Introduction Dion Hinchcliffe • ZDNet’s
Enterprise Web 2.0 • http://blogs.zdnet.com/Hinchcliffe • Social Computing Magazine – Editor-in-Chief • http://socialcomputingmagazine.com • Enterprise 2.0 TV Show • http://e2tvshow.com ! • •Hinchcliffe & Company http://hinchcliffeandco.com • mailto:email@example.com • Web 2.0 University • http://web20university.com • Twitter: dhinchcliffe
The Plan • 9:00am -
noon • Break at 10:15am • Twitter tags #w2e and #econ2 • Google Moderator • http://bit.ly/econ2questions • Slides at firstname.lastname@example.org
Overview • Exploration of new
ways of doing old things • New economic, social, and cultural models • With an emphasis on 2.0 • Pragmatic exploration of how they promote resilient, sustainable business models • We’ll look for evidence that they work. • Or debunk them. • Or just conﬁrm they are promising.
The Map of Opportunity Innovation
Growth Creating new rapid growth online products Leveraging Innovation • Product Incubators powered by: • Open Supply Chains • Peer Production • Product Development 2.0 • Jakob’s Law • Some Rights Reserved • The Long Tail • Blue Ocean Reinventing the • Network Fostering customer relationship Effects Innovation to drive revenue: • Customer Communities • Internal Innovation Markets • Customer Self-Service • Open innovation • Marketing 2.0 • Database of Intentions Current Business State Driving costs down through Change Management less expensive, better 2.0 • Transformation Communities solutions: • 2.0 Education • Capability • Lightweight IT/SOA • Enterprise mashups Acquisition • Expertise Location Improving • Knowledge Retention Business Remodeling productivity and and Restructuring access to value: • BPM 2.0 • Enterprise 2.0 • Employee Communities • Open APIs • Cloudsourcing • Crowdsourcing • Pull Systems • Prediction Markets Cost Reduction Transformation
The major shifts • In
who creates value (the network does) • How much control we have over our businesses • How intellectual property works • Great increases in transparency and openness • Open supply chains, community-based processes and relationships
Evaluating candidates • The criteria:
• Cheaper: Less waste, more efﬁcient, and lighter weight. • Better: Faster, richer, and other intrinsic improvements. • Innovative: New types of products and services, different lines of business. A future.
Rating the Economics 2.0 contenders
Challenges Repeatability Ready for Wide Questionable Adoption Value Ideal for Early Adopters Suitable for Strategic Experimentation Industry Play Uncertain Results Proven Beneﬁt
The network is a big
place today • All your customers • All your competitors • All the ideas and innovation • Only a few proven strategies for long-term competitive advantage
Likely candidates (social media in
the enterprise) Enterprise 2.0 & Product Development 2.0 Open Business Models Product Development Marketing crowdsourcing Sales online cloud computing Customer Service community mashups open APIs SaaS Line of Business 2.0 development Operations | IT | Back Ofﬁce platforms
The motive forces of 21st
century economics ^ at we th of so know • Network effects far • Peer production • Self-service • Open business models • New social power structures
What is a Network Effect?
• A network effect occurs when a good or service has more value the more that other people have it too. - Wikipedia – Postal Mail – Phones – E-mail – Instant Messaging – Web pages – Blogs – Anything that has an open network structure
Building Sustainable Value • Even
small network have large potential network effects • But very large networks have astronomical network effects • Recent Discovery: Reed’s Law, which say social use of networks are by far the most valuable
Modern Social Computing: Enterprise 2.0
• Concieved by Harvard Business School Professor Andrew McAfee • Deﬁned as emergent, freeform, social applications for use within the enterprise • Primarily to improve the collaboration problem (discussed shortly) • The use of blogs and wikis to capture institutional knowledge, make it discoverable and let structure and organization emerge naturally
Applying the “Web 2.0 effect”
at work • Enterprise 2.0 Enterprise 2.0 systems adapt – Globally visible, persistent collaboration to the environment, rather than requiring the • Employees, partners, and even customers environment to adapt to it. • Leaves behind highly reusable knowledge – Uses wikis, blogs, social networks, and other Web 2.0 applications to enable low-barrier collaboration across the enterprise – Puts workers into central focus as contributors – Case studies of early adoption consistently verifying signiﬁcant levels of productivity and innovation
Perceived Beneﬁts Of Enterprise 2.0
• Increased knowledge retention • More adoption and use of knowledge management tools • Emergent structure and processes • Increased transparency • Less duplication of effort • Higher level of productivity
Why is Enterprise 2.0 different?
