The world’s largest companies are rapidly waking up to the revenue-generating potential of Web 2.0 internet services that promote online collaboration and information sharing.

In the main, corporates are focusing Web 2.0 development efforts on the creation of online communities designed to help with product marketing or development. These investments are being widely augmented by the establishment of blogs (web logs) and wikis (collaborative online publications) to initiate conversations and share knowledge between company employees and third parties.

Corporates are not jumping on the Web 2.0 bandwagon because they love bleeding edge technology, but rather because they believe that interacting and collaborating more closely with customers and partners will boost growth and profitability.

According to new Economist Intelligence Unit (EIU) research, almost 80% of large enterprises believe that Web 2.0 technologies can improve revenues and margins. This EIU research, which was sponsored by FAST, was based on a survey of 406 senior executives from companies with average sales revenues of $2.5bn. It reveals that corporates are increasingly viewing Web 2.0 technologies as must-have additions to augment their existing communication channels.

“Web 2.0 is no longer bleeding edge,” said Harvey Koeppel, chief information officer and senior vice president at Citigroup’s Global Consumer Group in New York. “Now it is leading edge.”

“We were surprised by the level of excitement among big firms concerning the commercial possibilities presented by Web 2.0,” added Dan Armstrong, editor of the EIU report, Serious business: Web 2.0 goes corporate.

“Our survey respondents and interviewees saw Web 2.0 as an opportunity, not a threat, and were extremely creative in applying the idea of the collaborative network to their own products and processes.”

Dissenting voices
Armstrong concedes, however, that there are some dissenting voices among this chorus of approval for Web 2.0. Compared to CEOs and the rest of the C-level executives, CFOs lag behind in support of Web 2.0 initiatives. CFOs, according to the research, are less likely to view Web 2.0 as transformative, less likely to think that it will affect all parts of the business and less likely to say that it will change the company’s business model. They are also less optimistic than their C-level peers about Web 2.0’s potential to increase revenue and margins.

But it is apparent that this scepticism is not holding back widespread corporate adoption of Web 2.0 technology. Almost eight out of ten companies surveyed by the EIU see the collaborative aspects of Web 2.0 as a way to increase corporate revenue and/or margins. In terms of cutting costs, 30% of companies expect Web 2.0 tools to trim customer-service and support costs.

“Instead of a call centre with 5,000 people, you could have one with 2,000,” said Citigroup’s Koeppel, because customers can find their own answers to questions online.

Online community
To help achieve such bottom line benefits, most companies are focusing on online community building. In the EIU survey, 71% of firms said that they are already using, or plan to use, online communities for things such as marketing and product development within the coming two years.

Nearly 60% of large companies are now inviting customers to contribute content that explains, supports, promotes or enhances their products, or plan to do so within the coming two years. About half of companies say they are, or are planning to, treat customers as co-developers of products that are in a constant state of improvement.

Blogging, in particular, is being touted as a very effective, low-cost marketing and brand building tool. For example, in 2006 the world’s largest car manufacturer, General Motors, followed its launch in 2005 of a blog called FastLane with a second blog called FYI.

Bill Betts, manager of web services at GM in Detroit, said the car giant wanted to “change the perception that GM is a giant corporation that is impersonal”. So, in addition to the executives who blog on FastLane, GM put employees from factories and offices on the blogging front lines at FYI. “It has put a human face on the corporation,” said Betts. “We’re very pleased that we’ve got the return we’ve hoped for and maybe even more than that. This has been money well spent.”

When it comes to boosting profits and sales, most companies expect to get the biggest return on Web 2.0 investment from new business. Around 38% of companies polled by the EIU expect to use Web 2.0 tools and methods to boost revenue through customer acquisition. One-quarter of respondents expect Web 2.0 to increase revenue through product and service innovation.

The future for corporate Web 2.0 adoption appears bright: most executives expect Web 2.0 methods and tools to be the single biggest factor changing the ways their companies interact with customers, according to 68% of the EIUs poll respondents.