Analysis: Why Buying Yammer Makes Sense for Microsoft

Microsoft announced that it would buy Yammer for $1.2 billion, after a week of speculation that the deal was imminent. From my perspective, having researched the enterprise social networking space (see report), the acquisition is a continuation of current trends in the industry and makes a lot of sense for both MSFT and Yammer.

Yammer CEO David Sacks wrote in a blog post about the acquisition, “When most people thought social networking was for kids, we had a vision for how it could change the way we work.” When Yammer launched at TechCrunch four years ago, it won the “best in show” award from judges and it’s been on a rocket ride since then for two simple reasons — it’s free and people love using it. The result: 85% of large companies have Yammer inside their walls.

That love-driven virality is a key reason why Microsoft bought Yammer — after all, who would use the word “love” to describe Microsoft or a product like SharePoint? The fact is that Yammer and its competitors are creating new way for work to get done, that is not only effective but also — dare we say it — makes work fun. Microsoft knew that it was behind in the enterprise social networking space and could either build organically within SharePoint or acquire. I think they did the smart move by buying Yammer as it gives them not only the largest independent player, but also penetration into virtually every company that already is using its products.

The challenge going forward is how Microsoft will integrate Yammer into its Office offerings, in particular, SharePoint. Yammer already enables integration with SharePoint that inserts microblogging capabilities right into SharePoint, making the enterprise app much more social. Up to this point, the main selling points of ESNs has been that they just had to be better than SharePoint’s built-in social tools. That is no longer the case, so you’ll see other enterprise apps companies scrambling to snap up remaining players like Moxie. Here’s a graphic from my ESN report from February that shows how the world (used to) stack up in terms of players — this is a game being played by the big enterprise players now.

Fig. 7 Enterprise Social Networking Technologies Evolve From Three Scenarios

While there is concern that adding Yammer makes worse an already-confusing mix of Microsoft offerings, it’s nothing compared to the bewildering situation facing CIOs when it comes to ESN. One CIO shared with me that he faces a situation of having Salesforce’s Chatter, VMWare’s Socialcast, Yammer, and SharePoint all running within his organization. And that didn’t include rogue installations of Box and Google+.

In the end, it makes sense for each company to have one — and only one — enterprise social network in order to ensure universal access. Thus ESNs like Yammer become battlegrounds in the way that other foundational enterprise tools like email, IM, and CRM have become. In this way, Yammer makes a whole lot of sense for Microsoft, as it becomes more integrated into all of its offerings, rather than remain a standalone. Here are some examples:

  • Any organization with a SharePoint installation will now get supported integration of an ESN into their organization – and more importantly, make sure that the technology actually increases business value.
  • Any organization with Yammer but that doesn’t have SharePoint will become a lead for Microsoft.
  • Office 365 gains a huge foothold into SMBs that may have already implemented Yammer, but would never consider SharePoint. If they are already using Google Apps, integration between Office 365 and Yammer becomes a potential switching point.
  • Microsoft Dynamics has a potential answer to Salesforce Chatter.
  • Provides a counter to IBM’s Lotus Connections.
Taking all of the above into consideration, the $1.2 billion price tag begins to make sense. But the intangible brand value goes back to where this blog started — the potential that we as workers and companies will again love Microsoft. Even if that translates to just a chance for a mild “like” for Microsoft products because they enable social connections, it will have been worth it for Microsoft to acquire Yammer.

 

Webinar: A Foundation For Mobile Business

Now for a word on mobile in the enterprise. Altimeter’s mobile analyst, Chris Silva, is working on a report that explores how managers on the business-side – not the IT – side of the organization are increasingly leading the charge to bring mobility to their workforce.

A key challenge is how to build the control and security foundation for a mobile business strategy. Chris and I will be hosting an open, no-cost webinar on Wed March 28th at 10am PT/1pm ET that will discuss the key elements of the mobile control layer, its importance, and how both the technologies and leadership elements should come together to provide a foundation for a coherent enterprise mobility strategy.

The Mobile Control Plane Should Underlie All Mobile Strategy

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Having business leaders take the reigns in mobile is a growing trend and a change in strategy that ensure the people who know the needs of the mobile workforce are driving strategy. This strategic shift, however, still relies on IT having put in place a mobile control layer that provides security, management and overall policy to govern mobile as it spreads across the organization. This foundation, which underlies all of the business-driven use of mobile, is comprised of many pieces and goes well beyond mobile device management (MDM) the increasingly catch-all phrase that vendors are using to insinuate themselves onto shortlists of mobility partners.

