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CONFIDENTIAL
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion.
Document
DateNASSCOM India Leadership Forum
February 8, 2007
Web 2.0Fundamental or Fad?
John Hagel, III
www. johnhagel.com
Copyright John Hagel III, 20072
* FootnoteSource: Sources
Unit of measureInformation Technology And The Fashion Industry
Copyright John Hagel III, 20073
* FootnoteSource: Sources
Unit of measureWeb 2.0 – The Hype Escalates
Articles mentioning “Web 2.0”
Jan-
05M
ar-0
5M
ay-0
5Ju
l-05
Sep-
05N
ov-0
5
Jan-
06M
ar-0
6
May
-06
Jul-0
6
Sep-
06
Nov
-06
200
400
600
800
1000
1200
0
Copyright John Hagel III, 20074
* FootnoteSource: Sources
Unit of measureWeb 2.0
What is it?
Where’s the money?
What’s required?
Copyright John Hagel III, 20075
* FootnoteSource: Sources
Unit of measureA Prominent Skeptic
“. . . Web 2.0 is of course a piece of jargon, nobody even knows what it means”
Tim Berners – Lee, 2006
Copyright John Hagel III, 20076
* FootnoteSource: Sources
Unit of measure A Prominent Evangelist
“The network as platform”Tim O’Reilly, 2005
Copyright John Hagel III, 20077
* FootnoteSource: Sources
Unit of measureAnother Prominent Evangelist
“Web 2.0 is people” Ross Mayfield, 2005
Copyright John Hagel III, 20078
* FootnoteSource: Sources
Unit of measureO’Reilly Again
“ Web 2.0 is the business evolution in the computer industry caused by the move to the internet as platform. Chief among these rules is this: Build applications that harness network effects to get better the more people use them”
Tim O’Reilly, 2006
Copyright John Hagel III, 20079
* FootnoteSource: Sources
Unit of measureUnderstandable Reaction
“There’s something happening here, what it is ain’t exactly clear ”
Buffalo Springfield
Copyright John Hagel III, 200710
* FootnoteSource: Sources
Unit of measureWeb 2.0 - My Definition
“An emerging network centric platform
to support
distributed, collaborative and cumulative creation
by its users”
Copyright John Hagel III, 200711
* FootnoteSource: Sources
Unit of measureThe Contrast
Presentation Participation
Publication Conversation
Aggregationof information
Aggregationof people andfunctionality
Consumption Creation
Web 1.0 Web 2.0
Copyright John Hagel III, 200712
* FootnoteSource: Sources
Unit of measureWeb 2.0 and SOA - Similarities
• Re-conceive software and data as services
• View services as platforms
• Support distributed and cumulative creation
• Built upon foundation of XML
Copyright John Hagel III, 200713
* FootnoteSource: Sources
Unit of measureWeb 2.0 and SOA – Cultural Chasm
SOA evangelists
Web 2.0 technologies arelight-weight “toys” not suitable for “real work”
Primary focus
Connect people
Primary focus
Connect applicationsand databases
Web 2.0 evangelists
Will SOA’s ever do realwork given “bloated”standards and timeconsumed in generatingarchitectural blue prints?
Copyright John Hagel III, 200714
* FootnoteSource: Sources
Unit of measureTechnology EvolutionFrom Web 1.0 To Web 2.0
AJAX Information Functionality
Emerging Network-CentricPlatform
ForDistributed, Collaborative
and Cumulative Creation byits Users
Web 2.0
XMLIsolation Connectivity
Social Software(Wikis, tags,Video over IP, etc.)
Individual Community
RSS/OPML
Surf Subscribe
ApplicationCreation
PeopleConnection
Copyright John Hagel III, 200715
* FootnoteSource: Sources
Unit of measureWeb 2.0
What is it?
Where’s the money?
What’s required?
