Potential Microsoft-Yammer impact

There’s still no official declaration by Microsoft – or Yammer – that it would acquire the social work media company for over $1 billion. While some observers labeled the social enterprise acquisition frenzy “lunacy,” others called this potential match-up the “smartest deal of the year.” As with all acquisitions and mergers, it’s all in the details of execution, but this potential combination makes a lot of sense.
What it means
Microsoft’s own SharePoint enterprise collaboration platform is notoriously difficult to deploy. Yammer is just the opposite. And Yammer, like several other freemium, cloud-based collaboration tools, has built integration hooks into its activity stream to pull from and feed back into Microsoft applications, as well as those of Salesforce.com, SAP and other enterprise software offerings. Yammer offers social network-like work media functions including user profiles, project and user “following,” a feed-based user interface, and basic content and file sharing. Yammer, having raised $142 million, claims to have 5 million users at over 200,000 companies, although likely 20 percent or fewer are paid seats.
If the deal goes through, there will be lots of talk of integration. But this is one case where a “bolted on” solution might pay off better for Microsoft than slowing down Yammer’s so-far successful strategy of plugging in to multiple other applications and platforms, including Microsoft’s. And when Microsoft talks integration, it doesn’t necessarily move swiftly. Microsoft spoke warmly about opportunities to connect its Lync unified communications scheme with Skype, with little to show for it so far. A longer-term integration differentiator could lie in searching and connecting the new data silos being created by the proliferation of work media applications.
And which Microsoft product set would benefit most from Yammer integration? SharePoint is the most logical starting point, but Microsoft’s Dynamics CRM suite beckons as does Office and its cloud-based Office 365 variant. Microsoft has been most successful when it builds out horizontal platforms like Windows, Office and SQL Server that third-party developers can leverage for functional (CRM, accounting, HR, manufacturing, etc.) or industry-specific applications. By that reasoning, Yammer fits SharePoint better than Dynamics.
A horizontal approach would keep the door wide open for developers, systems integrators and distributors to take the Yammer/Microsoft combination far and wide. Though some observers think Microsoft will kill Yammer’s freemium business model, it would be wiser to maintain a free entrée point. Microsoft needs to figure out how to exploit this model; freemium is here to stay.
Whom it affects
There is a wide variety – not to say confusing proliferation – of social enterprise players in the market. They tend to fall into types:
Enterprise social networks. Yammer sees companies like Jive Software and Telligent as its main competitors. Those two are ahead of Yammer in adding features and applications to customized their offerings for community marketing, internal and external collaboration and some of those business functions mentioned above. Another player, Atlassian has focused smartly as a platform for software developer collaboration. While Microsoft would add resources to Yammer, those companies are better positioned to compete than is NewsGator, whose current business model depends on adding services to SharePoint.
File-sharing content management and collaboration. Companies like Alfresco and Box have built out far more content management features compared with Dropbox and others that have yet to move far beyond file-sharing. Still, simple collaboration tools have managed to gain ground with line-of-business managers that can’t wait for IT support. If Microsoft doesn’t wreck Yammer, it may be able to wall off enterprise incursions by these companies, and relegate them to small-business and midmarket buyers.
Socialized ERP. Salesforce.com’s Chatter looks a lot like Yammer, and Salesforce can position itself as a credible cloud solution compared with Microsoft. Microsoft must keep Yammer as a horizontal platform play, and resist too much of its own – rather than third-party – application integration. Ironically, Microsoft could play the “open systems” ecosystem card against Salesforce and Oracle’s Webcenter. Oracle pitches Webcenter across all its software, but it’s really its applications-focused cloud computing tactic versus Salesforce.
Socialized enterprise software infrastructure. IBM Connections add social integration to its infrastructure and communications software, much as Tibco employs tibbr. They’re “bolting on” social media to their own offerings, where VMWare is trying to build out a platform with Socialcast. Socialcast, as the more general-purpose offering, is more vulnerable to the Microsoft/Yammer potential.
Key takeaway
Microsoft should focus on keeping Yammer a horizontal platform and learn how to adapt to freemium pricing rather than obsess over deeply integrating Yammer across its product lines. If it does, this could be a powerful combination in work media.

Question of the week

Who’s most at risk from a Microsoft/Yammer combination?