According to a new report by Forrester Research, despite a long-term future marked by commoditization, enterprise spending on Web 2.0 technologies will surge over the next five years, growing 43 percent each year to reach $4.6 billion globally by 2013. The 5-year enterprise Web 2.0 forecast includes technologies such as social networking, RSS, blogs, wikis, mashups, podcasting, and widgets.

The enterprise Web 2.0 market, which includes the deployment of tools like blogs, wikis, and social networking within the enterprise, was a growing force in enterprise software in 2007 - 2008. While the market is still quite immature, it will continue to gain importance in 2008 as an increasing number of firms look to enterprise Web 2.0 tools to solve long-standing information worker problems. As a result, Forrester expects to see strong demand growth for tools like enterprise RSS and social networking, an increased role for IT departments in technology acquisition, and steadily growing revenue from current deployments. The market will remain volatile, but Forrester expects midtier software vendors, consultancies and systems integrators, and Microsoft to reap the biggest rewards in the coming year.

Forrester Research, says there will be "strong demand" for web 2.0 tools in the enterprise in 2008. Even though 42% of enterprises say adding web 2.0 tools is not on their agenda, according to a survey, Forrester expects that half of those will change their mind and embrace web 2.0 tools by year end. In the report "Top Enterprise Web 2.0 Predictions For 2008," analyst Oliver Young gives three reasons why he thinks 2008 is the year that "IT departments will take their heads out of the sand and embrace web 2.0 technologies."

For the sake of clarity, Forrester's definition of web 2.0 is, "A set of technologies and applications that enable efficient interaction among people, content, and data in support of collectively fostering new businesses, technology offerings, and social structures."

Young gives three reasons he things deployment of web 2.0 will sneak onto enterprise agendas in 2008:

1. IT guys are already using web 2.0 - According to Young, many IT departments and shops have been using web 2.0 tools for internal tasks like project management and support ticketing. The utility of these deployments will encourage them to push web 2.0 tools out more broadly in the enterprise.

2. If you can't beat 'em, join 'em - When big business is unable to stem the use of Software as a Service tools and things like social networks by employees, rather than allow untested software and services on their networks, they will "mitigate risk by deploying enterprise-class tools in their stead."

3. They make you look cool - "For IT departments aspiring to be more relevant to the business," writes Young, "enterprise web 2.0 tools will be a high-impact, low-cost method to show leadership and innovation."

Forrester believes that Web 2.0 technologies represent a fundamentally new way to connect with customers and prospects and harness the collaborative power of employees. Large enterprises such as General Motors, McDonald’s, Northwestern Mutual Life Insurance, and Wells Fargo have all made heavy use of these tools, and 56 percent of North American and European enterprises consider Web 2.0 to be a priority in 2008 according to a recent Forrester survey.

The key question for software firms is who pays for Web 2.0 in the enterprise? Three challenges face vendors:

• IT shops are wary of what they perceive as insecure, consumer-grade technology

• Ad-supported Web 2.0 tools on the consumer side have set “free” as a starting point

• Web 2.0 technologies enter a crowded space dominated by legacy software investments

Currently, large businesses are spending more on employee collaboration tools than customer-facing Web 2.0 technologies, but Forrester expects that trend to reverse by next year. By 2013, investment in customer-facing Web 2.0 technology will dwarf spending on internal collaboration software by nearly a billion dollars.