The+Internet,+Web+2.0+and+Business



=1.0 Introduction =

toc I think we can all acknowledge - largely based on our own personal experiences – that the internet has had a profound impact on all businesses in the UK and we can expect that impact to increase significantly in the future. In this page I want to explore these assumptions in details and address two themes relating to the impact of the internet on businesses:

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 * Internet use by UK businesses
 * Web 2.0 and its uses by businesses

=2.0 Internet Use by UK Businesses =

Last year Google, in conjunction with the Boston Consulting Group, published an excellent and informative report on the internet market in the UK. You can access and download this report for free a t[]. Its contents are summarised in this clip:

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Let me try to highlight what I see as the key and most startling figures in this report:


 * The internet is worth £100bn to the UK economy, or more than 7% of national income. If it were an industry in its own right, the internet would be more than twice as large as the UK hotel and restaurant market and nearly as big as the financial services sector. It is larger than the utility and transport industries combined.


 * The UK has the biggest e-commerce market in the world when measured by the amount spent per capita. 62% of UK adults (or 31 million people) bought goods and services online in 2010. Indeed, the expansion of the internet in the UK had largely been driven by this growth in e-commerce.


 * The popularity of shopping for goods and services online has also helped to fuel a boom in online advertising as companies spend heavily to attract users to their sites. This advertising is worth around £3.5bn a year.
 * Research suggests that SMEs active online are more successful and grow faster than businesses with no internet presence
 * Research suggests that SMEs active online are more successful and grow faster than businesses with no internet presence


 * The UK exports goods and services worth £2.80 for every £1 it imports – much of this trade is sustained by the internet.


 * The value of goods and services researched online but purchased offline was £40 billion in 2008


 * The internet economy is likely to grow by 10% a year for the next five years and could contribute up to 13% of GDP a year by 2015


 * Broadband use in the UK has more than doubled since 2005. As far as consumers are concerned, the average amount of time spent on the internet has increased by 65% in three years and amongst 16-24 year olds more time is spent on the internet than watching TV.


 * <span style="font-family: Arial,Helvetica,sans-serif;">But there is a digital divide in the UK, with some parts of the country – including Scotland and Northern Ireland – lagging far behind London and the south-east. 20% UK residents never go online (mainly rural areas where there are poor internet connections)


 * <span style="font-family: Arial,Helvetica,sans-serif;">Microsoft Security Intelligence Report estimates that 97% of emails globally are unwanted

<span style="font-family: Arial,Helvetica,sans-serif;">This report appears to confirm and add weight to what I suspect all of us already know. The internet will be a significant and crucial component of the business world in the future and is unlikely that businesses, especially in certain sectors, can succeed without a viable internet presence. For many of you leaving university this summer, you’ll be using the internet extensively to help your businesses to build and sustain a competitive advantage. It will be a critical component of your working lives.

=<span style="font-family: Arial,Helvetica,sans-serif;">3.0 Business and the Internet - Success for SME’s? =

<span style="font-family: Arial,Helvetica,sans-serif;">Despite the recent economic climate, small and medium sized businesses should be optimistic about the future. In 2012 the Prime Minister, David Cameron launched a loan scheme for small businesses, according to Sparrow (2012) of the Guardian, the loans will make it much easier for entrepreneurs with business ideas to seize their ambition and make a start to their business. Furthermore, the Internet is forever expanding, according to the Office for National Statistics (2013), in Great Britain; 21 million households (83%) had access to the Internet in 2013. Additionally, 72% of all adults bought goods or services online, up from 53% in 2008.

<span style="font-family: Arial,Helvetica,sans-serif;">Together with these opportunities, Kozmetsky and Yue (2005) state that the web is providing a new range of opportunities to aid the success of small and medium sized businesses. The Internet provides tools and personnel available at the touch of a button. The increasing number of accessible online services is allowing businesses any size to reduce their expenses and maximise their growth potential. In addition the use of free open-source software and cloud services such as [|Dropbox] and [|Google Drive] is a cheaper way of storing information than offline equivalents.

