Social Business by the Numbers

by Susan Scrupski 28 Feb 2012 Blog Post

While the blustering goes on in the blogosphere, I thought I’d (ahem) cut to the chase and get serious about the Social Business opportunity in, well, spreadsheet terms. I popped into a little discussion  between Adam Holt at Morgan Stanley and Tony Zingale and Bryan LeBlanc  of Jive Software (JIVE).   Although specific business gains directly related to Social Business can’t always be divulged by large companies for a variety of reasons, we can take a look at the category as an investment play  and make some judgments about its viability.

To that end, here are a few key points CEO Zingale and CFO LeBlanc made to the investor community:

  •  What’s different about the social business category is there are multiple entry points for a sale.  The sale could come from IT, Sales, Marketing, Customer Support, HR, Corporate Communications or more often than not a  Business Unit.  < Key learning: this is different in software investing.  Buyers abound.
  • The Social Business story has reached a tipping point.  No longer are sales “missionary” sales.  There are line item budgets for social business software, and large RFPs are on the market from F1000 companies who are investing in these platforms.    Further, every software company is now incorporating social into its product suite, albeit mostly still relegated to “silo” functional software for specific departmental needs (Sales, HR, etc.)
  • Social Software is not a “replacement” category of software like  Salesforce was with Seibel or Workday is with various ERP modules.  This is not a cloud v. on premise alternative. (Jive sells both on and off premise).
  • The deals are larger.  Jive closed three million dollar plus deals in the fourth quarter of 2011.  Large institutions in various industry segments (PwC, Thomson Reuters, and Ace Insurance) chose Jive  to introduce a new way of working to their firms.
  • Social Business software delivers real value to every knowledge worker in the enterprise. The market opportunity exceeds that of traditional enterprise software which typically serves a discrete business unit function (manufacturing, HR, finance, sales, etc.).

The JIVE call has some interesting nuggets about how JIVE is uniquely poised to compete against the other two main competitors in the enterprise space: IBM and Microsoft, but the essence of the story is about the legitimization of the social business category for the institutional buyer.  More importantly, this investor story is not even about technology and tools. It’s about organizations behaving differently by connecting and engaging with constituents.  The tools will come and go, but the behavioral change is a paradigm shift well worth the early entry.

Jive management took the company public on  December 13.  Since then, the stock has doubled and Jive’s market cap is $1.24B. Institutions hold 82%, so lots of pension funds are betting (not gambling) that social business is real. I’ll side with Wall Street on this one.

 

  • http://rickladd.com Rick Ladd

    Hi Susan – I agree with you and, I guess, Wall Street on this one. Your point about organizations behaving differently is spot on in my opinion. Organizations have foundered on the shoals of understanding and accessing their corporate knowledge – especially the knowledge that exists between the ears of their employees – for a long time. As a Knowledge Management professional, I was part of what I now consider the misguided approach that treated KM somewhat like Library Science. I am reasonably convinced social business represents the beginnings of far more usefully aligned communication and collaboration all through the value chain . . . and it’s only the beginning.

    Two of the problems I witnessed, and struggled against, still stand in the way of further acceptance and understanding of the value of social business. The first is the propensity of many knowledgeable people to believe hoarding their knowledge will somehow safeguard their position. This is exacerbated when an organization, by its rewards and recognition practices, singles out people for acts of “heroism”, e.g. awards for patents, etc. The second is related to social business’s propensity to “flatten” the organization. In the industry I was in, command-and-control was de rigeur; so deeply ingrained in the culture that many would refuse to try something unless they were told they should – or could – by their management. Managers and Executives were highly suspicious of anything that gave voice to the average worker. I suspect that’s still the case in other industries as well.

    There are still numerous other cultural issues yet to be addressed. However, I think Jive’s performance, the success stories Dion has published, and the inherent value in the paradigm shift you point out bodes well for the future of social business. Thanks. I have a presentation coming up that much of what you’ve shared will be helpful with (sounds almost like some of the spam comments I get on my blog!)

  • Susan Scrupski

    Excellent comments and insights Rick. Changing the rewards and recognition practices is critical to achieving the full potential of social business. The problems you outlined here were not unique to your experience. Depending on the industry and the heritage of the company, they’re tough obstacles to overcome in thought and deed.