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The Top 10 Enterprise 2.0 Stories of 2008

The enterprise 2.0 space saw good action this year. I’ve had a chance to see it up close, starting the year with BEA Systems (now Oracle) and closing out the year with Connectbeam. I think it’s fair to say that in 2007, social software was still something of a missionary sale. In 2008, company inquiries increased a lot. The burden still falls on the vendors to articulate business benefits, adoption strategies and use cases. But enterprise customers are now partners in this work.

So let’s get to it. Here are my top ten stories for the year:

1. Activity Streams

Facebook really got this going with its newsfeed, and FriendFeed took it to an art form with its lifestreaming service. In 2008, many vendors added activity streams to their applications: Connectbeam, BEA Systems, Atlassian, SocialText, Jive Software and others.  Activity streams are great for improving awareness of colleagues’ activities, and adding a new searchable object: actions.

2. Forrester’s $4.6 Billion Forecast

Forrester Research made a splash with its forecast that Enterprise 2.0 will be a $4.6 billion market by 2013. The ReadWriteWeb story about it has been bookmarked to Del.icio.us 386 times and counting. Forrester’s projections provided a solid analytical framework for the different tools, used internally and externally. According to the analysis, social networking will be the most popular tool for companies. Whether you buy the forecast or not, they remain the best-known, most visible numbers to date.

3. Oracle Beehive

Larry Ellison is fond of essentially dismissing SaaS. He does not have Oracle invest much in the trend. But Oracle did seem to embrace Enterprise 2.0 in a big way this year with Beehive, which is an “integrated set of collaboration services.”  The New York Times quotes Oracle EVP  Chuck Rozwat: “It is a product we built from scratch over the last three years.” Now since Oracle is a huge enterprise software company, there’s plenty of skepticism about the capabilities and innovation of Beehive. But there’s no denying that Oracle has the ear of the enterprise, and picks up a lot of market intelligence through its customer base. While Beehive itself may or may not succeed, the idea that Oracle came out with Beehive was a big story.

4. AIIM/McKinsey Surveys

Research and consulting firms AIIM and McKinsey each came out with surveys of corporate interest in enterprise 2.0. The AIIM survey looked at levels of awareness and interest among different Enterprise 2.0 technologies. AIIM also took a fairly expansive view of social software. The top 3 “Enterprise 2.0” technologies in terms of corporate awareness? Email, instant messaging, search. That’s actually a funny list, yet there are lessons there for vendors and consultants in the social software industry. If those are entrenched, can you play nicely with them? One other quote I like from the report:

This study of 441 end users found that a majority of organizations recognize Enterprise 2.0 as critical to the success of their business goals and objectives, but that most do not have a clear understanding of what Enterprise 2.0 is.

McKinsey’s survey of enterprises looked at the interest in various tools as well. It also asked respondents what the leading barriers were for success of social software initiatives. Top three were: (1) Lack of understanding for their financial return; (2) Company culture; (3) Insufficient incentives to adopt or experiment with the tools.

5. Facebook Co-Founder Leaves to Start an Enterprise 2.0 Company

Facebook co-founder Dustin Moskovitz and colleague Justin Rosenstein announced they were leaving the hot consumer social network to start a new company. The new company will “build an extensible enterprise productivity suite,” with the goal of “making companies themselves run better.” Why would these young guys, sitting on top of the leader in consumer social networking, choose to exit? As I wrote at the time:

The Enterprise 2.0 market is still quite nascent and fragmented. Combine that industry profile with projected spending in the category, and suddenly you understand why these guys are striking out on their own.

Assuming they’ll be able to tap the mother ship for help, I think this was a fairly important story this year.

6. Microblogging Enters the Enterprise

Joining wikis, blogs, social bookmarking and other incumbent tools this year was microblogging . Given the way Twitter is used by Enterprise 2.0 aficionados, and is enjoying skyrocketing popularity, it’s no surprise we started seeing microblogging emerge for internal use. At the mostly consumer-focused TechCrunch50, enterprise microblogging start-up Yammer won the top prize. Other start-ups in the category include SocialCast and Present.ly. SocialText added microblogging with its release of Signals.

7. Gartner Narrows its Criteria for Social Software

Gartner came out with its Social Software Magic Quadrant in October. As SageCircle notes:

Gartner’s Magic Quadrant is probably the iconic piece of analyst research. With its visibility and status, it also has enormous influence on vendor sales opportunities, especially when it comes time for IT buyers to draw up the all-important vendor short lists.

So it was with great interest when I read that Gartner had narrowed the criteria for whom it puts in the Magic Quadrant:

Added blogs and wikis to the functionality requirements

The effect of that is to establish those two tools as the de facto standard for enterprise social software inside the enterprise. To the extent corporate buyers are listening to Gartner for signals about the market, this will make it a bit more challenging for start-ups with interesting offerings that address other parts of the social software market. Yammer, for instance, won’t make it into their Magic Quadrant.

8. Enterprise RSS Fails to Take Off

RSS is one of those technologies that you know has huge value, and yet continues to struggle for awareness and adoption. Google tracks the leading “what is” searches. The fifth most popular on its list? “What is RSS?” Take that as both good and bad. Good that people want to know, bad that awareness continues to be a struggle.

