Moving on from a culture of collaboration by email

The time has come to think seriously about enterprise social networking (ESN) and consider its role within wider enterprise collaboration strategy.

The time has come to think seriously about enterprise social networking (ESN) and consider its role within wider enterprise collaboration strategy.

The ESN market is starting to mature and is now moving from the introduction phase into the growth phase.

Strategic acquisitions have already been made at all levels, and more will undoubtedly follow.

Jive and Yammer are the two vendors that organizations are most eager to compare and contrast, but other vendors are also generating significant business and revenues from their offerings.

Widely reported industry figures suggest that IBM's social networking platform, IBM Connections, brought in $105.4m during 2011, with Ovum estimating the current value of the ESN market to be in excess of $500m.

Comparing revenues from traditional software sales with revenues from software-as-a-service (SaaS) companies presents some interesting challenges when trying to determine market share, but Microsoft's acquisition of Yammer for $1.2bn clearly indicates that there is money to be made in this software sector.

It is at least equal to that of the corporate email market, in which Exchange Server is a multi-billion-dollar product for Microsoft. 

If Yammer fulfills its potential then it could become the "next SharePoint" in terms of revenue generation.

“Freemium” is the route to prove ROI

The business case for investment in ESN solutions has not yet been proven to the satisfaction of the general business skeptic, so the "freemium" model (whereby basic features are offered for free and advanced features for a premium) is being employed by some vendors to demonstrate business value and prove return on investment (ROI).

Initially it was the younger employee who was generally more familiar with the power and efficacy of social networking tools, but this demographic is changing. 

Acting against this "social change" is the longstanding nature and culture of established organizations in which the middle management layer tends toward the "need-to-know" and "knowledge is power" mantras.
As a result, the business potential offered by enterprise social networks will probably only be unlocked when necessity dictates a business change.

Mobile apps and freemium offerings are enabling ESN adoption

From a market perspective, enterprise social networking is now well and truly within the adopter phase, with more than 10% of organizations in established IT markets deploying solutions or subscribing to services. 

Mobile apps are increasingly being used to access enterprise social networks – especially “freemium” offerings from the likes of Yammer – and this is extending the use case for such solutions to a broad audience.

The notion of what constitutes an enterprise social network is evolving, as solutions mature and develop to encompass greater functionality and, in some cases, make existing collaboration solutions redundant.

Tomorrow’s enterprise social networking market could be worth $10bn

The enterprise collaboration technology landscape is awash with social software from a variety of different vendors.

 Those offering pure-play enterprise social networking solutions are competing against established enterprise collaboration solution providers.

Meanwhile, vendors offering business automation social platforms are trying to gain traction in a market that is also assessing the merits of emerging offerings from companies specializing in enterprise applications.

Merger and acquisition activity has increased markedly during the last six months, and this has led to new entrants appearing on the enterprise collaboration landscape. 

So, with a market potential of at least $10bn, the enterprise social networking market is the new battleground for all enterprise collaboration vendors.

Richard Edward is Principal Analyst for Consumer Impact of IT, at Ovum.

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