Clearly, collaboration is in high demand. The Telecommunications Industry Association (TIA) indicates that global revenues from collaboration applications, including audio conferencing, video conferencing, Web conferencing, unified messaging and instant messaging, totaled $1.5 billion in 2003, more than double the $696 million generated in 2002. TIA forecasts that collaboration revenues will experience a 66.5 percent compound annual growth rate, reaching $11.4 billion by 2007.
Corporate customers are clamoring for the latest collaboration technology. This high demand is the catalyst for an accelerating pace of innovation. New products are coming on the market at breakneck speed. Existing products get more sophisticated with every new release.
The good news is that the technology can now support and enhance the way people actually work together. The market has become extremely competitive, and a variety of flexible pricing models are now available. The bad news is that the market is now cluttered with a wide range of products and a growing array of complicated licensing models. Enterprise integration is blurring the distinction between stand-alone and native collaboration. It has been described as a buyer’s market, albeit a bewildering one. Navigating through this complex maze of products and prices can be daunting.
The most familiar collaboration technology used for learning is Web conferencing. Web conferencing has been an integral part of the corporate learning landscape for several years. Centra, WebEx, Latitude (now owned by Cisco), Groove, Elluminate, Interwise, Microsoft Live Meeting (formerly PlaceWare), IBM Lotus Workplace Collaboration, and iLinc are household names in the industry. Collaboration products from these vendors are widely used for formal training, informal learning and information sharing.
The market is changing quickly to meet the growing demands of buyers. The products are converging with new innovations in instant messaging, expertise mining, presence awareness, remote access, social analysis, simulation and workflow technology. The most compelling innovations in next-generation products include the use of real-time technology, so-called “expertise mining,” and the extension of collaboration outside the office using wireless technologies.
Analysts that track the learning industry agree that collaboration is the fastest-growing learning technology in the enterprise. The product category exploded after the tragic events of 9/11 and maintained growth throughout the ensuing recession. The rollout of service-oriented architecture (SOA) and global wireless broadband will extend the market for collaboration to the massive small and medium business (SMB) market. This will ensure the continued growth of the collaboration technology market for at least the next five to 10 years.
C-Level Consensus
Corporate buyers of technology are faced with three major challenges: cutting costs, integrating technology and optimizing the productivity of the shrinking workforce. Collaboration technology has proved to be the magic bullet that helps buyers accomplish all three goals. Consequently, collaboration is perhaps the first technology that is attractive to all C-level executives, not just chief learning officers.
IBM claims that it achieves $400 million in annual savings using collaboration technology for meetings, learning events and presentations. IBM conducts more than 4,000 virtual meetings a month. The company saves more than $4 million a month in travel expenses alone.
The principal economic driver of these collaborative technologies has been the increase in productivity and the savings in travel costs. Corporate decentralization and globalization will continue to contribute to this growth. The principal human performance driver of these technologies is direct (albeit virtual) human-to-human collaboration in workspaces. Workers like to use collaboration technology.
Innovation and Convergence
The high customer demand for collaboration technology has sparked a boom in the number of products. This proliferation has created a fierce competitive environment and a great deal of customer confusion. It also has sparked an unprecedented degree of innovation and convergence.
Real-time communication is a prominent characteristic of next-generation collaboration products. Perhaps the best-known real-time technology is instant messaging (IM). IM has begun to proliferate rapidly in the enterprise as a real-time performance support technology. Once the domain of the consumer, it is becoming integral to corporate workflow and collaboration.
Microsoft and IBM currently dominate the enterprise instant messaging market. Each has about 30 percent to 35 percent of the corporate IM market. More than 80 percent of all large companies have IM technology backbones in place. The end-user adoption varies in each company, but in general, the adoption among end users is now approaching 35 percent of all corporate users.
A new technology called “presence awareness” is now being marketed by vendors such as Microsoft, IBM, Tacit Knowledge, AskMe, Bantu and Groove Networks. Presence awareness is the foundation for “Find an Expert” technology, also known as expertise mining. It is used to determine the availability of a worker for tasks, an expert for consultation or groups for project collaboration.
Presence awareness combined with expertise mining expands collaboration to include a “social analysis network” of the people present online. This analysis can determine the relationships among workers and the skills that various workers possess. This technology “mines” for human experts, and puts workers and experts in contact when the need arises. The human expert is the learning object in this scenario. It is a very effective knowledge-transfer method. It is the virtual equivalent of asking the local expert for help on a job task, known as “prairie-dogging” in the office.
SOA is accelerating the innovation and convergence of collaboration. SOA is changing the corporate technology ecosystem at a very fundamental level. It is driving stand-alone applications like collaboration into integrated application suites. It is also driving collaboration down into infrastructure stacks as middleware. Defining a stand-alone collaboration product now becomes almost impossible when the technology is embedded deep in middleware and integrated across enterprise application suites.
