Enterprise Social Media: Separating the Good from the Average

By CIOinsight  |  Posted 07-13-2012 Print Email
A proliferation of companies are sprouting or modifying their business models to portray them as enterprise social networking savvy, but some have smarter business models than others.

Scores of companies have been promoting themselves as players in the enterprise social networking space of late, but they are not all created equal, with varying business models, approaches to the market and in some cases, a bit of a me-too eagerness. But amid the pretenders are serious contenders that bring a well-thought-out approach to the space and are attracting serious attention from major software vendors.

The $1.2 billion bid for Yammer by Microsoft, the nearly $700 million that Salesforce.com plans to pay for Buddy Media on top of the $326 million it paid for Radian 6, and Oracle's purchase of Vitrue are just some examples of the land grab by big software for enterprise social territory. The difference between the revenues these takeover targets generated and the price their acquirers were willing to pay for them is huge, perhaps indicating a bubble, but also perhaps indicating the growth potential in the space. But analysts and other industry players say the most sought after companies do not just offer me-too marketing plans, but innovative technology to make enterprise social networking work.

The whole point is to make a business more productive and profitable--not just social for the sake of social.

Still, the market is fragmented, although it's generally dividing into two camps, one group that uses social media internally to enhance business productivity and another group using social media externally to better engage with customers. And because each of the smaller companies are niche players--offering unique technology or a specific algorithm--the acquirers have to snap up several companies in order to build a comprehensive solution.

Notably, it's enterprise software companies, rather than retailers or big advertising or marketing firms that are buying up enterprise social media firms, said Michael Mullarkey, CEO of Brickfish, which delivers social media programs to better engage companies with their retail customers. A sample Brickfish campaign for Redbox, the DVD rental by vending machine company, invited customers to "Share Your Love" by having a photo taken of them hugging their neighborhood Redbox and posting it on the company's Facebook page. Silly, perhaps, but Redbox had 3 million "Likes" when they took on Brickfish and it now has 4.7 million.

"Fortune 2000 companies rely on software companies like Salesforce, Oracle and SAP for enterprise applications and are trying to find ways to drive revenue," said Mullarkey. "It's enterprise software companies that understand that social media are going to drive transaction volume in the years to come."

And Mullarkey explains how the acquisition strategies of the enterprise software companies help them build their social media prowess. Redbox, he said, uses Buddy Media to build its presence on Facebook, while Radian 6 moderates customer comments on their Facebook page, and Brickfish delivers loyalty campaigns and other efforts to improve customer engagement. Buddy Media and Radian 6 are now part of Salesforce.

"It's like anything else, it s a big space, there are lots of players out there," Mullarkey said.

But some of them are less than they pretend to be.

"The me-too mentality is so true and I think the real distinction is between social integration and real social innovation," said Ashley Furness, a CRM market analyst at Software Advice, a lead-generation business for multiple software vendors including Oracle, SAP and Microsoft Dynamics. It helps business customers trying to buy software determine their needs and, from that, refer them to the appropriate vendor.

There are some vendors whose solution allows a user to import contacts from Facebook or LinkedIn into their CRM system, or to push content from their CRM system onto social networks and calling that a social enterprise platform, Furness said. "Microsoft didn't spend $1.2 billion on Yammer just so you could have a social sharing button in your CRM system."

The innovators in enterprise social networking--Salesforce Chatter, Yammer and Jive, for instance--have created social intelligence algorithms, she said, similar to Facebook's, that are based on how people use the platform and will pick up on the kinds of information that they share with others on the platform, what kind of groups they interact with and who they're connected to. The result is the delivery of more relevant information. Furness wrote a blog post chronicling demonstrable results from use of enterprise social by various clients, including a 30 percent reduction in email volume, a 27 percent reduction in the amount of time spent in meetings and a 34 percent reduction in the time it takes to find an expert who can solve a problem.



 

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