Web 2.0: Companies Will Spend $4.6 Billion By 2013, Forrester Predicts

As a standard enterprise tool, Web 2.0 has a bright future, one that companies are expected to spend $4.6 billion on by 2013 to integrate into their corporate computing environments, according to a Forrester Research report issued Monday.

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Though still considered an upstart technology, Forrester believes that conventional Web 2.0 elements -- social networking, RSS, blogs, wikis, mashups, podcasting, and widgets -- are fast becoming the norm for communicating with employees and customers. The report highlights megacompanies such as General Motors, McDonald's, Northwestern Mutual Life Insurance, and Wells Fargo among those who already have jumped into the Web 2.0 pool with both feet. Additionally, some 56% of North American and European enterprises consider Web 2.0 to be a priority in 2008, according to another recent Forrester survey.

"If I wanted to be anywhere in the Web 2.0 economy, I'd want to be on the enterprise side," report author and Forrester Research analyst Oliver Young told InformationWeek.

The report is timely as the Web 2.0 Expo in San Francisco gets under way this week. Hundreds of vendors and thousands of attendees are expected to show their wares and trade their secrets to success. "I'm really looking forward to the show and seeing how the vendors feel out each other's technology."

However, Forrester's report doesn't bode well for startup vendors hoping to make it big with Web 2.0, Young said, as the technology created by larger enterprises like Six Apart and IBM has created a bit of a commoditization factor.

"We're seeing enterprise-class software coming from startups, but we're seeing them through very low price points ... so it [Web 2.0] will never be a megamarket," Young said. "It will eventually disappear into the fabric of the enterprise, despite the major effects the technology will have on how businesses market their products and optimize their workforces."

The consumer-facing ad-funded Web 2.0 sites like Facebook, MySpace, and Delicious also will have difficulty as similar technologies are incorporated into the enterprise. "Even Google is having a hard time selling the advertising," Young said.

Still, startups have much to gain in pursuing the Web 2.0 world -- such as understanding of how companies are adopting their technology. Small groups within a company are more likely to adopt blogs, wikis, mashups, and widgets, Young said. The key to adoption, he added, is to show how there is a business value in using the Web 2.0 tools.

"What we recommend is to start with a very specific problem and work your way up from there," Young said. "For example with a wiki, you can't have everyone try to use it at once. You should start on one team individually and then move on when that team is successful."

Young also advises against hiring outside companies to handle the training and instead recommends internal evangelists get the word out.

"Web 2.0 is not a critical 'must have' for any company at this point," he said, "but it's more than likely that your competition is using it and is showing faster results because of it."