by C.G. Lynch

Why Layoffs at Consumer Tech Start-Ups Matter to Enterprise IT

Oct 27, 20082 mins
Enterprise Applications

During the past few years, free consumer applications and social technologies were the primary focus of start-ups in Silicon Valley. Now, with venture capital drying up, these same firms have begun tightening their belts, announcing layoffs while shelving new development projects. Though this will have obvious effects on the consumer Web, it will also profoundly hurt business technology, which, at its best, mimics the moves of its cooler consumer cousin.

For the past couple years, Web 2.0 and consumer applications in general have improved corporate technology immensely, and there were two main factors behind this:

1) One was end-user driven. Users felt that the free consumer technologies they utilized on the Web such as social networks, wikis and blogs would improve their productivity at work, more so than the less flashy enterprise applications they had been given. As a result, we saw an emergence of rogue IT users — people who didn’t wait for a new technology to clear an IT project list. If they wanted it, they went on the Web and got it, with (or often without) IT’s blessing. This forced CIOs and IT to take notice.

2) Business software vendors came to IT’s rescue. IBM and Microsoft, to name the two big players, each added social software to their offerings, IBM with its Lotus Connections, and Microsoft adding Web 2.0 tools to SharePoint. By following the lead of Web 2.0 and start-up vendors who were making cool social tools and consumer applications, enterprise users could get what they wanted (well, almost) while satisfying the legitimate security and compliance concerns of their IT department.

Now, with consumer-driven start-ups approaching tough times, business software vendors, and the IT departments who buy from them, might be forced to come up with their own innovations rather than play copycat.

Corporate IT should not use the decline in consumer innovation (if there is one) to be complacent, or, even worse, revert back to its old policy of deploying command and control applications that don’t empower end-users.

If there is one thing we’ve learned from this passing era of the Web, it’s that technologies designed with the end-user in mind first bolster individual and group productivity, which in turn benefits the modern corporation. Applications designed to merely suit the latter, ironically, help neither the organization or its employees trying to improve it.