Copyright John Hagel III, 200716
* FootnoteSource: Sources
Unit of measureI.T. Performance Levers – Process vs. Practice
Exception
ExceptionException
Exception
Copyright John Hagel III, 200717
* FootnoteSource: Sources
Unit of measureThe Shadow Economy – Exception-Handling
Exception HandlingPercentage of Staff Time
Source: IT Outsourcer Data
32%
68%
Exception
HandlingActivities
RoutineProcessActivities
Copyright John Hagel III, 200718
* FootnoteSource: Sources
Unit of measureWeb 2.0 Tools
Identify and locate appropriate experts
Create effective collaborative environments
Mobilize relevant resources and tools
Document exception handling incidents
Provide pattern recognition and analysis tools
Copyright John Hagel III, 200719
* FootnoteSource: Sources
Unit of measureCompelling Business Case
― Near-term cost savings – more efficient tacit collaboration
― Longer-term innovation platform – pattern recognition
Copyright John Hagel III, 200720
* FootnoteSource: Sources
Unit of measure
RetailingDistribution
Centers
Global
Li & Fung – Process Orchestration
10,000 suppliers
48 countries
YarnCutting
Bangladesh
LogisticsLogistics Logistics Logistics Logistics
YarnWeavingTaiwan
YarnSourcing
Korea
YarnDyeing
Thailand
FinalAssembly
Mexico
ZippersJapan
Quality Control
Copyright John Hagel III, 200721
* FootnoteSource: Sources
Unit of measureImplications For Next Generation Outsourcers/Orchestrators
From
Low cost provisionof generic capacity
Coordination of dispersed service providers and service consumers
Accelerated development and delivery of new I.T. based services
Enhanced visibility for service consumers
Continued reduction of operating inefficiencies
Development of more sophisticated SLA’s and performance measurement systems
To
Flexible configurationof capability
Copyright John Hagel III, 200722
* FootnoteSource: Sources
Unit of measureFrom In-Out To Out-In: Reverse Architectural Migration
Enterprise
Glass House
DepartmentsEnterpriseEnterprise
Enterprise
Enterprise
Enterprise
Enterprise
Enterprise Enterprise
Work Group
Copyright John Hagel III, 200723
* FootnoteSource: Sources
Unit of measureContrasting Architectures
In-Out Out-In
Control One control point Autonomousentities
Resources Heterogeneous Heterogeneoussquared
Transactions Fine grainedShort - lived
Coarse grainedLong - lived
Outlook Optimistic Pessimistic
Copyright John Hagel III, 200724
* FootnoteSource: Sources
Unit of measureNext Wave of Enterprise IT Value Creation
Unmet Business Needs
• Exception handling
• Distributed process networks
• Open innovation
• Supply networks
• Collaboration marketing
New I.T. Architectures
– Combining SOA & Web 2.0
– Outside-In
– Relational
Copyright John Hagel III, 200725
* FootnoteSource: Sources
Unit of measureWeb 2.0Web 2.0
What is it?
Where’s the money?
What’s required?
Copyright John Hagel III, 200726
* FootnoteSource: Sources
Unit of measureDecision – Making Focus Shifting
Veto
PurchaseDecisions
BusinessBusinessLineLine
ManagersManagers
EnterprisePlatforms
TargetedBusiness/ITInitiatives
CFOCFO
CIOCIO
RiskAverse
RiskTaking
Copyright John Hagel III, 200727
* FootnoteSource: Sources
Unit of measureWhat Decision Makers Want
• Near – term
• Targeted
• Modest investment
PragmaticPerformanceImprovement
No Regrets
Micro - SalesMega - Sales
“Big Bang”Visions and
Projects
Copyright John Hagel III, 200728
* FootnoteSource: Sources
Unit of measureThe Sales Challenge
Centralized,Easy To Target
Decision-Makers
Dispersed,Hard To Find
Decision-Makers
Technology SaleHorizontal SaleQualify vs. CompetitionRelationship Selling
Business Sale“Vertical” SaleQualify NeedReference Selling
Copyright John Hagel III, 200729
* FootnoteSource: Sources
Unit of measureThe Sales Opportunity
– Manage Risk– Support Architectural Migration– Help Develop Business Case
– Help on Near-Term Business Needs– Manage Risk– Keep Informed on New Technologies
CIO/ITManagers
Business LineManagers
Copyright John Hagel III, 200730
* FootnoteSource: Sources
Unit of measureFundamental or Fad?
― Near-term business impact?
― Longer-term evolution potential?
CONFIDENTIAL
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion.
Document
DateNASSCOM India Leadership Forum
February 8, 2007
Web 2.0Fundamental or Fad?
John Hagel, III
www. johnhagel.com