• Maturation of techniques that leverage how people work best • Realization of the power of emergent solutions over pre- deﬁned solutions • Nearly zero-barriers to use • Low cost • Network effect driven
Challenges: The enterprise is not
the Web • We want to replicate the positive aspects of Web 2.0 platforms in the enterprise • But our infrastructure is usually not very Web-like, creating signiﬁcant impedance and diluted results • Requires augmentation and adaptation to reproduce the same or similar results
Enterprise 2.0 Ecosystems Enterprise 2.0
Peer Produced participation Applications Knowledge Blogs and Wikis Internal Applications and Industry Social Network (Social Media) Databases deeply linked structure Prediction Markets Other Web 2.0 Tools (External and Internal) (del.icio.us, Flickr, Twitter, Friendfeed) Enterprise Mashups Enterprise Social Integrated Search Network
Signiﬁcant Motivation Exists To Adopt
Enterprise 2.0 • Increased levels of productivity that were inaccessible until now • Enablement of tacit interactions on a previously unknown scale (Source: McKinsey & Company) Enterprise 2.0 has the potential to increase productivity in complex interactions, where previous attempts have largely failed
• Hundreds of Enterprise 2.0
projects exist worldwide currently • Based on aggregation of all known contacts and citations • Many implementations are not “ofﬁcial” pilots • Anecdotal evidence and market research both indicate SMBs are slow to adopt • 1/3rd of enterprises as of this year • But large enterprises are buying...
• Early success stories emerging
• Case studies now exist from: • Bank of America, Boston College, Dresdner Kleinwort Wasserstein, IBM, Janssen-Cilag, Motorola, Northwestern Mutual, P&G, Siemens, SAP, T. Rowe Price, U.S. Hospital, Volvo, Wells Fargo, and many others. • Most results are very positive • Generally reporting better communication, improved cross- pollination and leverage of knowledge, higher productivity, and few of the early expected problems • Other results harder to pin down: better innovation
Enterprise 2.0: The bottom line
• Repeatable • Medium Risk • Proven Beneﬁt Ready for Wide Adoption • Rapid ROI • New Transunion Enterprise 2.0 case study with dramatic ROI: $3.5M recoup in 5 months with $50K investment: http://bit.ly/O74W
Example: Amazon • 1st Gen.
Product: E-commerce store – No differentiation – Scaling of a single site – Single site • 2nd Gen. Product: E-commerce platform – 55,000 partners using their e-commerce APIs live – Scaling of the Web • 3rd Gen. Product: A series of Web platforms Simple Storage Service (S3) – S3 EC2 Elastic Compute Cloud (EC2) – Mechanical Turk (Mturk) – Many others – 300K businesses build on top of what they’ve produced – • 2nd and 3rd generation platforms generate large net revenue
The Market Share Opportunity •
The vast majority of Internet user activity is elsewhere, on 3rd party Web sites and applications • If ﬁrms could reach this trafﬁc, the growth potential is as large as the Web itself • Reaching this trafﬁc before competitors do can result in successful marketshare “lock-out” • Businesses able to cost-effectively integrate with a large number of partners to grow • Access and offer value to existing ecosystems of customers
Opportunity: Going To the Customer
and Open Web APIs Tens of Thousands of Dynamic Web Partners Partner Partner Partner Partner Partner Partner Partner New Business Division: Partner Partner Partner Partner Partner Partner Partner Partner Partner Partner Partner Additional Interact Partner Partner Partner Partner Revenue via Usage Fees, + Live Web Advertising, etc. $$$ Integration Open API Monetization Boundary + Online Business Direct Revenue Consumer or Business Interact
Platforms vs. Applications Distribution Models
Target Audiences Consumers Native App existing Small Businesses Web Application Medium-Sized Business Open Widgets Power/Web Saavy Users Facebook/Open Social Developers Web API SDK, Developer Community, SLA, Businesses Billing
Platforms vs. Applications Distribution Distribution
Models Order of Magnitude Method 10M Users Push Native App 10M Users Pull Desktop Client API Open Widgets 10-20M Users Pull Facebook/Open Social Open Web API 100M+ Users Pull SDK, Developer Community, SLA, Billing
