Which way to Web 2.0?

My colleague Shayna Garlick, who writes for SearchOracle.com, blogged on something this week that is timely for SAP customers as well -whether Web 2.0 for the enterprise will take a hit in this economy.

The post’s premise was that as established vendors and start-ups compete for Web 2.0 deals with companies, prices will fall, but so will vendors’ profits and, consequently, innovation.

It’s one reason why SAP’s investment in sort-of start-up LinkedIn is particularly interesting — as it could prove to be the best of both worlds for customers and the vendor alike.

Last week, it was revealed that the venture capital arm of SAP, SAP Ventures, poured some money into the young, social/business-networking site. LinkedIn provides an online community for professionals to pass their “business cards” around, recommend colleagues and even search for new employees among its members. And this week, LinkedIn added new applications for activities like blogging.

While investments made by SAP Ventures are somewhat independent of SAP AG, (if you’re interested in some of its other investments, here’s a list) LinkedIn said it decided to work with SAP as a “strategic investment.” They’ve been hearing for a long-time from members who run SAP software — including many CIOS — who want to leverage the online community to help people do their jobs more efficiently, a LinkedIn spokeswoman said.

“The idea that we could work with SAP was intriguing to us,” said Ellen Levy, LinkedIn’s Vice President of Corporate Development & Strategy, declining to give any clues as to what the two might work on, or when customers might see it.

SAP had this to say about the deal.

“LinkedIn is one of the leading Internet companies in the world that targets business users,” SAP spokesman Saswato Das said. “When Web 2.0 technologies are smartly applied to the enterprise, they can produce significant efficiencies for small, medium and large companies, and we believe in LinkedIn’s pioneering approach.”

SAP has poured money into its own Web 2.0 initiatives.  But while vendors like Oracle, with its WebCenter Suite, and IBM, which announced in the fall it’s opening a social software research center in Massachusetts, are working to improve their own initiatives, SAP’s LinkedIn partnership signals an approach to Web 2.0 of leveraging and improving ideas from start-ups that are already working.

What’s the best way for vendors to optimize Web 2.0 for the enterprise, while still making money off it?

Courtney Bjorlin, News Editor