Convergence and SOA
Just what is collaboration technology? This used to be an easy question to answer. Now, the response to the question generates a laundry list that includes e-mail, application sharing, file sharing, audio conferencing, Web conferencing, IM, social networking, presence awareness, device awareness, chats and content management. The list seems to get longer every day. Making the process even more difficult, SOA technologies are now influencing the design of the products.
Vendors are starting to wrap collaboration feature sets as Web services in an SOA. This allows the collaboration products to be embedded inside any application. It also allows applications to be embedded into the collaboration interface. In an SOA environment, there is no longer a stand-alone application interface. Instead, a portal or rich Internet application is the container for a variety of features, including collaboration. Collaboration is no longer a product, but rather a service that is embedded in a collection of features in a hybrid application.
The presence of collaboration in the stack and in integrated application suites is good news for buyers. The technology comes “in the box” and is already present “under the hood.” Buyers are well-advised to look under the hood of existing technology they already own before buying new stand-alone collaboration technology.
Major vendors such as Microsoft, IBM, Oracle and Cisco are now deconstructing their collaboration products into granular Web services. The goal of SOA is straightforward: It enables vendors to reach the massive SMB market.
Extending Collaboration to the SMB Market
According to the Information Technology Solution Providers Alliance, there are 22 million small and medium businesses in the United States, and they employ 54 percent of the American workforce. Smaller business will never be able to buy enterprise software licenses, but they will be able to rent those features by the month. SOA-based products are able to penetrate this “last-mile” market. Based on subscription business models, the SMB market represents the largest growth area for collaboration vendors.
Combined, small and medium businesses in the United States account for 75 percent ($52 billion) of all software sales, but no more than 6 percent of enterprise application software sales. The vendors that sell collaboration products now recognize that they need to develop products that can tap into this $52 billion revenue pool.
This is the primary reason vendors are adopting Web services and SOA: to sell subscription-based enterprise application services, like collaboration, to the massive SMB market. Collaboration vendors are modifying their licensing and pricing models to meet the needs of the smaller businesses.
Licensing models are in flux right now but there are currently three basic models available to buyers: hosted, installed, and combinations of hosted and installed. The hosted model is more appealing to small business, but it is catching on in the enterprise as well.
Pricing is also evolving. There are four basic pricing models: flat fee, named users, minutes used and unlimited usage with subscription. Fortunately for buyers, the vendors are very willing to combine these pricing models into custom deals that meet needs. Demand for products is keeping prices steady, yet buyers can get much better deals now due to flexible hybrid models.
The various combinations of these hybrid licensing and pricing models can be complex. It is a buyer’s market, but a complicated one. The high demand for collaboration products and the complexity of the current market have created a demand for a variety of new services.
The Rise of Collaboration Services
Responding to the confusion in the market, a growing number of consulting firms and community portals help buyers navigate through the bewildering maze of options available to them.
Hosting services are becoming the purchasing model of choice for smaller companies. This protects them from rapidly changing technology, but also allows them to pay for just the services they use. Administration services such as registration, event management, attendee support and billing are now part of the expanded service offerings of vendors.
Using the term “collaboration” literally, new companies have emerged that leverage collaboration technologies to provide human-to-human mentoring and coaching services. Ensemble Collaboration is an example of this new type of mentoring-as-a-service company.
As collaboration technology becomes pervasive, the emphasis shifts away from technology toward human-to-human services. Mentoring and coaching will be in very high demand in the coming years.
The Shape of Things to Come
Within two years, collaboration technology will be widespread and seamlessly integrated into both front- and back-office platforms. The impact of Microsoft embedding collaboration technology into the Office 2003 suite will have a fundamental impact on the adoption of collaboration products. In late 2003, IBM renamed its Lotus Platform, “Workplace Collaboration.” Its LMS is now called IBM Lotus Workplace Collaborative Learning. Collaboration is now the cornerstone of Microsoft’s and IBM’s ongoing enterprise application development efforts.
Other factors that will have a positive impact on new collaboration technology are the growth of pervasive computing and the proliferation of wireless broadband Internet access in North America. The significance of these factors is that collaboration is now possible everywhere, in the field, in the health-care clinic, on a sales call and on the factory floor.
In the United States, more than 50 percent of all workers are mobile. The growth of pervasive computing and wireless broadband connectivity doubles the market for collaboration products, until now restricted to desktop computer users.
Companies like SmartMeeting and FakeSpace are already selling products that provide 3-D immersive virtual collaboration spaces for multiple workers. Vendors in the multi-billion dollar product lifecycle industry are selling products that allow multiple product designers to work together in a real-time 3-D environment.
The true innovation in these systems is not the immersion or the technology, but the multi-user capability. Multiple workers can interact with the system and one another in real time. Human interaction dominates the experience, and the technology fades to the background. Enhanced human interaction is the greatest appeal of collaboration. It is the light at the end of the tunnel that will bring clarity to the market.
Sam S. Adkins is an independent learning technology researcher and chief research officer at Ambient Insight, specializing in research that spans converging technologies, including simulation, mobility, business process management, collaboration, workflow management and Web services. Sam can be reached at sadkins@clomedia.com.