This session will be interactive, with Q/A and will answer the following questions:
  • What are the steps I must take before I can hand my line of business managers (sales, support, products) the reigns to deploy the mobile strategy that’s right for them?
  • What is IT’s role vs. the business management’s role in making mobility an element of strategy that positively impacts the business?
  • What technologies and strategies should be in my “plan” to enact mobility? Isn’t MDM enough?
We’re going to be looking at what the most common use cases are for mobility, the challenges organizations have encountered in bringing mobile tools on board and explore what the best tools are – and the partners that provide them – depending on the workforce you’re trying to empower.

The webinar will take place on Wednesday March 28th at 1PM Eastern/10AM Pacific time.

Register today at: http://bit.ly/mobilecontrol

 

 

Report: Making The Business Case For Enterprise Social Networks

In 2011, the US hit a milestone — more than half of all adults visit social networking sites at least once a month. But when it comes to using social-networking technologies inside organizations, many business leaders are at a loss to understand what value can be created from Facebook-like status updates within the enterprise. Some organizations have deployed social-networking features with an initial enthusiastic reception, only to see these early efforts wither to just a few stalwart participants. The problem: Most companies approach enterprise social networks as a technology deployment and fail to understand that the new relationshipscreated by enterprise social networks are the source for value creation. Yesteryear, internal technology departments could force software on business units, but in today’s consumerized world, business units can adopt enterprise software, often without IT ever knowing. As a result, a new approach is required that focuses on four key ways that relationships create value through enterprise social networks:

  1. Encourage sharing.
  2. Capture knowledge.
  3. Enable action.
  4. Empower employees.

This is the first of two reports on enterprise social networks, with this one focused on how it creates value for organizations. The next report will focus on maturity models and the future of enterprise social networks.

Data HighlightsThe report also includes input from 13 technology providers, 185 end users, and surveyed 81 ESN decision makers from companies with over 250 employees (see below in Related Resources for links to the data). A few of the findings and graphics from the report are included below. There was only moderate impact on business goals. On a scale of 1 to 4, the highest impact seen – improving collaboration between departments/teams — scored only a 2.91 (see Figure 5 below).

Enterprise Social Networks Have Only Moderate Impact On Business Goals

A key reason for this is that there were few metrics used to gauge effectiveness. Most metrics were engagement-oriented in nature and not necessarily tied to business impact. For example, the top three metrics used were 1) More/faster collaboration across the company; 2) Frequency of use; and 3) Engagement across the company (% of employees using it) (see Figure 6-1 below).

Top Metrics Measure Engagement, Not Progress Against Business Goals

In fact, no organization surveyed believed they measure ESNs very well, and only 31% felt they measured ESN impact somewhat well. A quarter admitted that they didn’t measure at all! (see Figure 6-2 below).

Most Organizations Admit They Measure ESNs Poorly

Four Ways Enterprise Social Networks Drive Value
Despite the promise and potential for ESNs, they have only received moderate traction. The problem is that most ESN deployments to date have been treated as technology deployments with a focus on adoption and usage. A different way to think about this is that ESNs represent a new way to communicate and form relationships — and because of that, can bridge gaps that exist in terms of information sharing and decision-making processes. To better understand these use cases, we found that they boil down to four different types of gaps in the organization — tough problems that can’t be addressed by the current technology, process, or culture.
  1. Encourage sharing.  Remember how revolutionary email was? It fundamentally changed the way we communicated by reducing the cost/effort and collapsing the time frame and scaling it to include multiple recipients. Social represents a fundamental change, simply because, at its essence, it encourages sharing. The simple presence of a status update box on a page encourages people to share their thoughts, activities, and expertise.
  2. Capture knowledge.  Capturing the collective knowledge of an organization is a daunting task because it includes a wide range of facts, information, and skills gained through experience. Yet few people proactively sit down each day to document and capture their knowledge. ESNs provide an opportunity to do just that, by capturing glimpses of knowledge through profiles, activity streams, and interactions.
  3. Enable action.  Having an ESN in place means that operations and processes can begin to change as well. This happens when the day-to-day process changes because the ESN enables new relationships and behaviors that address a gap that prevented actions from being taken.
  4. Empower employees.  The last way ESNs drive value is that they empower and embolden people to speak up and join together, as well as gives them opportunities to contribute their skills and ideas.
Enterprise Social Network Action Plan
To be successful with your ESN, you need thus to focus on how relationships can close the gaps of information flows and decision making in your organization. To do this, you should take four steps, with your technology selection coming last, not first.

Figure 10 Enterprise Social Networking Action Plan

Related resources. In the spirit of Open Research — and to spur further discussion on the topic of enterprise social networks, we are also making available a PDF summary of all questions asked in the survey, a PowerPoint of the graphics, and the full data set. If you discover additional insights, we ask that you share back your findings with the community.

Webinar. I’ll be doing a Webinar on Thursday, February 22nd, 2012 at 10am PST on the report with Socialcast’s CEO Tim Young. More information and registration is available at http://t.co/1XI8nMkp. It will also be recorded and available for playback on Socialcast’s site.