<span style="font-family: Arial,Helvetica,sans-serif;">The issue surrounding the volume of online resources concerning the Internet, is where do small and medium business start. To follow are a number of ways in which SME’s can utilise the Internet for the benefit of their business within the contemporary work today.

[[image:ntinm3/Internet world.png width="335" height="253" align="right" caption="Communicate through the Internet "]]<span style="font-family: Arial,Helvetica,sans-serif;">3.0.1 Communications
<span style="font-family: Arial,Helvetica,sans-serif;">The utilisation of the Internet for small and medium sized businesses allows a number of great benefits, one of which is communication. The use of Internet voice over networks is a great way to minimise phone bills. Olsen (2013) states that the recent introduction of [|Skype] and [|Footalk] offer options for making free calls to anywhere in the world. In addition, Skype offers video calls, adding a visual element to a conference call; in turn this links teams together, regardless of their locations. Furthermore, a selection of these online services also offer calls at a reduced costs to a users mobile phone, meaning that even external communication with clients or partners can be cost-effective.

<span style="font-family: Arial,Helvetica,sans-serif;">In agreement with Olsen (2013), The Information Resources Management Association (2000) shows that most SME’s who access the Internet tend to use the Internet for communication and information gathering with little consideration to use the Internet for electronic transactions.

<span style="font-family: Arial,Helvetica,sans-serif;">3.0.2 Reduced Mailing Expenses
<span style="font-family: Arial,Helvetica,sans-serif;">The use of Internet resources for small and medium sized businesses can reduce or eliminate the need for traditional postal mailing and the costs associated with that contact method (Chen, 2005). The traditional methods of mailing have moved on, the internet makes it easy to stay in contact with consumers via emails, discussion boards, chart rooms and social networking sites.

<span style="font-family: Arial,Helvetica,sans-serif;">The introduction of services such as Dropbox and Google Documents allows businesses to be operational without the use of paper. The use of such services allows employees from anywhere in the world to contribute their work to a shared spread. Additionally, these services allow business to synchronise information and upload and retrieve information through the Internet. The synchronised data can be retrieved among a number of devices, including Macs, PCs and most mobile phones. This process allows small business to benefit from an increase in efficiency and reduced costs in the business world today.

<span style="font-family: Arial,Helvetica,sans-serif;">3.0.3 Employees
<span style="font-family: Arial,Helvetica,sans-serif;">The selection of online employment platforms such as [|Glasscubes] and [|Elance] allows small business without employees, to hire experienced temporary workers for a variety of tasks (Lister and Harnish, 2009). This opens the possibilities for small businesses to be operational, hiring freelancers who work remotely is an easy way to reduce expenses and quickly increase the necessary work force when in high demand.

<span style="font-family: Arial,Helvetica,sans-serif;">3.0.4 Customer Relationship Management Web Tools
<span style="font-family: Arial,Helvetica,sans-serif;">In the current economic situation a vast majority of small businesses exist online, meaning customer relationships have become progressively less personal. The online industry suggests that customers and merchants favour a short and direct relationship. However, with companies such as [|SalesForce], [|Microsoft Dynamics] and [|Maximizer Software] businesses can digitalise their customer relationships.

<span style="font-family: Arial,Helvetica,sans-serif;">These services help businesses to, organise, improve and manage their current customer base. Blokdijk (2008) states that the implementation of customer relationships management leads to a number of key benefits,


 * <span style="font-family: Arial,Helvetica,sans-serif;">Increase in revenue
 * <span style="font-family: Arial,Helvetica,sans-serif;">Decrease in marketing and sales costs
 * <span style="font-family: Arial,Helvetica,sans-serif;">Enhance customer loyalty
 * <span style="font-family: Arial,Helvetica,sans-serif;">Shorten sales cycles

<span style="font-family: Arial,Helvetica,sans-serif;">In addition to Blokdijk's (2008) <span style="font-family: Arial,Helvetica,sans-serif;">research <span style="font-family: Arial,Helvetica,sans-serif;">, Longenecker et al., (2008) have identified five economic benefits of maintaining relationships with current customers for small businesses. They state that,


 * <span style="font-family: Arial,Helvetica,sans-serif;">Acquisition costs for new customers are huge
 * <span style="font-family: Arial,Helvetica,sans-serif;">Long time customers spend more money than new ones
 * <span style="font-family: Arial,Helvetica,sans-serif;">Happy customers refer their friends or colleagues
 * <span style="font-family: Arial,Helvetica,sans-serif;">Order processing costs are higher for new customers
 * <span style="font-family: Arial,Helvetica,sans-serif;">Old customers will pay more for products.

