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 / Winter 2007 / Issue 49(originally published by Booz & Company)


Web-Based Apps: A Strategic View

Most of these programs are offered at no cost as part of a “bait and switch” strategy. Developers of this software hope to sell users ad­ditional, more powerful versions of their applications — so-called enterprise versions that run on client/server networks.

Which only highlights the lim­itations of the scaled-down Web-based productivity software. The maximum size of a word processing file produced in Google Apps, for instance, is just 500 kilobytes, plus two megabytes per embedded image, not huge in this age of documents that include pictures, spreadsheets, and numerous other design features (but enough to store a 125-page book without images, for instance). Other offerings are more generous; Zoho and ThinkFree allow files of 10 megabytes or so. Meanwhile, formatting and revision capabilities remain either nonexistent or primitive at best. Moreover, users must be online in order to use these applications.

Yet despite the relative lack of features, two productivity benefits of Web-based applications stand out. First, users can collaborate, editing Web-based documents and spreadsheets simultaneously; viewing the changes they make almost immediately; and, because most of these applications offer integrated instant messaging, discussing these edits the moment they are made. With all documents and spreadsheets stored in a central repository that everybody can ac­cess, users can search and index the entire database. When companies compare working this way to developing and using an enterprise search application that must retrieve information from individual computers, they see immense savings both in time and in money.

The second benefit is interoperability. Because these applications are browser-based, they are free of any restrictions created by the type of computer or operating system being used. Windows, Mac OS, and even Linux users can work together seamlessly, without worrying about file or storage compatibility.

Given these features, the rise of Web-based applications offers an intriguing strategic possibility: The cost advantage of Web-based applications — and, presumably, of the low-power computers needed to run these programs — should allow CIOs to be more generous when passing out computers to the rank and file in the organization. And when personal productivity tools spread farther down into the corporate hierarchy, employees throughout the company may be able to contribute to the organization more fully as they are linked to the huge information resources of the Internet. And they may be able to work with one another more flexibly.

That advantage takes on special significance in fast-globalizing business environments. Rapidly deploying teams to new locations where infrastructure is iffy and IT support is minimal becomes much easier when all that is needed to get up and running is a lightweight notebook computer and an Internet connection. Such increased agility will let companies explore new market opportunities cheaply and rapidly, without the risk of an overinvestment of people, time, and money in marginal markets. Moreover, the relative lack of features in Web applications will probably be irrelevant in nascent markets, where skill levels may not be what we’ve come to expect in more developed countries. Indeed, storing proprietary and sensitive information on the Web and not on local computers would be a significant advantage in less-developed markets where the security of both data and physical computers remains a concern.

On the enterprise level, how­ever, security and privacy concerns may be the one thing that could derail the success of Web-based applications. Despite the consid­erable value of storing files on Google’s or Zoho’s servers, that data is no longer under the direct control of the company’s internal technol­ogy and is thus more vulnerable to hackers and other computer security problems. Most offerings include some level of encryption for working with and storing files, and Google, for one, guarantees the security of files stored on its applications. Yet although Google is in general a trusted name, the company has already conceded that it searches e-mails sent by users of Gmail, its e-mail program, in order to target ads at users based on their interests. Other, less well-known companies may base their storage systems outside the U.S. CIOs have to weigh whether that sort of environment is appropriate to use for sensitive corporate information.

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