Key API Goals • Leveraging
existing investments as much as possible (reduce rework in design and architecture) • Protect intellectual property around proprietary capabilities • Select API model that will result in 1) the most developer uptake and 2) access to the largest possible audience • Selecting a discriminating factor (rich vs. reach) • Scope: Graduated capability vs. full initial API
The Distribution Opportunities 3.5 billion
wireless users - 40+ hw/sw platforms - high distribution impedance - highly variable run-time - many carriers and rules - limited run-time capabilities 1.3 billion internet users - ie, ﬁrefox, mozilla, safari, opera 850 million PCs - lowEST distribution impedance - windows, mac, linux - 99% ﬂash penetration - medium distribution impedance - zero footprint - anti-virus - some run-time limits - admin rights - end-user knowledge - rich runtime capabilities ﬂash 99.9% Silverlight 10% Java web start 5-50%
Long-term future usage breakdown w/API
Other Apps • Reach every distribution Embedded Apps Web Mobile Apps channel possible Web Widget Apps • Leverage 3rd party customer iPhone Apps bases Open Social Apps • Cut off competitor’s growth OPPORTUNITIES 3rd Party Web Apps • Ride the MAXIMUM POTENTIAL growth curve Facebook Apps • Harness innovation of Existing Web Site or hundreds and thousands of 3rd party developers Application
Reasons Developers Select APIs Key
to initial adoption Key to long-term adoption • Provides access to • Reliable, well-known, scalable functionality not possible provider that is trusted to develop internally • Developers can get answers to • Easy to use and integrate questions, support, and with problems ﬁxed when bugs are • found Good documentation and easy to get started • Strong user base for 3rd party developers to tap
“Platforming” Your Business • Requires
opening the server-side to 3rd party developers • Allowing the construction of widgets and Web apps offering some or of all of your functionality by external partners • Harnessing the innovation on the network • Generating the greatest potential reach, competitive lock-out, market share, and revenue
Connecting people and data •
SOA is a modular software architecture, and the modules are services designed to interact with each other. – Important Note: SOA also contains higher order constructs such as composite applications, orchestration, coordination, and more exist. • We tend to rely on open standards to encourage automatic interoperability of services designed separately. – A good SOA could still violate this rule however – See Thomas Erl and Seven Principles of SO
Key Points • Gartner has
reported that Service-Oriented Architecture is the leading organizing principle in the enterprise space, with 80% of all development using SOA principles in 2008. – They’ve also said that all organizations should have begun getting their lines of business on a Web 2.0 architecture by 2008 • McKinsey and the Sandhill Group report that Web 2.0 in the enterprise will be one of the major disruptive inﬂuences in enterprise software in the late 2000’s.
A key Goal of Web
2.0 and SOA: Turning Applications Into Platforms • Openly exposing the features of software and data to customers, end-users, partners, and suppliers for reuse and remixing • This strategy requires documenting, encouraging, and actively supporting the application as a platform – Has serious governance implications • Provide legal, technical, and business reasons to enable this : – Fair licensing, pricing, & support models – A vast array of services that provide data that uses need – A way to apply these services to business problems rapidly and inexpensively.
But existing integration models have
been challenged • Most SOA initiatives are delivering low ROI to the business • The reasons are many but boil down to: – SOA technologies have proven to have challenges compared to more successful models. – Top-down enterprise architecture moves slower than the environment changes. – Important avenues of SOA consumption and production points were often excluded from participation.
