I noticed that the subtitle of this blog is a “hosted discussion on enterprise 2.0” so I could not resist the challenge that Fred Wilson (aka A VC in NYC) recently tossed in his post, Is “Social Enterprise Software” An Oxymoron? While Fred did not use the term enterprise 2.0 in his post, he referenced two other blog posts challenging enterprise 2.0 at the end with the implication they supported his concerns. The technology part of enterprise 2.0 is often referred to as social software or some variation on this theme so we stand accused. Let me take this on in two parts.

First, enterprise 2.0 is certainly not web 2.0. It is easy to offer up a few consumer web 2.0 applications in an argument that social software does not belong in the enterprise. Fred offers the wikipedia definition of social software that only lists consumer web examples. Someone needs to update the definition. Forrester was careful to exclude this class of software in its Global Enterprise Web 2.0 Market Forecast: 2007 To 2013. They did not include consumer services like Blogger, Facebook, Netvibes, and Twitter when they predicted the enterprise web 2.0 market would grow to $4.6 billion globally by 2013. At the same time they said that that enterprise web 2.0 will get absorbed into the fabric of the enterprise (see Social Networking is Climbing the Revenue Projection Ladder on this blog). More on this last issue in the second half of this post when I cover the oxymoron part.

Consumer web tools are often designed to increase traffic and generate ad revenue, not exactly enterprise goals. I generally do not feel that they should form the basis of enterprise social computing with some possible rare exceptions. But should we go to the other extreme and have consumer web tools banned from the enterprise? That was the subject of a recent debate between two Garner analysts, Nikos Drakos and Ray Valdes. I think this is going too far. There is a role for social activities at work whether they be actual or virtual. Puneet Gupta put this in a clear perspective in his post, The Role of Facebook in the Enterprise: A Post Script, that was a follow up to his post on the Drakos Valdes debate.

Puneet said, “I do not think the debate was asking the right question. Facebook is a consumer oriented networking tool that is increasingly being adopted by business people as a social networking tool for business purposes. In this way it is like a “virtual social event or other recreational activity” that can be effectively used for business networking. I would not ban my sales force from attending social events in the real world with customers during business hours if this activity has the potential to lead to sales or helps with customer relations. But if my salesperson goes to social events in the real world every day or surfs Facebook all day and does not make any sales, I might “ban” that person. In the end you need to use good judgment.”

He added that he does not ban Facebook in his company (Connectbeam) and concluded with “I think the more important question is what social networking tools are right for your business. In this case I would pick a tool that is designed for business use, and not one designed for recreational use and built to generate high traffic.” This is a good transition to part two.

Enterprise 2.0 is not an oxymoron. Not that I especially like the term but it seems to be sticking as did web 2.0 that no one liked at first, either. What is more important than the term is the existence of an emerging class of business software that does not simply take consumer web tools behind the firewall. These tools are developed for businesses to solve business problems. Businesses are run and operated by people, for the most part for now, and these tools look at the social context of information. There are many communities within an enterprise: project teams, divisions, etc. Then there are the communities that enterprises want to have with their suppliers and customers. In 2006 McKinsey issues the report, The Next Revolution in Interactions, in which they said, “In today’s developed economies, the significant nuances in employment concern interactions: the searching, monitoring, and coordinating required to manage the exchange of goods and services.” They say that traditionally the focus of business and IT investments has been on production rather than interactions. They added that in today’s post-knowledge economy it is interactions that count for the most.

Many of these enterprise 2.0 tools support, monitor, and make accessible these important business interactions, the social side of the enterprise. Many of them have been written about on this blog and on the AppGap blog, as well as many other places. My colleagues and I have interviewed many of them. Forrester likely interviewed even more for their market prediction and they seem to take this market seriously. But instead of only looking at numbers, here is just one of many examples, Changing Organization Behavior at XM Radio through Enterprise 2.0 and QuickBase.

XM Radio brought in an enterprise 2.0 tool, QuickBase, to help bring more rigor, order, collaboration, and transparency to the processes. XM first used it for project management around the launch of XM Radio’s newest product called the XpressRC. QuickBase facilitated global communication amongst the many partners involved in the successful launch of the XpressRC throughout the end-to-end supply chain. QuickBase provided a robust program management database that made the key issues transparent so they could be addressed and resolved in a timely manner. The transparency promoted accountability and a clear and concise escalation process. The right data was in place for all to see and progress could be posted in QuickBase via a very effective metrics dashboard. It was the first time they produced a product on time and on budget.

A variety of uses emerged. QuickBase was utilized by XM to manage outsourced partner management throughout the Supply Chain. It was used for collaboration with manufacturing partners. Operational and logistics issues could be listed in QuickBase and resolved within the tool. Emails on issue resolution were eliminated as all progress was entered real time by the respective parties. QuickBase was applied to assist XM with end to end visibility of product throughout the supply chain and is used as the primary inventory reporting tool. The graphics for all product artwork and packaging resides in a repository within QuickBase and can be quickly accessed and used by XM and all of their supply chain partners. XM radio also uses QuickBase to many cost reduction and efficiency improvement projects to provide a common platform and toolset so the all projects are managed consistently and transparently.

There are many other enterprise 2.0 tools that have produced similar stories. Here is a partial list of Enterprise 2.0 Success Stories from 2007. I am hearing many more in 2008 but have not consolidated a list yet. Fred mentioned the security issue and this is real and one that the business oriented enterprise 2.0 venders have recognized and are tackling (e.g., Central Desktop Acts on Enterprise 2.0 Security). In fairness to Fred, he said he would keep an open mind and watch with interest what Jeff Dachis builds in this space. I will also, but I think we do not have to wait for Jeff to look at the social side of business transactions and benefit in ways that XM Radio did.

Have said all this, the last thing I would recommend is to go out pushing the enterprise 2.0 banner as a sales approach. As Jevon MacDonald rightly said, “Enterprise 2.0 budgets do not exist, except where some early adopters create them.” You sell solutions to business problems but, since people still run and operate business, there are a lot of business problems where making the social side of transactions more transparent and better supported will provide real business benefits.

I have said enough for one post and will close with one of the emerging trends, the integration of social software and traditional enterprise software. More on that later. Thanks Fred for getting me charged up a grey, rainy day.