Businesses that rush blindly to set up shop on online virtual worlds are opening themselves up to significant risk, according to a warning issued by Gartner.

Gartner singled out Second Life as an “uncontrolled virtual world” where there is significant risk to brands that are sensitive to social and ethical positioning. Gartner analysts have even gone as far as to suggest that companies should consider tamer (highly moderated) alternatives such as  There, Kaneva and Activeworlds.

“The risks enterprises face as a result of their involvement in virtual worlds are real and can be significant. They shouldn’t be ignored – but neither should the potential opportunities and benefits that arise from using these new environments for corporate collaboration and communications,” said Steve Prentice, vice president and analyst at Gartner. 
Gartner – five reasons why Second Life is high risk

“When planning enterprise activities in virtual worlds, an enterprise’s awareness of the risks, as well as a reasoned and objective analysis of them, will enable it to objectively evaluate the overall situation and offset risks against often-nebulous benefits.”

Prentice outlines five major risks facing corporations considering an online virtual world presence:

1. IT security risks - Gartner is concerned about the downloading of unverified applications to managed desktop systems in corporate environments. While Gartner has no evidence that these downloads are more risky than similar downloads, it says that the frequency of updates makes control more difficult.

2. Identity fraud – because new accounts can be opened with ease, and at no cost, many individuals have multiple avatars. Thus, Gartner says, it’s difficult, if not impossible, to ensure that any specific avatar actually represents the person with whom it’s associated. Gartner says that this makes it difficult to use virtual worlds for online collaboration, and that corporations should consider “private” virtual-world environments, which are hosted internally and exist entirely inside the enterprise firewall

3. Confidentiality – Gartner believes that discussions involving confidential and commercially sensitive information shouldn’t take place inside Second Life or any other virtual world – or in an open, internet-supported social-networking site. Worldwide legal systems, especially in the US, have become increasingly aggressive in demanding access to electronically stored records.

4. Brand and Reputation Risk Management – Uncontrolled virtual worlds represent an environment fraught with danger for enterprises that are sensitive to brand and reputation issues. Enterprises should exercise extreme caution in their virtual-world activities.  Enterprises that are sensitive to brand and reputation issues should consider confining their activities to controlled virtual environments to minimize, but not eliminate, their potential exposure.

5. Productivity - Considerable skepticism remains regarding the practical benefits of virtual worlds to enterprise activities, with many senior executives viewing them as time consuming diversions that lead to significant amounts of wasted time as well as computing and bandwidth resources. Gartner’s take is that productivity may decline during the extensive learning and adoption phases of virtual worlds, but this shouldn’t prevent enterprises from looking beyond the initial phases toward the productivity benefits that may ensue.

As someone who’s been extremely skeptical about the corporate rush to set up shop on Second Life, it’s good to see Gartner issuing some sensible advice. I can only imagine that executives at the corporations that jumped onto the Second Life bandwagon thought that they were latching onto the next big thing.

There’s now evidence that Second Life has been a big disappointment for business. A recent visit into Second Life by Los Angeles Times journalist Alana Semuels found that many Second Life sites set up by corporations were empty.

“Best Buy’s Geek Squad Island was devoid of visitors and the virtual staff that was supposed to be online,” she wrote.

“The schedule of events on Sun Microsystems Inc’s site was blank, and the green landscape of Dell Island was deserted. Signs posted on the window of the empty American Apparel store said it had closed up shop.”

“There’s not a compelling reason to stay,” said Brian McGuinness of Starwood Hotels & Resorts Worldwide told Semuels.

I think that just about sums it up.

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Entry was posted on Friday, August 10th, 2007 at 12:26 pm under Uncategorized.

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