September 15, 2008 20 Comments
Yammer, as much of the free world seems to now know, won “best of show” at TechCrunch50. Yammer is an enterprise 2.0 company. The blogosphere had a fairly negative opinion about this. I read a number of these posts, and the table below outlines the reasons Yammer was viewed negatively:
Links to source posts: Dennis Howlett, Rafe Needleman, Rob Diana, Mathew Ingram, Svetlana Gladkova, Chris Cardinal, Chris Brogan, Jennifer Leggio, Bernard Lunn, Joe Duck, Stephen Baker, Mike Gotta, Fred Wilson, Duncan Riley, Liz Gannes
It’s a diverse collection of bloggers, and they each bring different perspectives. But there was enough commonality that I bucketed the reasons into the five groups you see in the table.
The reactions surprised me a bit – although there were positive reactions too. Let’s break down these five buckets.
Another Twitter Clone
Key difference here is the market Yammer is pursuing: enterprise. That makes all the difference in the world.
- For Identi.ca to succeed, people would have to stop using Twitter (see Louis Gray’s post for analytical back-up to this point)
- For Yammer to succeed, the more people use Twitter, the better.
Twitter ain’t enterprise, and I’d be surprised it gets there anytime soon. But using Twitter makes people understand the value of microblogging, which in turn helps Yammer.
Twitter/Others Will Do This
Given Twitter’s problems with keeping the service stable, I’d be shocked if they had also been putting in cycles figuring out how to go after the corporate market.
The other key difference is this. Enterprise is a different world than consumer. Probably one of the better explanations of the differences was by Mike Gotta, in discussing microblogging inside the enterprise:
“Within the enterprise, it is highly probable that IT organizations will classify these tools as messaging platforms (I would BTW). As a messaging platform, these tools would have to support security, logging, audit and archival functions to satisfy regulatory, compliance and records management demands.”
To succeed in the enterprise, you really need to focus on the enterprise. Twitter is having a field day in its growth in the consumer world. Wachovia just added their Twitter account to the website Contact Us page. Keith Olbermann is now on Twitter. Twitter should really focus on the consumer market, and own that.
Extortion Revenue Model
The extortion is based on the fact that Yammer is free for sign-up and use. But if a company wants to control it, access to the administrative functions costs money. So companies will feel compelled to pay in order to manage the goings-on inside Yammer.
I’ll admit it’s a pretty creative enterprise pricing model. It seems to address two issues that bedevil enterprise software vendors:
- How do I get a company to try my software
- How do I prove employees will use it and get value from it
Companies don’t pay until they’ve seen employees use it and get value from it. Not bad, and it really wouldn’t be that hard for a CIO to tell employees to stop using Yammer (and block the site).
It is sneaky, but it’s also a clever way to address the adoption and value proposition issues that enterprise software vendors will always face. Atlassian Confluence achieved a solid share of the wiki market via viral adoption. Atlassian doesn’t have sales people – it’s all word of mouth.
Workers Won’t Adopt
This is where Yammer faces the toughest road. Getting people to microblog. Twitter is available to the hundreds of millions of people around the globe who might be interested. And it’s gotten a very small percentage of them.
Inside the enterprise, you need a much higher adoption rate. People already on Twitter are natural adopters, but a lot of employees will still have the “why would I do that?” reaction.
The “sell” has to compare Yammer to existing communication modes:
- Instant messaging
Note that relative to Twitter, Yammer has immediate context and built-in users. Context comes because the internal messages will generally center around work that colleagues have a stake in. In other words, they care more about each Yammer message than they do about individual tweets out in the wild.
The other thing is that managers at the departmental level can join and start using Yammer. On Twitter, if you don’t follow an A-Lister…so be it. On Yammer, if you don’t follow your boss…you’re going to miss something.
Cloud Computing Is Scary
Salesforce.com experienced outages back in late 2005 and early 2006. They were a blow to the software-as-a-service sector, but the company appears to have righted the ship since then.
Salesforce.com has a market cap of $6.9 billion. Yammer doesn’t.
But Yammer doesn’t have the database-of-record mission that Salesforce.com does, so the threshold for Yammer is lower. Still, ideally for Yammer, people will message about critical issues for their companies, not just what they’re having for lunch. So Yammer’s scalability, security and reliability will be important.
Cloud computing still has a sell-job of its own, but I like the way Anshu Sharma put it:
“No one (at least not me) is suggesting that on-premise software will disappear – its just that growth in enterprise software will come from SaaS and not on-premise (which is growing at about 4%). Venture capitalists like Emergence Capital and Humbold Winblad are voting with their dollars!”
A lot of action is around SaaS, it’s a question of how long the adoption curve will be. Yammer is counting on this one.
Gartner’s Hype Cycle
Gartner puts out updates on something it calls the Hype Cycle for Emerging Technologies. The hype cycle tracks the market views of various technologies, which go through predictable cycles:
- Technology Trigger
- Peak of Inflated Expectations
- Trough of Disillusionment
- Slope of Enlightenment
- Plateau of Productivity
In July 2008, Gartner released its latest view regarding the hype cycle. This one included both microblogging and cloud computing, Yammer’s model:
Neither microblogging nor cloud computing is anywhere near mainstream uptake. Gartner pegs that at a 2 to 5 year horizon.
The companies that are in now, though, will be best positioned to figure out what drives the Plateau of Productivity. It takes time to learn a market, get some positive customer stories and gain a wider customer base.
I’ll be watching Yammer.
I’m @bhc3 on Twitter.