<span style="font-family: Arial,Helvetica,sans-serif;">Customer relationship management web tools give small businesses an opportunity to advance. Allowing businesses to connect with their customer in a more direct way through feedback and account tracking. Overall, the use of customer relationships management will make the customer experience with a small business easier and more convenient.

<span style="font-family: Arial,Helvetica,sans-serif;">3.0.5 Summary
<span style="font-family: Arial,Helvetica,sans-serif;">The use of the internet for small and medium sized businesses has been summarised by Hamill and Gregory (1997), they found that implementing the internet could help to overcome physiological, operations, organisational and market barriers. Furthermore, Mehta and Shah (2001) have stated that the use of the Internet can easily reach millions of clients who surf the Internet. Usigbe (2013) summarises the point made by Mehta and Shah (2001) by stating that this will create the possibility of increasing the clientele base and in turn will translate into more sales and more profit.

=<span style="font-family: Arial,Helvetica,sans-serif;">3.1 Google AdWords =

<span style="font-family: Arial,Helvetica,sans-serif;">Research into [|Google’s AdWords] has uncovered another way in which the Internet has enabled small and medium sized businesses to succeed. The concept of AdWords is simple, to enable businesses to create their own advert, have it appear on Google and to attract consumers to their business (Marshall and Todd, 2012). According to Google (2014), there are three steps in how this procedure allows small businesses to succeed. Create the ad using keywords related to the business. The ad appears on Google, when people search using Google using one of the keywords, the ad may appear next to the search results. Attract customers, people can simple click on the ad to make a purchase or learn more about the product.

<span style="font-family: Arial,Helvetica,sans-serif;">According to Google (2014), businesses can advertise to people searching on Google even if they already appear in Google’s search results, targeting new audiences on Google and through their advertising networks. An additional function of AdWords that’s supports small businesses is the ability to focus the advert either, locally or regionally, suggesting that this service is for both small and medium sized businesses. Furthermore, the use of AdWords allows a great control. Businesses can edit the ads and adjust the budget until the results meet the expectations. This can be adjusted to specific languages and geographic locations. Finally, Google (2014) state that there is no minimum spending required, moreover, with the cost per click option businesses are only charged if people click on the ads. Meaning, ‘that every of the budget goes towards bringing new prospects to [the business].’ The concept of AdWords is an innovative way of ensuring that small and medium sized businesses are able to compete in such torrid economic times, but does it work?



<span style="font-family: Arial,Helvetica,sans-serif;">3.1.1 Hostlebookers.com
<span style="font-family: Arial,Helvetica,sans-serif;">In 2003, [|Hostlebookers.com] a London online travel agency, specialising in budget accommodation, aimed to be the easiest and cheapest way for online customers to reserve budget accommodation around the <span style="font-family: Arial,Helvetica,sans-serif;">world, Google (2014). Juan Perez, the marketing manager at the company, explains the demand for the service, ‘as we began growing internationally, we needed to be sure that we were reaching our target market accurately. Thanks to AdWords, this has been a breeze’ (Google, 2014). This shows that the use of Google AdWords has enabled a SME to use the Internet to their advantage and succeed during a time of uncertainty surrounding the economic situation.

<span style="font-family: Arial,Helvetica,sans-serif;">3.1.2 The Mini Farm[[image:TheMiniFarm.png width="204" height="147" align="right"]]
<span style="font-family: Arial,Helvetica,sans-serif;">An additional success story within the UK is that of [|The Mini Farm], founded in Derby just 18 months ago, The Mini Farm is a mobile animal petting farm that provides a fun and interactive farm experiences for people of all ages at summer fetes, parties, corporate events and family days Google (2014). The Mini Farm have been using AdWords from the very start of their adventure and have found that it has helped to boost the amount of traffic to their site. According to Google (2014) The Mini Farm plans to keep investing in AdWords and focus on spending more time getting the most out of the service. The two examples stated above provide evidence of SME’s using services within the Internet to create a competitive edge within a troubled economic time. The next question, is whether we can rely on the Internet forever?

