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Enterprise Integration & IT Strategy Blog

Web 2.0 and its long tail

Ashu Bhatia, Director of Delivery  :  08 May 2009 / 11:02 AM  :  0

Everywhere one goes these days one is bombarded with the XYZ 2.0 lingo – Sales 2.0, Business 2.0, Life 2.0. It’s like 101 of anything is so passé. But my eyes really opened up to the return of the fat clients on the Internet when I was chatting with one of my technology architects the other day. He asked me “Do you like using MS outlook or do you prefer the web mail client”? The obvious answer was I like MS Outlook because of the user interface - I can check mails to delete, mark multiple mails as ‘read’, and many other functions that I cannot in my web mail.

He goes “That’s what they are building these Rich Inter Applications (RIAs)”. “So is this all the hoopla about Wikis, RSS, Mash-ups, etc.?” I asked. And being such a business person, I had to ask him “what is the value proposition? How can businesses benefit? Bottom Line / Top Line?” He goes, “You do understand the drivers for the Web 2.0 world, right? Billions of users on the internet, broad band penetration, people engagement and participation in communities, and infrastructure cost reduction.”

I said that I agreed with all but had to think a bit more about it. It did get me thinking whether this was surely somewhat of a disruptive innovation with some changes to the rules of the game or was it just another channel. Web2.0 technologies seem to touch some components of a business model:

• Cost: lower cost of infrastructure (e.g. music distribution)
• Access: easier to locate resources (e.g. books online inventory)
• Time-to-market: faster

The way I saw it is we had a model of content changing its reach - flowing from few-to-many (Web 0), then Many-to-everybody (Web 1) and now everybody-to-everybody (Web 2). Also with the technology supporting rich applications, complexity is falling down. I also found a paper titled "Goodbye Pareto Principle, Hello Long Tail", Erik Brynjolfsson, Yu (Jeffrey) Hu, and Duncan Simester which found that, by greatly lowering search costs, information technology in general and internet markets in particular could substantially increase the collective share of hard-to-find products, thereby creating a longer tail in the distribution of sales. By analyzing data collected from a multi-channel retailing company, they showed empirical evidence that the Internet channel exhibits a significantly less concentrated sales distribution, when compared with traditional channels.

The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all solutions. Social computing sites like Blogger, Digg, LinkedIn, MySpace.com, Twitter, and Wikipedia enable communication and sharing. The value in these sites is not the wikis, blogs, and tagging technologies that they use but rather the fact that they enable end users to create, edit, and classify content and allow people to connect with others. Over time, user-generated content and semantic links lock users in to a site more tightly than technology can. These days collaboration platforms take communication and sharing a step further by adding services like messaging, team workspaces, conferencing, etc. For e.g. Microsoft and SAP recently brought out Duet that enables users to easily and quickly interact with SAP business processes and data via their familiar Microsoft Office environment.

But again given the current economic climate, the challenges remain for the new world of Web 2.0:

• Participation Model: define how community involvement and collective intelligence and technology advances can contribute to the business success and evolution
• Governance: power shift to consumers drives corporations to move form a position of control on the governance to a role of moderator which defines the rules of contribution and collaboration.
• Value Proposition: review value chain to establish a differentiated value proposition which reflects the new business context and exploits the benefits of new technologies.
• Viral Model: establish an effective viral model to achieve the necessary critical mass (i.e. tipping point) which makes the service delivery viable.

I think that currently the “Long Tail” concept highlights that there is a potential market which remains untapped due to consumption constraints: cost, access, skills, and time. I guess time will tell how this pans out; but one this is sure - we first need to get through the current economic slump where all discretionary IT spend has been squeezed tremendously for these concepts to be adapted.

Posted in Enterprise Integration & IT Strategy on 08 May 2009
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Tagged: Application Architecture  Knowledge Management  Social Networking  Solution / System / Application Architecture  

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