Web 2.0…For CIOs?

Web 2.0 as a concept is great. The idea of a landscape filled with easily connected applications communicating over standards-based channels with simple, intuitive user interfaces sounds like Nirvana to someone who’s long covered the technological morass that is IT.

But all the shiny, happy, Red Bull-fueled, “give me $20M and I’ll change the world” proponets out there right now should make every CIO lock the checkbook in the vault for a while. (Am I bitter about my own Internet bubble experience? Am I suspicious that many of the same venture capitalists who made a bundle off the first bubble seem to be manning the pumps under this one as well? Yes on both points.)

Web 2.0 is like those Staples Easy Button commercials. Just smack the button, and your problem is solved!  Everything will be fun! We’ll simply grab a bunch of public-API Web apps, mash them together and create magic!

Granted, there will be a million underpaid Indian programmers belowdecks manning the oars to move this stuff forward. And the Web 2.0 pundits I’ve read are often a bit vague on where the revenue stream will come from. (Though many seem sure it has something to do with the Long Tail. But the idea that we’re all going to ride on the back of Google’s ability to let niches be more easily discovered seems a tad optimistic. You can only slice and dice the populace so fine before you’re hustling for dimes, not dollars.)

At some point you’ll either need to drive massive traffic to make a buck off low-margin, general-interest ads, or you’ll have to offer a select, highly valuable audience upon which to sell higher-margin, targeted ads. If you can’t offer either (think 90-percent of what’s on the Web right now) you’ll need to sell something online (in the future everyone works for eBay!) charge subscriptions (like the Wall Street Journal) or run your offering as a nonprofit–intentionally or not.  (Celebrity Maps for instance is a fun way to waste 20 minutes, but they’d never get a penny out of me if it wasn’t free.)

And what about those public API Web apps? Google is the face that’s launching a thousand ships right now. But if a few of those “mashups” suddenly starts sucking huge bandwidth, you can bet Google will need to think about either sending some bills, cutting the apps off or at least throttling their throughput. And as they say in any business, those costs will need to be passed on to the consumer.

Finally, beyond Google, how many companies are positioned to offer free access to their applications just so some other company can tie them in a bow and try to make a profit? Not many. In fact, even the service providers underlying this Web-that-would-be-a-platform are beginning to make some rather disturbing comments about how they’d like to see a bit more revenue coming their way from Internet usage–and Web 2.0 will be a little tougher to implement if every connection requires a written contract and money changing hands.

That said, there are some opportunities here for savvy CIOs. The hype surrounding Web 2.0 is driving a lot of development–and development tools–around the area of Web-based services. Microsoft’s Atlas and Tibco’s General Interface are examples of mainstream companies getting involved in Web 2.0-ish development tools. And there are dozens of others. 

Those tools could provide IT departments with a number of potential upgrades, ranging from easier ways to add clever, useful user interface tweaks to a means of creating powerful composite applications. Imagine, for instance, an application that lets you and a partner share a portal that quickly grabs and integrates data from deep inside your respective data stores and presents it on the fly to grateful users–all using relatively simple tools, standard interfaces, and a common transport mechanism–the Internet.

Now you wouldn’t open that app up for free to the world, of course. And the Web 2.0 crowd won’t speak your name in reverant tones the way they do Larry Page and Sergey Brin. But you won’t care. You’ll be getting some work done–and maybe even making some money in the process.

(Updated 1/17/06: If you want an even more aggressively skeptical and detailed view on Web 2.0, check out web developer Jeffrey Zeldman’s entry on A List Apart.)