When Google Inc. bought hosted security and compliance vendor Postini for $625 million in July, experts said Google was aiming to boost the security and compliance capabilities of its emerging Google Apps product. The speculation was that Google was hoping this move would attract larger enterprises as Google Apps customers.

Less than three months later, Google has announced that it is officially adding Postini’s security and compliance capabilities to Google Apps.

Naturally, larger companies with bigger security and compliance concerns might be tempted to consider Google Apps now. However, analysts and users have warned that Google Apps is a nice supplement to other office productivity suites like Microsoft Office. No one, not even the smallest SMBs, really sees Google Apps as a replacement technology. Most of the components of Google Apps still have the “beta” sticker on them, even Gmail, which seems as standard a Google App as apple pie these days. I feel like I’ve been using it since I was a wee lad.

Anyway, SMBs with compliance concerns will probably welcome the Postini features, too.

Web 2.0 has made its way into a preponderance of enterprises, but most companies still aren’t adequately protecting themselves from Web 2.0-related threats, according to new research by Forrester Consulting.

Ninety-seven percent of the 153 IT pros surveyed said they considered themselves prepared to handle security threats posed by blogs, wikis and other Web 2.0 technologies, yet 79% still reported suffering frequent malware attacks. That’s because, or so says the survey, less than 5% have “comprehensive” Web 2.0 security plans in place.

The problems with these findings, as I see it, are that the study doesn’t say what percentage of malware attacks were actually related to Web 2.0 (as far as we know, most of the attacks could have been due to more traditional IT threats) and it doesn’t explain just what makes a Web 2.0 threat different from a conventional IT threat. I’ve sent an email to the PR guy to get some clarification on this and I’ll update you if I hear back.

The one interesting, though incongruous, finding of the study, which was sponsored by security vendor Secure Computing, is that 96% of respondents said their enterprise has already found value in using Web 2.0 applications, but 57% believe denying employees access to social-networking and “rich media” sites would “visibly” increase productivity. So most IT pros see the potential value of Web 2.0 technologies but aren’t sure its positives outweigh its negatives.

The study concludes that IT departments need to re-examine security policies and update them to take Web 2.0 into account, and should educate users about what is and what isn’t responsible Web 2.0 behavior. Sounds like good advice to me.

Google’s dominance in the online search realm is well documented, as are Yahoo’s hitherto unsuccessful attempts to reclaim the search crown for itself. Unfortunately for Yahoo, its 23 percent share of the search market is still less than half of Google’s formidable 56.5 percent share, according to the AP.

But Yahoo, like the little engine that could, just won’t give up. (Ok, with revenues in excess of $6 billion last year, perhaps comparing Yahoo to a make-believe, little blue train with the engine power of a Dodge Dart is a bit of a stretch, but you get my point.)

Today, Yahoo announced the debut of Search Assist, what the company says is “the most advanced assistance technology available on the Web.” Essentially, with Search Assist enabled, users are offered suggestions as they type search terms on Yahoo’s home page.

For instance, when I began typing New England Patriots, — who demolished the Cincinnati Bengals Monday by 21 points, in case you missed it — into Yahoo’s search field, by the time I finished typing just New E, a number of suggestions popped up below. They included new era, new edition and, of course, new england patriots.

But that’s not all. Yahoo also announced search results will now include content of all types, including video, audio and photos. Hmm. Where have I heard this before? Oh yeah, Google started doing the same thing four months ago, calling it Universal Search. Better late than never, right Yahoo?

But I kid. Actually, Yahoo adding integrated search results four months after Google did the same thing is pretty good time when you think about it. Remember the Panama delays anyone?

So does this mean Yahoo is on the verge of toppling Google? Not exactly, but it should at least get people talking about the company again. As Standard & Poor’s equity analyst Scott Kessler told the AP:

“Is this (upgrade) going to be very important in terms of market share? I’m not so sure. But it probably will help them in terms of mind share,” Kessler said. “One of the reasons that Google has captured the imaginations of so many people is they have been doing so many different and interesting things.”

Put another way, Yahoo has an image problem. Over the last several years we’ve witnessed some truly remarkable technology developments in the form of Web 2.0, from the rise of social networking sites (i.e., MySpace and Facebook) to the emergence of cloud computing (a.k.a. Software as a Service). The result? Web 1.0 companies, like Yahoo, seem quickly old and out of touch.

You can argue that such a perception is wrong or shortsighted, but it nonetheless exists . For Yahoo to become relevant again, it needs to take bold steps to prove it “gets it.” Search Assist and integrated search results are moves in the right direction, as was the recent acquisition of Zimbra and its open source online office suite. Yahoo still has a long way to go to catch Google, but if it keeps this up, it might just turn this thing around after all.

