My hat is off to David Sacks, CEO of Yammer. He is really living right. First, he throws himself a 40th birthday party in LA featuring Snoop Dogg. (My 40th is in a month, but so far I only have a colonoscopy and a visit to the eye doctor planned.) Then, he tops this off with the winning lottery ticket – I think it’s fair to say that 50x revenue for enterprise software is considered the MegaJackpot. In all sincerity, congratulations to David and the Yammer team. What a great outcome for your investors.
Unless you have been living under a rock – or still immersed in email – you have certainly heard that Microsoft has purchased Yammer, for $1.2 Billion (that’s a “B” my friends). And the opinions on the acquisition are numerous and diverse.
Social Platform v. Social Feature
For starters, the enterprise social software market is still a very nascent industry and thus it features players of all sizes who specialize in different areas of social business. There are specialty vendors that focus on distinct capabilities. Yammer fits into this category with its focus on activity streams. In fact, Rob Koplowitz of Forrester Research just published a great piece last month that illustrates this nicely. Here’s a link to it: The Forrester Wave™: Activities Streams, Q2 2012.
On the other end of the spectrum are companies such as Telligent that deliver full enterprise social platforms. Social platforms deliver an integrated suite of social capabilities that can be used inside and outside of the enterprise (for customer, partner and employee communities); plus these platforms provide key integrations with other enterprise software (e.g. CRM systems, CMS systems, etc.). Our Social 101 eBook offers a quick summary of the basics on this point.
This brings me to the “why” behind the move. I do think this statement by Microsoft means that it recognizes its installed base is hungry for a better user experience, and while Yammer will address a sliver of it (once they get integrated), achieving real business results requires a social platform that powers more than the chatter of the organization. Frankly, I think Microsoft acquired Yammer less for its social capabilities (because there are many companies that offer much, much richer social functionality), but more for its distribution model.
Success in social business requires more than just automating conversations. Our customers who have tried Yammer tell us that it doesn’t achieve what their businesses demand – the ability to accomplish real business objectives like enabling sales teams to collaborate and drive revenue, connecting customers to solve real problems real time, connecting companies to their consumers to gain valuable feedback, aligning internal resources to collaborate on projects, spurring innovation and ideation throughout the organization, etc. And Yammer doesn’t address external conversations with customers or partners.
Good News for Telligent
50x our revenue would be a really big number :- )
Seriously though, at Telligent, we are humbled by the confidence thousands of companies, and some of the world’s most recognizable brands, have placed in us as a pioneer in enterprise social. The recent investments by the 800 lb. gorillas of software have really validated our industry, our existence and our future. Social is a ‘must’ for all enterprises. Telligent delivers a robust, feature-rich social platform that is enterprise grade and integrates rather than replaces a company’s existing infrastructure. While Yammer delivers nice activity streams, this represents an important but very small percentage of the functionality of an enterprise social platform like ours, and the acquisition of Yammer certainly doesn’t address the social customer experience at all, an area where we really focus.
We don’t see Yammer in a lot of our deals, so never really look at them as a competitor. In fact, one of my favorite debates of recent memory was one social CEO claiming Yammer was great for the industry because it educates the market and provides a great source of leads for us enterprise players. I agree with him on this front. As a matter of fact, we have a number of recent wins with tens of thousands of employees centralizing on one social platform (enterprise grade and available to power internal and external communities). We predict this trend will continue (and probably accelerate).
Our Microsoft Partnership
Obviously, we are important partners with Microsoft. We enjoy a very multi-faceted relationship with them and provide each other a great deal of value. We will continue to give companies who have invested heavily in the Microsoft infrastructure a great solution for delivering a world-class, enterprise grade social experience for customers, partners and employees.
We are a very strong ISV partner (Telligent was just named the 2012 Microsoft Digital Marketing Partner of the Year). While we have leveraged Microsoft technology and integrate nicely with SharePoint, FAST, and Lync, we are a standalone social platform with integrations into Sitecore, ATG, Tridion, Salesforce.com, Facebook and many more, as well.
The Acquisition Thesis
Finally, all mergers work well in PowerPoint and Excel; no one would ever do them if they didn’t. But in reality, the execution of acquisitions is hard in the best of circumstances (and really hard with different technologies, cultures and distribution models). If this is successful, it will take a very long time to realize the dream. And while everyone is predicting it, no one can say whether this is the next Palm or the next PayPal. Time will tell.
The New Normal
Microsoft’s acquisition of Yammer brings focus to our growing market. It attracts outside investment interest certainly, but even more so, when Microsoft provides 1.2 Billion reasons why it must have social, I think it’s fair to say that social ‘is’ the new normal, a message we’ve been advocating since 2004.
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