Related blog posts:

Stay in touch. Would you like to be notified about upcoming reports or even participate in our research via surveys or interviews? Please let us know by filling out this form.

Open Research This independent research report was 100% funded by Altimeter Group. This report is published under the principle of Open Research and is intended to advance the industry at no cost. This report is intended for you to read, utilize, and share with others; if you do so, please provide attribution to Altimeter Group.

Predictions Social Business in 2012, Part III: Transforming Your Organization

This is the last of three posts I’m writing on predictions and priorities for Social Business in 2012. You can read the first and second prediction posts for more context.

Prediction #3: Connected leaders and employees will create sustained competitive advantages through a culture of sharing. This year will see some companies pull ahead of others because they are able to collaborate, innovate and execute better and faster thanks to an ingrained culture of sharing.

This is the year that companies get serious about investing in their internal social business capabilities, simply because it helps create and sustain a fast-moving, innovative and collaborative culture. It’s one thing to have a Facebook or Twitter presence run by a small social media team in your organization. It’s a totally different ball game that truly social businesses are playing when thousands of employees are connected externally as well as internally.

Culture is often dismissed as the “soft” underbelly of business. But as business leaders like Jack Welch (GE), Howard Schultz (Starbucks), and Herb Kelleher (Southwest) have written, culture is what creates and sustains a great company. And while a company can be successful with a “command and control” culture, I believe that companies that embrace openness (see my book “Open Leadership” for details) and encourage a culture of sharing will be much better positioned in the long run.

There are two ways I see culture changing because of increased sharing enabled by social technologies. The first revolves around connecting your biggest advocates – your employees — with your customers. The second is connecting your employees with each other.

Empowering Your Employees To Connect With Customers

No matter how many people you have on your social media team, it won’t be enough to meet the groundswell of customer interaction demand. To do that, you have to create your own internal groundswell, embodied in your employees.

Let’s go back to Dell. In my first prediction, we saw Dell dealing with flaming notebooks in the summer of 2006. Since that time, Dell has made it a mission to get closer to customers. One way they’ve done this is to train employees on how to use social media on Dell’s behalf. To date, over 5,400 Dell employees have taken one or more social media certification class and more than 2,000 have taken the full 8+ hours of classes to become fully “social media certified”.

According to Altimeter’s benchmarking surveys, advanced social businesses have roughly 20 people working on their social media efforts. That means that Dell effectively has 100 times more people engaged in social media than the most advanced social businesses.

This means that Dell understands customer needs at 100 times more points throughout the organizations, and has 100 times more people poised to jump in and support customers. It’s also 100 times more people looking at ways to improve and innovate the business on multiple fronts.

Many organizations will look at the immense costs (and risks) of training even a significant minority of employees and take a pass. It’s beyond their ability to comprehend so many people freely speaking on behalf of the company, beyond the grasp and control of corporate communications.

But look at the huge benefit to companies that do make that investment. Dell is building a competitive advantage deep into the organization that will difficult for competitors to emulate. It doesn’t replace great products but in the long run, 2,000 points of connection will give Dell a better way to facilitate faster agile design processes.

What’s the actual cost/benefit of social media training and empowerment? Here’s a back of the envelope calculation. Let’s assume that those 2,000 Dell employees had 8 hours of training at the opportunity cost of $50/hour. Add in trainer time and being generous, it’s roughly $1 million or about $500 per employee. I’m pretty sure Dell is realizing at least $500 in value just this year from the engagement of those connected employees.

And what if you are worried about something going wrong? Two ways to get your mind around this. First, your employees already interact each and every day with your customers – and you train and trust them to do the right thing and exercise good judgement. Second, things always and inevitably go wrong. To my first prediction about practicing every day transparency, you have to be able to feel comfortable with this new level of openness in order to have the confidence to empower your employees.

Connecting Employees Throughout The Organization

A hot trend right now is the adoption of “enterprise social networking” (ESN) where a company uses software to connect employees socially within the enterprise. This can be either as a standalone service (like Yammer or Socialcast) or integrated into a collaboration platform or suite (like Salesforce.com’s Chatter, IBM Connections, or Sharepoint with Newsgator). Think of it as Facebook-like status updates behind the firewall.

I’m finishing up a report that looks at these ESNs and one of the most interesting findings is that it’s increasingly the leaders of the organization that are behind the adoption of these technologies. The reason: They see it as a way to transform their organizations, simply by creating the opportunity for people to share.

The result of sharing is that barriers between departments fall. Silos get broken down and the power distance between leaders/managers and front line employees becomes smaller. And it also creates opportunity for new leaders to emerge, where they are defined not by their title or how much budget they control, but seen as a leaders simply because they have amassed followers.

