Social Media: Vendors Refactor Social Tools for the Enterprise

Consumer-style Social Media is moving into the enterprise, and research house IDC is predicting dramatic growth over the next four years, estimating more than 40 percent yearly compounded growth in revenues for each of those years in the area of Enterprise Social software. Entrprise Social Software revenues in 2011 came in at just $767.4 million, but IDC expects that to grow to $4.5 billion by 2016.  The rapid growth is happening despite possible issues with this category of software that includes clear return-on-investment, security, regulatory compliance and intellectual property protection.

Organizations are beginning to see business value in the Social Media tools which are commonly used in consumer computing. Potential benefits of the technology to business include collaboration, knowledge sharing, and customer relationship management. Enterprise software players like SAP, Oracle, Salesforce.com, Microsoft are actively developing and acquiring Social Media features to add to their current offerings. One example of this is Microsoft’s recent acquisition of Yammer, a company that offers Twitter-like micro-blogging capabilities for the enterprise. Yammer is used by 200,000 companies and 80 percent of Fortune 500 companies.

Facebook, Twitter and LinkedIn are lead players in the consumer Social Media space.  Enterprise Social software adapts features from these consumer products and integrates them into enterprise software.  The types of functionality that are being refactored and rolled out with an enterprise spin include  employee profiles, activity streams, blogs, microblogging, discussion forums, wikis, and content tagging, rating and reviewing.

IDC ranks IBM, Jive Software, Communispace, Telligent, Socialtext, Mzinga, Lithium, Yammer, NewsGator and VMware as the top Enterprise Social software vendors.  All of these companies are experiencing double digit growth in their Enterprise Social software offerings.  IBM and Jive are stand-outs in this category and are each seeing growth that’s exceeding 70 percent per year.  Sales by these top vendors was led by IBM with $105.4 million in sales, followed by Jive Software ($65.3 million), Communispace ($60 million), Telligent ($42.7 million) and Socialtext ($34.5 million).

Heidi Ambler, IBM’s director of social software, commented that “only 16 percent of CEO’s today are using social business platforms to connect with customers, but that number is poised to spike to 57 percent within the next three to five years…  Although face-to-face contact will remain the most prevalent form of customer  interaction, CEO’s expect a step-change in the use of social media. Over half expect social channels to be a primary way of engaging customers within five years.”