SAP knows big business. SAP knows small business. SAP now knows medium-sized business really well. At least, that’s what SAP hopes.

On Wednesday, SAP unveiled SAP Business ByDesign, a full suite of business applications delivered through the Software as a Service (SaaS) model. Unlike many big-iron vendors that dip their toes in the SaaS waters, SAP actually built this product from the ground up as a SaaS application, which should make SaaS evangelists happy.

If you look at this press information page, you’ll see that SAP is positioning this technology as the lower midmarket product in its SMB ERP product portfolio. It has SAP All-in-One, a vertical-specific suite of on-premise ERP software aimed at larger midmarket firms, with 100 to 2,500 employees. Then there is SAP Business One, a truly small business solution for companies with fewer than 100 employees. Now there is SAP Business ByDesign, aimed at companies with 100 to 500 employees.

As James Governor of Red Monk noted in an excellent blog review of Business ByDesign, SAP is one of those huge enterprise software vendors famous for complexity that is just plain poison for small and medium-sized companies. However, SAP likes to tell us that 65% of its customers are SMBs.

Last year SAP started airing television commercials during NFL football games. Clearly, these ads were aimed at rebranding SAP as a company that could serve SMBs. Every single enterprise software vendor you talk to says it’s going after the SMB market because it represents the best opportunity for rapid growth. With a three-headed monster of a product portfolio, SAP clearly means business. SMB business, that is.

Business ByDesign will feature on-demand software that will help medium-sized firms manage their finances, business analytics, human resources, projects, supply chains, customer and supplier relationships, and compliance.

Governor said SAP hasn’t hit a home run with Business ByDesign, but he thinks it’s offering a tool that may serve the medium-sized market well.

“I am pretty positive about BBD’s chances in the market, and it looks [like] a powerful set of apps for $149 per month per user. I do, however, feel SAP could have really smacked the ball out of the park had it driven harder on Web 2.0 front-end interaction. Time for SAP to get JavaScript religion.”

Dennis Byron, who says he’s a fan of the product, wrote on SeekingAlpha.com that SAP’s new product has a ways to go.

“Sorry, SAP, I am a great admirer but Business ByDesign (codenamed A1S) has a few problems. The name is too long, the beta set of users is too small, the price is too high, the reference implementations and demos are too much old SAP, and the channel strategy is too 20th century.”

I believe this is SAP’s first foray into SaaS. Companies like Salesforce.com and NetSuite have earned some well-deserved hype for their customer wins in the SaaS-delivered SMB ERP market. Now SAP is going to try to take them head on.

SAP is planning to sell this product through its channel partners, which is how most big vendors reach the SMB market. But will channel partners embrace this as an opportunity? New research from IDC suggests maybe not.

Last week, I blogged about IDC’s forecast for the social networking market, which it expects to grow at an astounding rate of 815% between 2006 and 2009. This week, another analyst firm, this time Gartner, weighs in with its predictions. 

According to eWeek’s Clint Boulton, Gartner expects the social networking software market “to grow at a compound annual revenue growth of 41.7 percent through 2011.” That’s obviously a huge difference from IDC’s heady predictions for the market, and it’s hard to say which prediction is more accurate. But at least both firms agree that social networking software will enjoy significant growth in the coming years, however wide a gap in their forecasts. 

Boulton, reporting from the floor of the Web Innovations summit in Las Vegas, also details Gartner analysts’ theory that “digital natives” — those who’ve grown up with social networking tools — will be the ones to drive the enterprise segment of the social software market.  

As these digital natives grow up, they’re moving into the work force, taking with them blogs, wikis, mashups, RSS feeds and other so-called Web 2.0 social networking tools that will enable them to collaborate more freely in an enterprise environment, said Gartner analyst Anthony Bradley.  

“They bring with them a set of expectations of how they will interact and the tools they’ll use to interact, and they can be woefully disappointed walking into organizations that don’t have some of the Web 2.0 tools that they’re used to using for building relationships and getting things done,” Bradley said.

Digital natives will thus usher in what Gartner calls the Enterprise 2.0, where users will use rich Internet applications, social software and a Web platform to execute tasks. 

If I’m interpreting Bradley right, he seems to be saying that for businesses to compete for top talent, they better get on board with Web 2.0. Otherwise, the best and the brightest will find a different employer that has.

The social networking application market will grow to over $420 million dollars by 2009, a whopping 815% increase from its 2006 size of $46.8 million, according to a recent report by IDC. As the market develops, the report continues, social networking functionality will increasingly be built directly into the foundations of communication platforms including email and IM. 

IDC identifies three emerging market segments that it says will fuel the majority of growth, all of which should be of particular interest to business users. 

