Forrester: Web 2.0 Will Reach $4.6 Billion

Web 2.0 will become a $4.6 billion industry by 2013, with the majority of spending being on social networking tools to fundamentally alter the way businesses interact with customers and to harness the collective power of employees, according to a new report by Forrester.

The report highlights a number of interesting takeaways, including the perplexing problem of who in the enterprise is going to pay for Web 2.0 tools. Just like the iPhone, IT shops view these solutions as insecure, consumer-grade technology, and they enter an arena crowded with legacy software, though SaaS and open source is helping to shift that tide.

Also, Forrester says businesses are currently spending more on employee collaboration tools than customer-facing, CRM 2.0 technologies, but they expect that to reverse itself within the coming years, and I’d agree. Businesses typically view emerging technologies with an initial focus on internal use and improvement before investigating how it can leverage these tools in outward-facing processes. Web 2.0 should be no different, and Forrester says that by 2013, investment in customer-facing Web 2.0 solutions will exceed spending on internal collaboration software by nearly a billion dollars.

I also found it interesting that Forrester says social networking will be even more popular than mashups in terms of spending (as the chart below shows), given the importance many SaaS vendors are now placing on the latter.