Net 30 Blog

What does "Web 2.0" mean for business information?

April 28th, 2008 by Cortera

Last week I spent three days at the O’Reilly Web 2.0 EXPO in San Francisco in an effort to better understand how emerging technologies and business models will impact the world of business information. This post is my attempt to summarize some of the key learning from the show and pose some hypotheses for how both producers and consumers of business information content can thrive in the changing world around us.

“Web 2.0″ is a muchhyped and little understood term and if you’re not familiar with the jargon, I would suggest you read Tim O’Reilly’s classic post, which is a bit dated in blog years (which are probably the inverse of dog years) but is still very relevant today. Wikipedia and Dion Hinchcliffe also provide excellent overviews of the Web 2.0 phenomenon.

Numerous business information providers (BIPs) either emerged during the heydays of Web 1.0 (e.g. the late ‘90′s and early 2000′s) or learned to leverage the Web to deliver their content. Their approach was a classic migration of a successful offline model onto the web – collect commodity information in a structured, centralized database, add some unique analytics, create a web interface or portal where users could come to access the information and charge high prices for access at the door.

There are several Web 2.0 concepts and technologies that are challenging this traditional approach:

Wikis – nowadays it seems there is a Wiki for everything and business information is no exception. TradeVibes has begun a Wiki for startup companies and while they may not have become a household name like Wikipedia, the concept has merit. The power of the model is that content is created by the community for free and if/once the community reaches critical mass, it can self-police and correct any errors or willful deception. However, managers who have been given the responsibility to make mission-critical decisions about target markets, sales leads, credit risk or vendor selection have long derided the veracity of information that is “self reported” to major BIPs. I think that for any wiki to gain traction as a source of business-class information, it will have to be complemented by rigorous quality checks, both machine and human. But the power of the model is unmistakable.
Social Networks – LinkedIn is the leading social network for business, although check out this list of almost 50 more. Online social networks for business replicate the offline notion of networking for jobs, sales contacts and the like. They do a better job than most of us too, because their memory for names and associations is perfect and they can help us visualize the indirect relationships between our direct relationships and lead to new connections. I like building my network and all, but I could do without the extra 3-4 emails a week from strangers wanting to “Join my professional network on LinkedIn”. And just like we’re not quite sure about the consummate networker collecting business cards at a cocktail party, aren’t we a little suspicious of the guy with 500+ LinkedIn connections? That said, you can’t deny the power of a network, like LinkedIn’s that has grown to over 20 million members in a just a few short years. BIPs that don’t think of ways to leverage social networks either between businesses or the employees of businesses are in for a rude awakening.
The Long Tail: Part I – The long tail impacts BIPs along two vectors: production and distribution. For a long time, the toughest economics in business information were in the collection and management of information on the long tail of businesses, the 25 million or so medium, small and SoHo companies out there. It’s much easier and more profitable to build a database on the 15,000 or so public companies that have to report their information to the world and who everyone seems to do business with. Now however, enabling technologies such as the aforementioned wikis and social networks make the creation of that content virtually free. With storage, bandwidth and processing power all at nearly zero marginal cost, the creation, storage and management of this content is cheaper than ever. BIPs that figure out how to leverage these technologies to help them create and edit information about small companies will enjoy a huge advantage going forward.
The Long Tail: Part II -The long tail may have an even bigger impact on information distribution. In the old world, BIPs built a centralized portal on top of their centralized database and charged people for access. The challenge is getting eyeballs (for ad supported sites) and/or paying customers to come to your portal and pay for access to the information. With the explosion of blogs, YouTube, Google and other content sources, users now face a bewildering set of choices for their business information. Rather than (only) trying to build a centralized portal, BIPs need to experiment with information content where the users are – on a blog, on an analyst’s web set, wherever. In the words of one of the Web 2.0 EXPO presenters yesterday, “You’re not building a web site. You’re building a service. That service should be built to be consumed everywhere and anywhere.” If you still don’t believe it, here’s a statistic for you – it was announced in one of the sessions that salesforce.com does over 1.1 billion API calls a month, which is over half of their total transactions.
Mashups – One of the most interesting sessions at the EXPO was John Musser from ProgrammableWeb talking about the rise of enterprise mashups. His message was that mashups have the potential to flip the traditional notion of top down, IT- or vendor-led application development on its head by empowering business users to rapidly put information, workflow and analytics from disparate sources together to solve a specific problem. JackBe, Kapow and Serena are a few of the interesting companies he discussed. In order to thrive in this environment, BIPs need to have nimble technology, transparent pricing, and an open approach to their data so that it can be consumed by an ad hoc enterprise mashup.