The results of a large
new SOA effectiveness study: •“It has become clear to me that SOA is not working in most organizations.” – Anne Thomas Manes, Burton Group
Demand for Breadth Integration •
“48 percent of the CIOs we surveyed said that they plan to implement service- oriented architectures for integration with external trading partners this year.” – McKinsey & Co.
And we now have real-world
experience with traditional means of connecting to our data • Traditional Web services was a good ﬁrst try but has a long list of challenges for the outcomes we desire today. • The model of the Web has continued to teach us about how to structure information and services.
Strange Attractors: Similarities between Web
2.0 and SOA • Web 2.0 • SOA – Software as services – Software as a service – Interoperability based on – Interoperability based on Web heavyweight standards principles – Applications as platforms – Applications as platforms – Permits unintended uses – Encourages unintended uses – Composite Apps – Little user interface guidance – Mashups – Little prescription of user – Rich user interfaces participation – Architecture of Participation
Enabling New Consumption Scenarios •
Cut-and-Paste deployment anywhere on the Intranet • Consumption of the SOA in any application that can use a URL • Discovery of data via search • Integration moves out of the spreadsheet
Deﬁnition: Mashup • “A mashup
Mashups • Strong preference for
reuse over coding – Innovation in assembly is the core value instead of ingenuity in coding • Disruptive delivery model: Web-based with no install, no plug-ins, no admin rights, etc. • Design focus is at the glue instead of the functionality • Emphasis on simple, easy-to-use Web technologies over complex enterprise technologies
What’s happening on the Web
today • The growth of Web sites with highly valuable “portable” content and functionality • Users putting modular Web parts on their blogs and proﬁles to host the pieces of the Web that they want to share • By the tens of millions on sites like MySpace and Facebook • The increasing realization that there is limited business value in being on a single site…
Connecting to and making use
of our data • Building open platforms instead of stand-alone applications • Forming self-distributing ecosystems • Spreading products far beyond the boundaries of a site – APIs, widgets, badges, syndication -> mashups • In other words: Being everywhere else on the network • Building on the shoulder of giants • Leveraging widgets, libraries, and APIs from Yahoo!, Amazon, and thousands of others and others • The automated mass servicing of markets of low demand content and functionality (The Long Tail) • Which represents the bulk of the demand
The Global SOA has surpassed
our enterprise IT landscape • Some businesses have hundreds of thousands of users of their SOA • Most are using WOA models for this • Hundreds of companies have opened their SOA to the Web – Mostly startups or established Internet companies that understand the Web – But larger companies are beginning to understand this.
Examples • Amazon and their
highly successful Web Services Division (with hundreds of thousands of business consumers of their global SOA) – Over $300 million in revenue last year • Google and its numerous and varied open Web APIs from Google Maps to Google Data • eBay and billions of dollars in listings it generates through its public SOA, • Applications like Twitter.com – Gets 10 times the use through its APIs than from its user interface. – A new generation of applications that are primarily used via their SOA presence.
The Focus: Rapid Business Solutions
• Full resources of the Web and the Intranet • Enterprise context around management, security, privacy, etc. • Gives everyone in the organization the ability to leverage the SOA. • Lightweight, simple model. • Inexpensive and extremely rapid results
Eliciting participation on the network
• Social media: A continuous stream of shared (two-way) conversation and knowledge • Online community: Groups of like minded individuals creating value for themselves • Collective intelligence: Shared information built together on the network
Online community • Lifestyle products
and brands generate strong, highly engaged communities on their own: • Harley Davidson, IKEA, XM Radio, and hundreds of others have large-scale, vibrant, customer communities • Many smaller examples: http:// www.travellerspoint.com/ is a typical example of hundreds of vertical communities. It has over 150,000 registered users. • People who deeply care about a product or brand can now meet, share ideas, socialize, and help each other.
What do online communities do?