=<span style="font-family: Arial,Helvetica,sans-serif;">4.0 Web 2.0 =

<span style="font-family: Arial,Helvetica,sans-serif;">As the business world is changing through the impact of internet on it, so the internet itself is changing. What is it is today isn’t the same beast as it was a decade or two decades ago.

<span style="font-family: Arial,Helvetica,sans-serif;"> One of the most significant changes in the internet in recent years has been the development and growth in web 2.0. Web 2.0 covers many web applications developed over the past decade or so that facilitate the participation of their users in information creation and sharing and collaborative enterprises on the internet. As O’Reilly (2004) argues, they therefore have a different character from the first generation of web applications – or web 1.0 – since they only allowed their users to view, but not to change significantly, their contents and they do not provide the means for their users to interact with other each other. Social networking sites (such as Facebook and Twitter), blogs, wikis, video sharing sites (such as YouTube), some games (such as Second Life) and mashups are all examples of web 2.0 applications and they have recently grown considerably in number and size. For example, by the end of 2010 there were 152m. blogs worldwide, 600m. Facebook users, 2bn. videos viewed each day on YouTube and 175m. Twitter subscribers (Pingdom blog, 2011).

<span style="font-family: Arial,Helvetica,sans-serif;"> Anderson (2007) has attempted to identify the principal characteristics of web 2.0 applications:

<span style="font-family: Arial,Helvetica,sans-serif;"> (1) Web 2.0 applications enable their users to generate their contents. These users are therefore what Tapscott and Williams (2006) and others refer to as ‘prosumers’ – people who both produce a product as well as consume it. Due to recent developments – such as digital cameras, smart phones and easy web connections – there are relatively few technological barriers preventing people from participating fully in web 2.0 applications.

<span style="font-family: Arial,Helvetica,sans-serif;"> (2) Many web 2.0 applications are open source software – not the private property of an organisation or person and free to use – developed through a process of what Benkler (2006) refers to as ‘commons-based peer production’. This mode of production involves a large number of people collaborating in software development, without the aid of traditional hierarchical structures and motivated by non-commercial and altruistic goals. Thus, the procedures by which these applications are developed mirror to a considerable extent what they then enable their users to do with them.

<span style="font-family: Arial,Helvetica,sans-serif;"> (3) The possibility of extensive participation and collaboration by users is built into the architecture of these web 2.0 applications. Their simplicity and ease of use ensures that there are few barriers to using these applications.

<span style="font-family: Arial,Helvetica,sans-serif;"> (4) Due to the design of web 2.0 applications, they are able to harness the individual inputs from all of their users to produce a collective knowledge that is frequently superior to what could be produced by any one person. This characteristic has similarities with the notion of ‘the wisdom of the crowd’ (Surowiecki, 2004), which recommends that a system that is able to aggregate effectively individual information is frequently more accurate than the information generated by any one person – even an expert.

<span style="font-family: Arial,Helvetica,sans-serif;"> (5) Web 2.0 applications benefit from ‘network effects’, since they only possess value to the extent that there are many users accessing them. Thus, it is the active participation of their users, and their engagement in collaborative many enterprises, that creates the value of these applications.

<span style="font-family: Arial,Helvetica,sans-serif;">As we’ve discussed in the past, a wiki is a web 2.0 application that possesses all of these five characteristics. The first wiki was developed in 1995 by Ward Cunningham. Wiki is a Hawaiian word for ‘fast’, clearly chosen by Cunningham to convey to its users that the wiki software is a quick and easy way for people with limited IT skills to create collectively a database. A wiki is created by all of its users with editing rights who can add new pages to it and edit and comment on all aspects of its existing pages. Via this process, they create a database that can then be searched for information. Thus, employing the wiki software a community of people are collaborating in the production of collective body of knowledge, which is evolving and developing over time as people add their contributions to it. A wiki is akin to a conversation within a community – albeit one taking place in the virtual world. The wiki software was designed to be simple to use, which ensures there are few barriers preventing people from accessing and participating in a wiki. Users can add text, pictures, graphics and video clips with ease. This software enables users to establish internal links between the themes covered by a wiki and external links with pages on the internet.

