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Corporate virtual worlds likely to fail

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Nine out of 10 business forays into virtual worlds fail within 18 months – but their impact on organisations could be as big as that of the internet. 

Gartner analysts said that focusing on the technology rather than understanding user requirements is one of the key reasons for failure.
"Businesses have learned some hard lessons," says Steve Prentice, vice-president and fellow at Gartner. "They need to realise that virtual worlds mark the transition from web pages to web places and a successful virtual presence starts with people, not physics. Realistic graphics and physical behaviour count for little unless the presence is valued by and engaging to a large audience."
Other reasons for the high failure rate include starting projects for the "cool" factor or because competitors are doing it. Many were closed down or abandoned by a lack of clear objectives and a limited understanding of the demographics, attitudes and expectations of virtual-world communities.
"An effective project starts by focusing on the audience¹s needs and ultimately delivering the technology to support the community of people," Prentice adds.
A benefit of virtual worlds is the rich collaboration experience they offer by adding a real-time visual dimension via avatars, so interactions can include emotional information in the "conversations" between individuals, setting them apart from simpler networking applications.
They also differentiate themselves from web-based interactions (which can be asynchronous) by requiring both parties to be present at the same time.
The cost of implementing a corporate virtual platform is also marginal, typically from around $50 000.00 and trials can start from as little as $5 000.00, which can further incentivise companies to experiment with them.
It could also save costs from reduced use of expensive videoconferencing facilities and eliminate the need to bring employees from multiple locations and time-zones to a single site, with substantial savings in travel and associated costs and time, thereby also supporting corporate environmental initiatives.
As an additional form of communication, virtual worlds have potential. "Companies need to start thinking what their virtual world strategy is, incorporate it into their internet strategy and merge their two-dimensional web pages to support a '3D web place'. Virtual world presence is not to replace the '2D world' but to supplement it," says Prentice.
If selecting the virtual world route, organisations have three broad choices: they can enter an existing one (such as Second Life or There.com), create there own public world, or create their own internal, private world.
By 2012, Gartner estimates that 70% of organisations will have established their own private virtual worlds and predicts that these internal worlds will have greater success due to lower expectations, clearer objectives and better constraints.
Some successful virtual worlds are those such as Habbo Hotel, Club Penguin and BarbieGirls which focus on their audience, understand their needs and deliver content which is appropriate to their audience­ it's not enough to target "the whole world", says Prentice.
"The challenge that general  projects inside Second Life face is that they do not know who their audience is and therefore do not know what their needs are. Organisations cannot effectively market a product for the whole world. They need to be focused and targeted."
There is meaningful corporate use of virtual world platforms that organisations can embrace. Gartner says they could start using virtual worlds in role-based scenario-driven training exercises or complex situational simulation.
They could be used in training emergency services (such as medical, fire and police) and military/law enforcement services to simulate real-world scenarios, including public order control and medical emergencies.
The second phase could involve extended virtual-world deployment to support collaboration and employee interaction to provide a secure, persistent and interactive virtual workspace to allow individuals to interact and improve collaboration. It could then progress to enhance socialisation both within and external to the organisation and ultimately extend to a broader community that includes supply chain partners and customers.
Prentice advises organisations to experiment with virtual world projects on a small, internal scale initially and pace their development to enhance the chances of success and minimise costs.