Forrester analyst Oliver Young has a sharp write-up that shows enterprise RSS did not expand inside companies as many had thought it would this year. As he notes:

Of the three enterprise RSS vendors selling into this space at the start of 2008: KnowNow went out of business completely; NewsGator shifted focus and now leads with its Social Sites for SharePoint offering, while its Enterprise Server catches much less attention; and Attensa has been very quiet this year.

RSS is a great way to distribute content inside companies, but its ongoing limited adoption was a big non-story for the year.

9. IBM and Intel Issue Employee Social Media Guidelines

IBM and Intel each established guidelines for their employees who participate in social media. As I wrote, this essentially was a deputization of employees as brand managers out on the web. These market leaders were essentially saying, “have at it out there on blogs, social networks, Twitter, etc. But make sure you know the company’s expectations.” These guidelines represent a milestone in large enterprises’ comfort with social media. I expect we’ll see more of this in 2009.

10. The Recession

This affects all industries, globally, of course. And Enterprise 2.0 is no exception. Jive Software made news with its layoffs, but the effect was industry-wide. And of course, corporate buyers aren’t immune either.

Those are my ten. Did I miss a big story for 2008? Add your thoughts in the comments.

If you’re interested in tracking what happens in 2009, I encourage you to join the Enterprise 2.0 Room on FriendFeed. It is a centralized location for tweets and Del.icio.us bookmarks that specifically relate to Enterprise 2.0.

*****

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Yammer Gets Bronx Cheers from the Blogosphere. Why?

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

Understandable reaction. We’ve seen Plurk, Identi.ca, Rejaw, etc. So I get the weary “Yet Another Twitter Clone” reaction.

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.

Yammer is more likely to bump up against SAP’s ESME and Oracle’s OraTweet.

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:

  • Email
  • Instant messaging
  • Forums

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

This is an ongoing issue for the entire cloud computing/web apps world. Amazon S3 and Gmail’s recent outages highlight the issue.

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:

Courtesy marketingfacts on Flickr

Courtesy marketingfacts on Flickr

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.

Riding Coach: A Day in the TechCrunch50 DemoPit

I spent a day in the DemoPit of the TechCrunch50 launch conference on behalf of my company Connectbeam. We didn’t debut at TC50 (two year-old company already has customers), but it was an opportunity to raise awareness among different communities.

I’ll say this: DemoPit is like flying coach, while the folks on-stage are flying first class. You don’t get the amenities or attention, but you still get to travel.

Here’s a quick summary of the experience.

Demo Tables

The tables are like 30 inches across. Not huge, but they were fine. Enough for a big display screen, a sign and a laptop. And that chip tip jar.

Wifi

Absolutely awful. The wifi was spotty early in the morning. Then it went down for several hours. That’s right…several hours. A bunch web-based companies without Internet access. Brilliant.

Jason Goldberg of SocialMedian went out for an EDVO card at the local Best Buy. He was back in business, so my colleague went out for one too. After an initial blue screen of death, we had Internet access again.

Late in the day, a TechCrunch staffer came by to offer another day to do demos since we had it pretty rough. Cool that they acknowledged the issue, and came up with a solution.

Demo-ing

Enjoyed myself when I could show off the product. It was great to take real-live data from someone visiting, punch it in the app and have it do all the cools things I said it could.

Lots of Visits by Tuesday-Wednesday DemoPitters

A lot of guys hitting the DemoPit on Tuesday and Wednesday came through the area on Monday. Smart. They wanted to see how we pitched, and find out what to watch out for (uh..the wifi).

Ashton Kutcher

Yup, Ashton Kutcher was in the house. He was up on stage pitching his start-up Blah Girls. You can read people’s tweet reactions here. It was amusing to see him on stage talking up his site. 10-12 year old girls might like it. Might…

Later this entourage-like crowd of people came through the DemoPit. It was Ashton Kutcher and Jason Calacanis’s were walking Jason’s bulldogs. There were several people accompanying them. Quite the scene.

And still later, Sarah Lacy was interviewing Kutcher. Do you think he got Zuckerberg’d?

FriendFeed Friends

I had a couple unplanned FriendFeed meet-ups, which was really cool.

Here are their handles on FriendFeed:

Weblebrities

Saw a few weblebrities: Michael Arrington, Robert Scoble, Stowe Boyd, Jason Calacanis, Dan Farber, Loren Feldman.

Big Companies

Three big communities were out in the DemoPit: Yahoo, Salesforce, MySpace.

Jason Goldberg of SocialMedian

Jason’s Social Median table had a steady flow of traffic during the day. And he did well with those DemoPit chips. People give poker chips to companies whose products they like. The company with the most chips gets to go on-stage at TechCrunch50 on Wednesday.

Social Media had a pretty good haul. Hope Jason makes it on-stage Wednesday.

Yammer

I liked TechCrunch50 participant Yammer. Enterprise Twitter.

On to Other Conferences

TechCrunch50 was tiring but fun. I enjoyed the scene. Next, Connectbeam will be at the KMWorld Expo September 23. And Defrag after that.

*****

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