=<span style="font-family: Arial,Helvetica,sans-serif;">5.0 Web 2.0 and Business =

<span style="font-family: Arial,Helvetica,sans-serif;">So, Web 2.0 offers businesses new ways of using the internet in their commercial activities and new opportunities. But I think the full potential of this new web architecture has not been fully acknowledged or realised. Businesses perhaps recognise that wikis can be used in managing project work, or Facebook can be employed in advertising and promotional activities for goods and services. But I sense (and perhaps you do too) that web 2.0 could probably be used for so much more and its true possibilities are yet to be seized by businesses. But what are these possibilities? To this question I don’t have meaningful answers.

=<span style="font-family: Arial,Helvetica,sans-serif;">6.0 Will we always have the Internet? =

<span style="font-family: Arial,Helvetica,sans-serif;">In 2013, Internet pioneer Danny Hillis took to the stage at TED to argue that the internet wasn’t designed for this kind of scale, and calls for a Plan B: If or when the Internet crashes. Below are the key findings from the TED talk.

> <span style="font-family: Arial,Helvetica,sans-serif;">‘Now, there was an interesting thing that happened last April. All of a sudden, a very large percentage of the traffic on the whole Internet, including a lot of the traffic between U.S. military installations, started getting re-routed through China. Now, China Telecom says it was just an honest mistake, and it is actually possible that it was, the way things work, but certainly somebody could make a dishonest mistake of that sort if they wanted to, and it shows you how vulnerable the system is even to mistakes. Imagine how vulnerable the system is to deliberate attacks’ (Hillis, 2013)
 * <span style="font-family: Arial,Helvetica,sans-serif;">In the 1970s and 1980s, a generous spirit suffused the Internet, whose users were few and far between. Now however, the level of people using the Internet can not me measured.
 * <span style="font-family: Arial,Helvetica,sans-serif;">Hillis (2013) emphasises that there are a lot of bad guys on the Internet these days, leaving uncertainty surrounding possible mistakes or deliberate attacks. Hillis (2013) expressed a number of examples of where mistakes or deliberate attacks have been implemented. The example shown below shows the scale for the opportunities through the Internet. He states.

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 * <span style="font-family: Arial,Helvetica,sans-serif;">The example that Hillis (2013) presents shows how easy ‘an honest mistake’ can occur. In addition it shows potentially how much of a threat the Internet can be. Furthermore, he states that if someone wanted to attack a country they wouldn’t bother using tanks or soldiers they would use the Internet.
 * <span style="font-family: Arial,Helvetica,sans-serif;">Continuing on, Hillis (2013) expresses his concern surrounding the many different ways in which we are using the Internet. He states that, ‘we’re using it in a very, very different way that we expected to use it, and its gotten very, very different scale than it was designed for’ (Hillis, 2013). He continues to state that nobody understands all the things the Internet is being use for. In addition he states that nobody really knows what position the Internet is in right now because it was different an hour ago. ‘It’s constantly changing. It’s constantly reconfiguring (Hillis, 2013).
 * <span style="font-family: Arial,Helvetica,sans-serif;">Hillis (2013) states that we are preparing ourselves for an internet disaster, similar to the financial system, where the system was built for a smaller scale and we have expanded it way beyond the limits of how it was meant to operate. Hillis (2013) believes if that were to happen we don’t know what the consequences are of an attack of the Internet.
 * <span style="font-family: Arial,Helvetica,sans-serif;">So, is there a plan B? Hillis (2013) states that there is no clear backup system to the Internet. However, people wont decide to create a plan B until they recognise the need for it. Hillis (2013) states that ‘it’s very hard to get people focused on plan B when plan A seems to be working so well.
 * <span style="font-family: Arial,Helvetica,sans-serif;">To conclude, Hillis (2013) has highlighted that the Internet is in a very different situation than it was once in. The threats of the Internet are there and possibly one day the need for plan B will become apparent.

