Enterprise Web 2.0 to reach $4.6B — but who's making the money?

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Enterprise spending on Web 2.0 technologies like blogs, wikis and mashups will grow at a healthy rate of 43 percent annually, reaching $4.6 billion in 2013, according to a new report from Forrester analyst G. Oliver Young. There’s been some uncertainty about the best way to make money in this field, so Young also offers some tips to ensure that your software company gets a piece of that billion-dollar pie.

While consumer-focused companies like Facebook have been hogging a lot of the media glare, there’s been increasing heat on the enterprise side too. In the startup arena, we’ve covered quite a few announcements in this market — most recently collaboration startup Central Desktop’s $7 million first round of funding. Google has been taking an interest too and is looking to increase enterprise adoption of Google Apps through deals like its partnership with Salesforce. While we can’t vouch for Forrester’s exact numbers, Young makes a compelling case that the technology has matured, and that it will eventually become just another enterprise tool.

Not surprisingly, Young predicts that social networks will be the biggest chunk of the market, earning around $2.0 billion in 2013, followed by mashups and RSS (see chart below).

But software firms looking to sustain themselves in this market will face some serious obstacles too, Young says: Corporations are depending on resource-strapped IT departments to lead adoption, some customers expect enterprise Web 2.0 technology to be ad-supported and free like consumer products and new tools need to be compatible with existing software.

A few key strategies will help companies overcome those hurdles, Young says. First, you should avoid “hitching your wagon to just one horse” — namely, companies shouldn’t focus on one deployment type, but rather start by selling their Web 2.0 tools for internal use, then expand from there. Software companies should also approach the internal (employee-facing) and external (customer-facing) markets differently. If you’re selling tools that companies use to interact with the outside world, focus on an entire industry. On the other hand, if your product allows companies to interact within their organizations, segment your efforts by company size. Finally, software companies plan on expanding in Europe and Asia, which will start getting hot next year.


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