Efficiencies of Scale

By Mathew Schwartz  |  Posted 03-18-2002 Print Email

Efficiencies of Scale

Some see the ability to include the members of an organization's "extended enterprise"—people and workgroups outside the corporate firewall—as central to the value of peer-to-peer. "The ability to work seamlessly, efficiently and effectively with outside players is becoming a critical success factor regardless of industry, company size or geographic location," says Ray Ozzie, creator of Lotus Notes and currently chairman and CEO of Groove Networks Inc., a Beverly, Mass.-based maker of peer-to-peer collaboration software. "Winning enterprises won't approach this as a debate between centralized versus decentralized technologies, but instead will find the best and most effective means of integrating both to support the critical needs of the business."

Yet despite such vision, the peer-to-peer market today is small. Industry analysts Frost & Sullivan place the entire market at $43.7 million in 2001, which includes instant messaging, file sharing and peer collaboration software. Gartner Inc.'s Robert Batchelder is a little more generous. "If it's $150 million or $200 million, I'd be surprised. But it's going to grow dramatically. By 2005, the whole notion of P2P stuff will be $1 billion," he claimed, though some of that will be consumer technologies such as music sharing. Frost & Sullivan predicts that by 2007, 6.2 million enterprise users will have access to peer-to-peer networks, and that revenues will grow to exceed $4.96 billion.

The real opportunity for a clear return on investment with instant messaging and file sharing will come when these services work together more seamlessly, such as with nascent efforts like Groove Networks' Groove client and servers. Ultimately, some believe that services such as instant messaging and file sharing will merge into other applications. "In this whole space, we're fairly early in the curve," says Corporate Software's Vaughan. "I see all this stuff tying together eventually. I see a merging of voice and traditional e-mail and instant messaging all into one."

But today, because of its simplicity, instant messaging and other peer-to-peer technologies can solve only very specific business problems. "It's a great technology," says Walid Mougayar, founder of Toronto-based PeerIntelligence.com, a knowledge hub that chronicles the impact of peer-to-peer technologies, "but it's not going to take the world by storm, and we should have the right expectations of what it can do and cannot do." What it can't do today is regularly justify its return on investment. But that doesn't seem to be stopping many CIOs from looking to roll out useful services to end-users.

MATHEW SCHWARTZ is a Boston-based freelance writer who covers technology, management, Wall Street and security. Comments on this story can be sent to editors@cioinsight.com.


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