=<span style="font-family: Arial,Helvetica,sans-serif;">7.0 Questions =

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 * 1) <span style="font-family: Arial,Helvetica,sans-serif;">List the most significant ways in which Web 2.0 could have an impact on businesses? How might it influence their internal operations, marketing and relationships with other businesses?
 * 2) <span style="font-family: Arial,Helvetica,sans-serif;">Will the impact of Web 2.0 be greater in some sectors than other sectors? What are these sectors?
 * 3) <span style="font-family: Arial,Helvetica,sans-serif;">Is the Internet becoming more and more powerful? Will it ever be used against us?
 * 4) <span style="font-family: Arial,Helvetica,sans-serif;">Do you believe Danny Hillis is correct? Will we ever need a plan B, is Plan A fails?

=<span style="font-family: Arial,Helvetica,sans-serif;">8.0 References =

<span style="font-family: Arial,Helvetica,sans-serif;">Anderson, P (2007) What is Web 2.0? Ideas, technologies and implications for education, [], accessed 16.1.12

<span style="font-family: Arial,Helvetica,sans-serif;">Blokdijk, G. (2008) CRM 100 Success Secrets - 100 Most Asked Questions on Customer Relationship Management Software, Solutions, Systems, Applications and Services. Newstead: Emereo Pty Ltd.

<span style="font-family: Arial,Helvetica,sans-serif;">Chen, S. (2005) Strategic Management of e-Business. 2nd ed. Chichester: John Wiley & Sons.

<span style="font-family: Arial,Helvetica,sans-serif;">Google (2014) AdWords: Advertise your business on Google [Online] Google. Available from: [] [Accessed 04/10, 2014].

<span style="font-family: Arial,Helvetica,sans-serif;">Hamill, J. and Gregory, K. (1997) 'Internet Marketing in the Internationalisation of UK SMEs''. Journal of Marketing Management, 13: 9-28.

<span style="font-family: Arial,Helvetica,sans-serif;">Hillis, D. (2013) The Internet could crash. We need a Plan B [Online] Ted. Available from: [|http://www.ted.com/talks/danny_hillis_the_internet_could_crash_we_need_a_plan_b#t-547289] [Accessed 04/11, 2014].

<span style="font-family: Arial,Helvetica,sans-serif;">Information Resources Management Association. International Conference (2000) Challenges of Information Technology Management in the 21st Century. Covent Garden: Idea Group Inc.

<span style="font-family: Arial,Helvetica,sans-serif;">Kozmetsky, G. and Yue, P. (2005) The Economic Transformation of the United States, 1950-2000. West Lafayette: Purdue University Press.

<span style="font-family: Arial,Helvetica,sans-serif;">Lister, K. and Harnish, T. (2009) Undress for Success. Hoboken: John Wiley & Sons.

<span style="font-family: Arial,Helvetica,sans-serif;">Longenecker, J., Rosales, L. and Loeza, E. (2008) Small Business Management. Mason: Cengage Learning.

<span style="font-family: Arial,Helvetica,sans-serif;">Marshall, P. and Todd, B. (2012) Ultimate Guide to Google AdWords 3/E. 3rd ed. Irvine: Entrepreneur Press.

<span style="font-family: Arial,Helvetica,sans-serif;">Mehta, K. and Shah, V. (2001) 'E-Comerce: The Next Global Frontier for Small Business'. The Journal of Applied Business Research, 17 (1).

<span style="font-family: Arial,Helvetica,sans-serif;">Olsen, K. (2013) How small businesses can take advantage of online services [Online] The Guardian. Available from: [] [Accessed 04/10, 2014].

<span style="font-family: Arial,Helvetica,sans-serif;">Sparrow, A. (2012) David Cameron launches loan scheme for young entrepreneurs [Online] The Guardian. Available from: [] [Accessed 04/10, 2014].

<span style="font-family: Arial,Helvetica,sans-serif;">The Office of National Statistics (2013) Internet Access - Households and Individuals, 2013 [Online] Available from: [] [Accessed 04/11, 2014]. ||