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| ARTICLES | August 2007 |
Report finds that 79 per cent of corporations believe Web 2.0 has the potential to increase revenues
Over 400 senior executives from major companies around the world assessed the impact of Web 2.0 on their businesses
A 2007 REPORT from the Economist Intelligence Unit, entitled Serious business: Web 2.0 goes corporate, examines how Web 2.0 is being applied—and will be applied in the near future—by large corporations throughout the world. The report is based on a survey of over 400 senior executives as well as interviews with major corporations.
Report summary
According to the survey, Web 2.0 has moved from buzzword to reality in many of the world’s largest corporations with 79 per cent of respondents seeing the collaborative web as a way to boost revenues and cut costs.
Perhaps the most interesting finding is that a full 85 per cent of Chief Officers see the sharing and collaboration aspects of Web 2.0 as an opportunity to increase revenue and/or margins, versus 75 per cent of middle management. These findings point to a possible disconnect between the corner office and the rest of the organisation on how to best incorporate Web 2.0 practices into business.
Fig. 1 How early adopters are using Web 2.0
Does your company currently use web technologies or processes to increase sharing and collaboration, or plan to use them within two years?
Customer interaction
The most-cited effect of Web 2.0—a collection of Web-based services that emphasise online collaboration and sharing among users—is to transform the way that companies interact with their customers. The study, which consisted of in-depth interviews with corporate leaders as well as a global survey of senior executives, found that large companies are already using Web 2.0 tools and methods in a variety of ways. So far, companies have focused their Web 2.0 efforts mainly on the creation of online communities that can help with product marketing or product development. In second place is the establishment of blogs or wikis to initiate conversations and share knowledge inside or outside the company.
In the future, companies expect Web 2.0 methods and tools to be the single biggest factor changing the ways their company interacts with customers (according to 68 per cent of executives), or on how employees interact with each other and the company (49 per cent of survey respondents).
Surprise
Report editor Dan Armstrong was surprised by the level of excitement among big firms concerning the commercial possibilities presented by Web 2.0. The survey respondents and interviewees saw Web 2.0 as an opportunity, not a threat, and were extremely creative in applying the idea of the collaborative network to their own products and processes.
According to John M. Lervik, CEO of report sponsor FAST, a rapid acceleration in the Web 2.0 adoption curve is expected as business leaders recognise the value of community-sourced information made accessible and actionable via search technology. Perhaps more interestingly, Web 2.0 principles are expected to take off at the enterprise level, fundamentally changing how organisations innovate and execute.
Other key findings
- Customers are helping to develop and support products Nearly 60 per cent of the surveyed companies say that they are inviting customers to contribute content that explains, supports, promotes or enhances their products, or that they plan to do so within the coming two years. About half of companies say they are, or are planning to, treat customers as co-developers of products that are in a constant state of improvement.
- Ease of acquiring and supporting customers provides the biggest financial benefits Most companies cited marketing and sales as an area where Web 2.0 could help to increase revenues, primarily through customer acquisition and service. Web 2.0 technologies were seen as a way to reduce costs in the areas of customer support, advertising and public relations, and product/service innovation.
- Early adopters are to be found in many countries and industries Companies based in the US, Germany, China, India and the UK are among the early adopters of Web 2.0 tools and methods, according to the survey. The top early-adopter industries are entertainment and media, technology, travel and tourism and professional services.
- The C-suite is more enthusiastic than lower-level executives A full 85 per cent of C-suite executives see the sharing and collaboration aspects of Web 2.0 as an opportunity to increase revenue and/or margins, versus 75 per cent of middle management. The C-suite is also more inclined to view Web 2.0 as transformative, affecting all parts of the business (35 per cent versus 28 per cent) and having a significant impact on the company’s business model (41 per cent versus 22 per cent).
- CFOs are the most skeptical about the potential of Web 2.0 Compared to CEOs and the rest of the C-suite, CFOs lag in understanding and support of Web 2.0 initiatives. CFOs are less likely to view Web 2.0 as transformative, less likely to think that it will affect all parts of the business, and less likely say that it will change the company’s business model. They are also less optimistic than their C-suite peers about Web 2.0’s potential to increase revenue and margins.
About the survey In early 2007 the Economist Intelligence Unit polled 406 senior executives from around the world on the impact of Web 2.0 on their businesses. Sponsored by FAST, the online survey focused on the prospects for improved internal and external collaboration, increases in revenue or profitability, and implementation challenges. Respondents included 406 senior executives, of which 41 per cent were from the C-suite or the board. The average company size was about US$2.5bn in revenue, and major industry segments included financial and professional services, life sciences, IT/telecoms and media. 40 per cent of the respondents were located in North America, about one-quarter each in Europe and the Asia/Pacific region, and the rest from elsewhere in the world. The survey was supplemented with in-depth interviews with senior executives across a range of industries, including financial services, telecoms, advertising and publishing. Copies of the report can be downloaded from www.fastsearch.com/EIU. |