• People ﬁnd and connect with each other based on a common, shared idea • Socialize, communicate, and collaborate on topics that they care about • Share ideas, experiences, stories, suggestions, etc. • Draw others in by word of mouth • Becomes an ideal vehicle for collective intelligence and peer production
Marketing vs. Community • Customers
and potential customers have the greatest resources to market and sell the product; if they only had the means. • Traditional marketing and demand-generation is enormously expensive; you have to do it all yourself. • The Web 2.0 solution: Passionate customers and potential customers are the most powerful resource in the world; tap into them directly.
The means and methods •
Platforms: • Drupal, Joomla, Lithium, Crowdvine • Community Management • Tools: • GetSatisfaction, Buzz Monitoring, Social Networks
The Three Essential Strategy Components
Social Media: Online Collective Community: Intelligence: Continuous Online Conversations Centralization of Using the network to conversations. make the product • Blogs better • Community Site • Facebook Presence • User Proﬁles • • Customer Input Social Messaging • Voting systems • Forums • YouTube Interviews • User Recommendations • Discussion Groups • Sponsored Content • Valuable data: • Social Media Content • Highlighted Community • Desired features (left) Stories and Activities • New ideas • Chat/Messaging • • Actual usage data Other Social Media • Community Outreach
The Story of KatrinaList &
XM Radio • Hurricane Katrina – Survivors emerged and announced where they were on their blogs – People watching the Web’s syndication “ecosystem” noticed the reports – A small group collected the reports out of the blogosphere and centralized the listing – Over 50,000 survivor reports in the first 3 days after the disaster – Emergent phenomenon – A critical example for how to rethink solutions to traditional problems in a 2.0 world in which we can actually tap collective intelligence • XM Radio • Community for Customer Service
Online Community: The bottom line
• Medium repeatability • Can be costly • Proven ROI • Dramatically lower Ready for Wide customer support Adoption costs (10-30%) • Better Customer Satisfaction • New customer relationship
Network-Driven Open Collaboration Breeding New
Business Strategies Methods: Open Source Open Business network effects Methods Open Data peer production • Richest, most up-to-date, and dynamic products & services • Lowest cost of production pull instead of push • Greatest degree of UGC & Open innovation and diversity Content • Ownership, control, and self-service monetization challenges Enterprise 2.0 Online Community
Sourcing Models open internally outsourced
sourced sourced peer production, direct subcontracting, Methods crowdsourcing, assignment consortiums open platforms contractors, Participants staff anyone partners Central Control high medium to high medium to low Predictability best good lowest Richness adequate medium high of Outcome corporation, open source Legal structure contracts, copyrights, licenses, Creative charters, etc. & IP protection patents, etc. Commons, etc.
Open Business Models: The bottom
line • Medium repeatability • Medium costs • Signiﬁcant cultural Ideal for Early Adopters changes required • ROI and control challenges • Major strategic beneﬁts
Today’s Software Applications Are Also
Extremely Sophisticated • Highly distributed and federated • Have a social architecture • Built from cutting edge platforms and parts http://clickatell.com • Have to scale globally • Set with expectations that are very high for Integrating with 3rd party functionality and low for the cost to suppliers live on the Web develop/own new apps as well as being a 3rd party supplier is the name of the • Created with productivity-oriented game circa-2009 development tools
Recent technological innovations coming primarily
from the online world • Cloud computing • Utility/grid/Platform-as-a-service • Non-relational databases • S3, CouchDB, GAE Datastore, Drizzle, etc. • New “productivity-oriented” development platforms • RIA: Flex/AIR, JavaFX • Stacks: Rails, CakePHP, Grails, GAE, iPhone, etc.
Cloud Computing is just about
12 months old but changing the game quickly • Provides enormous advantages in terms of cost and agility • LAMP doesn’t have a solution for providing economies of scale • Complex governance • Control, privacy, security • Regulations • Has reliability and fault-tolerance implications • 90% of organizations will have a cloud computing application in pilot by 2010
Non-relational databases • • •
Like CouchDB, Mongo is a CouchDB: Free, open-source, Drizzle began life as a spin- document-oriented JSON document-oriented database. off of the MySQL (6.0) database, except that it is relational database. • designed to be a true object Derived from the key/value • database, rather than a pure key/ store, it uses JSON to deﬁne an Aim of creating a leaner, value store. item's schema. simpler, faster database system. • Meant to bridge the gap • between document-oriented Drizzle can still store and relational databases relational data. Ideal for Early • • Adopters These views map the document The aim is a semi-relational data onto a table-like structure database platform tailored that can be indexed and queried. to web- and cloud-based apps running on systems with 16 cores or more.