The first is self-service applications that IDC says will prove particularly useful for marketing campaign teams. The second is something IDC calls “brand applications that focus on persistent customer engagement.” And the third is enterprise applications that improve communication and interaction with outside players, including customers and partners. 

While the first two market segments seem to me to be the same and the descriptions of all three are unnecessarily convoluted, the important point is this: enterprise applications, not consumer apps, will lead the social networking application market’s explosive growth over the next three years. That’s a significant statement, especially considering there are still some in the IT community who question the value of Web 2.0 technologies in the enterprise.    

“Social networking is the new must-have communication application and is being used for both marketing and operational efficiency,” said Rachel Happe, research manager for digital business economy at IDC in a statement. “Social networking applications drive engagements, information exposure and conversions as well as reducing marketing and operational costs.” 

So, does this report qualify as a sober, realistic assessment of the social networking market, or is it the latest volley of Web 2.0 hyperbole? Not to hedge my bets, but I think it might be a little of both.  

Predicting 815% growth is pretty bold, and any time you hear the phrase “the new must-have,” your B.S. radar should start buzzing and blinking. But as I wrote a couple of weeks ago, I don’t think Web 2.0 is a bubble waiting to burst, akin to the dot-com bubble of the ‘90s. And I definitely think social networking tools, blogs and wikis have an important role to play in the enterprise, so I agree with the report that enterprise social networking apps will likely lead the market’s future growth.  

Hey, even if IDC’s prediction is off by half, that’s still about 400% growth, which is none too shabby. I guess we’ll just have to check back in 2009 and see if IDC hit the mark or not.

In yet another sign that Web 2.0 isn’t just a passing fad fit for only wide-eyed startups with visions of grandeur, CIO Insight is reporting that Microsoft has a deal with Wachovia to provide the bank with a social-networking platform for its 100,000+ employees.

According to the report:

The nation’s fourth largest bank will roll out a social networking service for 110,000 employees over the next several months, giving workers a sophisticated knowledge-management platform that combines the user-friendly approach of the popular Facebook service with broad integration into Wachovia Corp.’s business applications.

The vendor for the big project isn’t one of the many contenders such as Visible Path, SelectMinds and Leverage Software in the burgeoning enterprise social-net market, or the ballyhooed Facebook itself. It’s Microsoft, which offers easy interconnection with other applications via its Office SharePoint Server product. Integration into the daily routine of business was a difference-maker in choosing the software.

So add Microsoft to the growing list of old-school, established tech companies jumping into the Web 2.0 pool. In fact, the pool’s getting a little crowded, with the likes of IBM and SAP already making their way to the deep end.

Just like the dot-com bubble of the 1990s, is Web 2.0 a bubble waiting to burst? Analyst firm Research and Markets says that it is:  

“The Internet changes everything” was a common phrase in the 1995-2000 period. Indeed, a lot of things did change for business, but a lot of things stayed fundamentally the same. Anyone who had the nerve to say that some early Internet businesses were overvalued, that there was a bubble and that many of the ventures had no business fundamentals was decried as someone who didn’t “get it.” …  

Today, the Web 2.0 phenomenon is being described as another bubble in the making, although few have the public nerve to predict when the bubble is going to burst. … By taking a realistic approach to Web 2.0, both types of stakeholder can help ensure that the baby is not thrown out with the bath water when the bubble does burst. 

OK, everybody just relax. There’s no question that the Web 2.0 “phenomenon” has suffered its fair share of hype, but to say the current situation mirrors the heady dot-com days of yesteryear is a bit of a stretch. 

Yes, there’s no shortage of Web 2.0 evangelists predicting that blogs, wikis, mashups and so on are “changing everything” — much like those who in the 1990s declared that e-commerce was reshaping life as we knew it. Maybe it will; maybe it won’t. 

The major difference between now and then, however, is that venture capitalists are much more selective about which Web 2.0 companies they back and how much they invest. During the 1990s, that was hardly the case; any two-bit programmer with a dial-up connection in his garage could land big bucks from hysterical VCs eager to cash in on the so-called Web boom. 

As Scott Duke Harris of the Mercury News wrote earlier this month, VCs also have significantly less influence now than they did then, because entrepreneurs themselves are more savvy and self-sufficient: 

Once upon a time on the Web, there was a lot of talk about “burn rate” — a phrase describing the way start-ups like Webvan and Pets.com went through venture capital like a blowtorch. Many flamed out. 

Today, the operative phrase is “bootstrapping.” In “Web 2.0,” a term reflecting the medium’s maturation into a dynamic, cost-effective business platform, penny-pinching entrepreneurs simply don’t need venture funding as much as they used to. 

