What does it take for brick-and-mortar companies to become Web 2.0-enabled? Conventional wisdom says it's a matter of deploying Web 2.0 applications like blogs, wikis, and Ajax applications. But that's just a coat of paint -- to be really Web 2.0-enabled requires a complete change of business model, says Tim O'Reilly, CEO of O'Reilly Media.

Classic Web 2.0 successes like Google, eBay, and Amazon.com succeed because they have massive databases of customer information and they share that information with their customers and use it to improve the customer experience. Big brick-and-mortar companies like banks and telephone companies have customer databases that are just as good -- but they bury the information behind a firewall, O'Reilly said.

"All the data is locked up in the back office," he said. "It's not a user-facing application."

I interviewed O'Reilly as part of our advance coverage of Web 2.0 Expo San Francisco 2008, April 22-25, produced by O'Reilly Media and InformationWeek's' parent company TechWeb.

I also wanted to talk to a big brick-and-mortar company that is using Web 2.0 to transform its business, so I poked around a bit on Facebook to see who was active there. I looked over the profiles of the folks in my network and found Bruce Eric Anderson, who I knew from a decade ago when I covered Dell regularly, which led me in turn to the Dell Spot Facebook page, which has 2,409 fans -- quite a respectable number for a corporate page on Facebook.

I learned that Dell is pioneering Web 2.0 and social networks to transform its business, trying to turn around a reputation for terrible customer service that the Dell has been struggling with for several years. The strategy is controversial -- while Dell touts its successes, a couple of Dell customers I've talked to say customer service is still rotten.

Leveraging Existing Databases

O'Reilly used telephone companies as one example of a kind of business that should be making better use of their internal databases to serve customers. "They remember everybody you ever called, everyone who has called you, but they don't give you access to the data," O'Reilly said.

Most phones have a redial list, but they stop at a few numbers. Phone companies should be giving customers a complete redial list, going back to every call they've ever made or received, ever, O'Reilly said.

Moreover, phone companies should be kings of social networking, competing with the likes of Facebook -- after all, the phone company knows who you call and who calls you, he said.