often be helped by communicating with others, perhaps the corporate equivalent could be relieved through activity on E2.0 platforms.
Andrew, I agree with your basic premise that this is the time to “widen the gap” against the competition and implement E2.0 solutions.
What would be your recommendation for those companies that already have E2.0 and are using it for some basic collaboration. What can they do to “widen the gap”? are there new techniques to deepen and expand the collaboration for those companies that are already familiar with these technologies?
Whilst I don’t disagree at all with your 3 overarching points Andrew, I think traction can only occur one of two ways for Large Enterprises: 1) if the CTO/CIO of an organization has bought into E2.0 as a viable collaboration tool for employees or 2) if a department begins a skunk-works project.
If 1) isn’t happening already, then whether times are tough, or times are good, E2.0 doesn’t have a chance. (particularly if the CTO/CIO has been brought up on an ERP intravenous and looks to the ERP vendor for new ‘modules’ in upcoming service packs or maintenance renewals as opposed to good SaaS or SOA 3rd party solutions)
If 2) is in play, then you’ve got yourself a classic example of the commoner taking E2.0 into his/her own hands for her department, which then (when times are perhaps rosier for the company as a whole) could be replicated to other departments or the organization itself.
This does not take into consideration the SME audience, but if we are heading into a recession (or are in fact in a recession) I can’t see how SME’s are looking to spend OPEX or variable budget on E2.0 ($50k/annum is a lot of money for them). Furthermore, because of their very definition of being a SME, I doubt they have scads of time available to populate an E2.0 environment as they will be undoubtedly running around trying to drum up business somehow. (ie. saving their jobs)
Just one man’s opinion.
Guffaw! I choked on my breakfast when I read the quote, “as business slows down workers often have more slack in their weeks”.
When business slows down, financial stress requires companies to layoff and run lean! Which means MORE work and less time to “surf”.
While true that, “smart companies will continue to invest in infrastructure” during an economic slowdown, the reality is that companies will have to be more creative about how they find the resources to accomplish this worthy goal.
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