Consequentially, the business fundamentals of many current Web 2.0 startups are actually pretty solid. A number will inevitably fall by the wayside, as a certain percentage of startups always do. But there’s no reason to believe the Web 2.0 phenomenon is a bubble waiting to burst. Blogs and wikis, which are relatively cheap to develop and deploy, have already proven their worth in the consumer market and the enterprise, and you can expect them to continue doing so for years to come.

If everyone on the planet jumped up and down at the same time, would the orbit of the earth shift? I doubt it. But I do know that if millions of people try to log in to their Skype accounts at the same time, it can knock the peer-to-peer Internet telephony service out of action for days. 

How do I know? Because that’s exactly what happened last week.  

For those unawares, Skype’s network crashed last Thursday, leaving its 220 million users without service for nearly two full days. The company, which is a division of the online auction giant eBay, initially blamed the outage on a “software issue,” while some bloggers speculated that a more sinister cause, namely a DoS attack, was behind the crash. 

Service was finally restored on Saturday morning, and today Skype’s Villu Arak explained on his Heartbeat blog what really took the network down: 

The disruption was triggered by a massive restart of our users’ computers across the globe within a very short timeframe as they re-booted after receiving a routine set of patches through Windows Update. 

File this incident under “unintended consequences.” I can just picture the millions upon millions of Windows users dutifully downloading their weekly update, restarting their machines and expecting all to be right with the world. Instead, they unwittingly shuttered, at least temporarily, one of Web 2.0’s most celebrated progeny. 

For parent company eBay, its response (or lack thereof) seems to have caused more damage to its reputation than the service outage itself did to Skype’s network. 

On GigaOM, blogger Om Malik writes: 

And in this moment of crisis, eBay’s senior management was AWOL. Ebay and Skype management are happy to talk to the press when delivering the good news, but in this crisis situation, the silence was deafening. 

Perhaps more ominous for Skype’s future advances into the SMB and enterprise markets are comments like these, posted on the All VoIP News blog:    

After the recent Skype outage I certainly would not use Skype for my business. If Windows updates cause millions of people to reboot their computers, and thus Skype is effected, there is something wrong. 

Ultimately, I don’t think you can blame Skype for failing to anticipate such a fluke occurrence as a network outage caused by millions of users rebooting their computers after a routine Windows Update. I know I certainly didn’t see it coming, and I doubt anyone else did either. Internet telephony is still a work in progress, and snafus like this are bound to happen from time to time.  

But Skype users certainly have a right to expect a better response and better customer service when such a drastic event does happen, especially from a major IT player like eBay. For its SMB users especially, those who depend on Skype to conduct daily business, anything less can prove costly. Maybe too costly to take a chance on a VoIP service like Skype in the first place 

So in addition to “unintended consequences,” here’s hoping eBay and Skype also file this incident under “lessons learned.”

The situation looks grim.  

More and more employees are bringing unsanctioned consumer technologies into the workplace and, if the trend continues, IT departments will increasingly find themselves swamped with maintenance and support requests and their networks teeming with unsecured devices and applications. 

Even worse, IT is helpless to stop the madness. Your only hope is to control meddlesome employees and their rogue apps by adopting something called an “internal customer care cooperative model.” 

According to “Zen and the Art of Rogue Employee Management,” a new and apparently Mahayana Buddhism-inspired survey/report from Yankee Group, almost half of the workers polled said they “feel more empowered than IT to control their personal IT environment.” They want IM and wikis and other social networking tools, and if their IT departments won’t supply them, workers are prepared to fill the void themselves. 

To avoid all-out IT anarchy, the report recommends that instead of trying (and inevitably failing) to stem the flow of unauthorized technologies, IT departments surrender to employees the power to manage their own IT destinies. According to Yankee Group: 

“IT must adopt a Zen-like approach to manage the technology and the rogue employee. Ceding control to end users via a internal customer care cooperative model reduces IT’s burden while improving customer satisfaction. The Zen support model is fundamentally different than most IT organizations today because it doesn’t seek to dictate policy and enforce standards, but rather set guidelines and steer users in the right direction.” 

To reach this “higher plane” of IT operations, the report recommends IT departments roll out Web 2.0 technologies — such as internal, Web-based portals — that allow employees to manage the ever-increasing legions of consumer apps and devices making their way onto corporate networks. The irony, of course, is that it’s the unauthorized introduction of mostly Web 2.0 technologies that brought us to this point in the first place.  

Regardless, Yankee Group warns that the time has come for a major change in the way IT departments interact with employees and that its Zen-like approach is the quickest path to IT enlightenment. 

“Enterprises can’t avoid consumerization or implement traditional approaches to managing consumerization in the enterprise because it’s failing,” Joshua Holbrook, Yankee Group’s enterprise research program manager, said in a statement. “It’s time for a new operating model; an IT care co-op is the solution.”