In the end, culture is defined simply the by the values, norms, and practices of how we get work done each and every day. The intractable nature of some cultures means that in order for culture transformations to happen – and to happen quickly – the new norms and mindsets not only have to established and trained, but also reinforced over and over again. Here are just a few ways that a culture of sharing can help achieve real business results:

  • Share information about a project to reduce duplication.
  • Find experts who have solved a similar problem before.
  • Solve problems together, faster.
  • Streamline processes in real time.
  • Identify innovations, big and especially small. And just as importantly, execute them quickly.
  • Gain confidence in distributed decision making because of greater information sharing and transparency.

These benefits as well as action plans will be included in the ESN report (sign up to be notified about the report when it is published).

The crucial action for leaders in 2012 is to make the commitment to these ESNs and to participate by simply sharing *how* you achieving your business goals. The practice of leadership requires constant focus on the important while addressing the urgent. Culture is important and can’t become a sidecar to the pursuit of hard goals. It’s just the other way around – culture becomes the foundation through which you will achieve those crucial goals today and in the long run.

So if you have these tools in house, share something every single day to support and grow your culture of sharing. And if you don’t have an ESN yet, look into how you can quickly get one in place

Your Social Business Journey

That’s it for my 2012 predictions and priorities. To summarize:

Prediction #1: Consumers will reward transparent companies with their loyalty. Companies must get courageous with transparency and make it an every day occurrence. Or they will face the wrath of outraged customers.

Prediction #2: Your customers want to be known. Your customers don’t merely want you to understand their needs or pain points. They want you to know them as individuals anywhere and anytime they engage with you.

Prediction #3: Connected leaders and employees will create sustained competitive advantages through a culture of sharing. This year will see some companies pull ahead of others because they are able to collaborate, innovate and execute better and faster thanks to an ingrained culture of sharing.

One thing I hope you see is that becoming a success social business has at its core being a successful business, period. The tactics and etiquette of social business may be unique, but the foundations are rooted in solid business strategy and practice.

All the best to you in 2012 and be sure to share examples of how you are doing on your social business journey. We will all benefit from your generosity and insight.

Google+ leverages Google’s strength as a communications platform

I’m watching the Google+ “launch” with great interest because at its center appears to be great “friend management” tools (see links below for the best detailed reviews).

Friend managment has been the bane of my Facebook experience because I don’t want to share everything with everyone. I also made the mistake of accepting far too many friend invitations with the result that I share very little on my “personal” account. While there are tools like Facebook Groups and friend lists, they are incredibly cumbersome and difficult to use.

Google+ leverages the fact that you already have your “real” friends listed and possibly even organized in your address book. This is especially true if you are using Gmail. Take a look at your Gmail address book and you’ll see your top 20 contacts already identified. Google knows this, and also knows who you frequently email together as a group (parents of your child’s class, book club, family reunion email list, etc.) and uses that information to drive the insight needed to suggest natural groups for you to form inside of Google+ Circles.

Google can leverage all of that behavioral information into helping you easily manage your relationships. Because face it–who you share with, how often, and with what other people you do that sharing provides valuable insight into the nature of the relationships.

Now for the scary privacy part — remember that Google also “reads” the contents of your email to show you ads on the side of Gmail. For the most part, we’ve gotten over this. But what if I gave permission (note: permission is crucial!) for Google to make recommendations on if and when I should add someone to a group? If I’m emailing someone frequently about biking trails, Google+ may suggest that I add that person to my biking Circle. Fundamentally, you would have to have a deep, trusting relationship with Google at a different level for this to happen. But the benefits could be tremendous. (See my post “In Google I Trust” for more discussion on this.)

Take that level of trust to a different level if you have an Android phone. Would you be OK with letting Google mine the contact, call, and texting data on your phone to help you build a more social experience with those people you communicate the most? What about your Google Calendar or Google Voice data?

I say this because most of my communications, both personal and professional, are run on Google’s platforms. Facebook does not have insight into all of the “real” sharing that I do in real life, while Google does.

My take on how this will play out is that Google has the natural ability to pull together groups based on communication patterns, and to also leverage the natural groups that already use communication platforms. It will be a no-brainer for Gmail to start using Google+, a much harder sell for non-Gmail users.

The result will be unified sharing, as opposed to unified messaging, on Google platforms. This won’t happen overnight and it will be far from being a “Facebook killer”. Rather, it’s a smart move by Google to leverage its strengths in communication platforms, algorithms, and trust of core users to move into social.

Lastly, I don’t expect Facebook to stay still for long. Look for them to roll out improved friend management tools in the near future. But regardless, they will always lack the behavioral intelligence to help me truly manage my friends, unless I am a devoted Facebook user.

Links to detailed reviews:

Google+

Google Blog

TechCrunch

NYTimes

SearchEngine Land