Wednesday, January 12, 2011

Digital:How businesses are using Web 2.0: A McKinsey Global Survey

By and large, executives are satisfied with their previous investments in Internet technology, and most are investing in trends that promote automation and networking online.

The rising popularity of user-driven online services, including MySpace, Wikipedia, and YouTube, has drawn attention to a group of technological developments known as Web 2.0. These technologies, which rely on user collaboration, include Web services, peer-to-peer networking, blogs, podcasts, and online social networks.
Respondents to a recent McKinsey survey show widespread but careful interest in this trend.1 Expressing satisfaction with their Internet investments so far, they say that Web 2.0 technologies are strategic and that they plan to increase these investments. But companies aren’t necessarily relying on the best-known Web 2.0 trends, such as blogs; instead, they place the greatest importance on technologies that enable automation and networking.
During an online discussion convened to dig more deeply into these results, it became clear that companies using Web 2.0 technologies have developed a new way of bringing technology into businesses. And, according to many participants, this new approach is easier to implement and more flexible than traditional top-down approaches. Discussion participants are seeing some business impact from these technologies and seem generally optimistic about their benefits, particularly in how they help a company refine its strategy.
Notes
1 The McKinsey Quarterly conducted this survey in January 2007 and received responses from 2,847 executives worldwide, 44 percent of whom hold C-level positions; all data are weighted by GDP of constituent countries to adjust for differences in response rates.

Successful investments so far
More than half of the executives surveyed say they are pleased with the results of their investments in Internet technologies over the past five years, and nearly three-quarters say that their companies plan to maintain or increase investments in Web 2.0 technologies in coming years. (A mere 13 percent say they are disappointed with previous investments.) Companies that acted quickly in the previous wave of investment are more satisfied than late movers. Less than a fifth of all those surveyed say they are very satisfied with their returns. Of those who rate themselves as very satisfied, 46 percent are “early adopters” and 44 percent “fast followers” (Exhibit 1).
Asked what might have been done differently to make the previous investments in Internet technologies more effective, only 18 percent say they would not have acted differently. Forty-two percent say they would have strengthened their companies’ internal capabilities to make the most of the market opportunity at hand (Exhibit 2). Among the 24 percent who say they would have moved faster, many describe their companies as fast followers or early adopters—a strategy consistent with the view that speed is of the essence in technology investments.
What’s next?
Among the executives familiar with the nine Web 2.0 trends cited in the survey (see the sidebar, “What’s in Web 2.0”), more than three-fourths say that their companies are already investing in one or more of these trends. The most frequently cited investment is Web services, being used or considered by 80 percent of the respondents familiar with the tools. Peer-to-peer networking also is popular; 47 percent say they are using or considering it (Exhibit 3).
Few executives say that their companies are using more than two of these technologies. But nearly two-thirds of those whose companies are investing in them think they are important for maintaining the company’s market position, either to provide a competitive edge or to match the competition and address customer demand. More than one-third labeled them “experimental.”
Executives from some industries and regions that were slow to invest during the past five years are poised to move more aggressively now. For example, retail executives, whose companies were more likely than the average company to invest cautiously in the past, now overwhelmingly say they will step up investment in Web 2.0 technologies in the coming years (Exhibit 4).
Similarly, while executives from China and Latin America typically say that their companies are late followers or had invested cautiously, they now plan to invest at the same rate or even faster than companies in Europe and North America. The level of investment in each of the Web 2.0 technologies cited in this survey varies across regions, with China being a fast adopter. The use of and plans for Web 2.0 technologies in general are well balanced globally (Exhibit 5), although some locations (such as India) stand out for their enthusiasm.

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