The New Dynamic Development Platforms
• The Web development industry has moved to a focus on “productivity-orientation.” • New platforms highly optimized for Web development are emerging. • These new Web development platforms embody much of what we’ve learned in the last 15 years in terms of best practices. • However, like all platforms, they have tradeoffs, including performance and maturity.
Ruby on Rails • Ajax-ready
but works with all RIA technologies • Automatic Object/Relational Mapping • Sophisticated Model View Controller Support • Convention over conﬁguration • Radically-oriented around Web development only • Very high productivity (IBM veriﬁed 10-20x older platforms) • Open source and free • Runs major sites like Twitter • One of the most popular new platforms • Has clones in most other major languages Ready for Wide now. SaaS versions too: http://heroku.com Adoption
CakePHP • Open source Web
application framework written in PHP • Works with all major RIA technologies • Modeled after the concepts of Ruby on Rails • Not a port of Rails but extends the ideas to PHP • Stable, mature, and reliable • http://www.cakephp.org/
Groovy & Grails • Groovy
is a dynamic language for the Java Virtual Machine • Has strengths of Ruby, Python, and Smalltalk • Runs anywhere Java runs • Grails is a Ruby on Rails like framework for Groovy • Mature, stable, and relatively high performance Ideal for Early Adopters
Changes to the processes that
create architecture • Increasing move to assembly and integration over development of new code • Perpetual Beta and “extreme” agile • Community-based development and “commercial source” • Product Development 2.0
The Web’s Version of Agile
Ready for Wide Adoption • Shadow Apps for real- time feedback • Customer-Sampling and Live Testing • Granular Versions (constant evolution) • Daily, even hourly, releases
Challenges to Transitioning to New
Architectural Modes • Innovator’s Dilemma • “How do we disrupt ourselves before our competition does?” • Not-Invented Here • Overly fearful of failure • Deeply ingrained classical software culture • Low level of 2.0 literacy
What we often see in
the marketplace today • Too many copy-cat products • Failure of imagination and courage • New architectural concepts as an after- thought. Or tacked on as a “checklist” item. • Companies that pay lip service to innovation but are having trouble or unwilling to make the necessary changes
The 1.0 world is having
its own problems • The time is right for change now more than ever before • We all have to learn how to adapt quickly to new marketplace realities • Something that the (successful parts) of network have been doing for a long time
Key Lesson: We now have
a fundamentally new and better set of lenses through which to look at leveraging value on the network...
• Push to pull systems
• Web 2.0 design patterns and business models • New modes of software, platforms, and architectures • Productivity-Oriented Platforms • Web-Oriented Architecture • New Distribution Models
The new Web 2.0 era
distribution models remain largely untapped Number of Practitioners Semantic Web/Web 3.0 Social Network Apps Web Widgets Open APIs Web 2.0 Apps Syndication Web Sites Potential Reach Power and Network Effect (Lowest Cost Per Customer/Partner)
It’s time to change our
DNA • Moving from the 20th century towards 21st century businesses • Deeply understanding the network and its profound potential for creating growth and building value • Putting 2.0 into the core of our lines of business
The rewards are considerable •
Products and services that are sustainable • Successful transition to a rapid evolving new marketplace • Attaining of new, sustainable competitive advantage • Resilience to future change and ongoing market evolution
Major Opportunities in 2009 •
Redesign products and services for the 21st century. • Strategically move IT infrastructure to the cloud. • Embrace new low-cost economic models for SOA. • Reduce application development and integration time/ expenditures with new platforms and techniques. • Open your supply chain to partners on the Web.