Articles from iGo2 Group

How Social Mobile Cloud brought Microsoft to buy Yammer

2012-07-03 09:07:02 WalterA

Yammers Xmas came early when it agreed last week to be bought by Microsoft for $1.2b, and it left some of its main competitors such as Newsgator snubbed and surprised. Why did Microsoft choose Yammer? After all Newsgator was named 2011 Microsoft Country [USA] Partner of the Year for providing the foundation for enterprise social computing with Sharepoint and Newsgators Social Sites were lauded by Microsoft.

Very recently, in April 2012, Microsoft ran a joint Get Social global tour with Newsgator Please join us as we take a deeper look at how organizations are changing the modern workplace with NewsGator & Microsoft they said. So how did it all go wrong for Newsgator? The answer lies in two parts (or four depending on how you look at them). The first part is the Social Mobile Cloud (So-Mo-Clo) $600b disruption and transformation of the enterprise software market. The second is Activity Streams and their rise as the glue of social flow in the enterprise the foundation for integrated applications and organizations as Ross Dawson said recently.

SO MO CLO Microsoft are only just making commercially satisfying inroads with cloud from their Office365 and the PaaS (Azure) offers, despite their best endeavours and excellent technical quality and value of those offers. And despite what some say Microsoft know a heck of a lot about offering managed services theyre far from just an on-premise enterprise software company. But the cloud sales are average and in particular to the SMB market where the real battlefront lies and Social CRM is a must, and Microsoft needed a kicker. Some say Microsoft was even getting desperate. Yammer is that kicker. I think that the answer to the Why $1.2 billion? question is as simple as that. Microsoft will focus on a timeline to integrate Yammer into Sharepoint Online e.g a Yammer Feed Web Part for Sharepoint Online, Office365 + Dynamics CRM Online, and Skype. Here are some proof points: 1. Over time, youll see more and more connections to SharePoint, Office365, Dynamics and Skype Yammer Blog 2. Its a perfect fit for our cloud plans. We have a very aggressive plan to move our core capabilities to the cloud with Office 365 and Yammer fits right in, said Microsofts Kurt DelBene President of the Microsoft Office Division 3. he seemed to suggest that any future Yammer integration would be limited to cloud products BetaNews in How long before Microsoft drops Sharepoint on-premise Altogether. 4. Microsoft is reasonably happy with the ecosystem it has built around its on-premises SharePoint offering and has chosen to invest instead in cloud-hosted collaboration and social services, says

Dow Brook analysts. Its a massive job for Microsoft to make this shift away from on-premise, and especially to mobile in the face of the dreaded Bring Your Own Device trend which is enveloping the enterprise software world ( the CIO of SAP recently purchased 40,000 iPads). Its very difficult to shift into a world where mobile devices dont run the Windows operating system, says Peter Levine, a general partner at venture capital firm Andreessen Horowitz. And even MORE difficult when your mobile partner is Nokia who is well down the track of committing the greatest corporate act of suicide in the history of capitalism the 90% loss of market share in Australia is par for the course for Nokia in many of their markets. Yammers mobile interface is well regarded and well used among their customers. Steve Balmer admired the viral freemium Yammer sales model (understandably since Sharepoint has been the 800 pound gorilla success story in the fremium market), which will give Microsoft reach into new customers (including perhaps a push towards dominating the education market) and especially SMB customers with cloud Dynamics CRM particularly in mind. In other words every Newsgator customer is already a Sharepoint customer, by definition since Newsgator is an app which sits on top of Sharepoint, but many Yammer customers are not. Which means Microsofts first 100 days must focus on getting their sales reps to partner-up with the Yammer reps and have the Yammer reps bring them into the conversations with their accounts Microsoft and social and leads thats what a large chunk of the $1.2b was buying (not the technology). Another large chunk lay in the value of Activity Streams. Activity Streams Yammer puts itself forward as a horizontal layer that ties together a wide variety of enterprise software systems, and they were clever enough to choose the Open Graph Protocol (established by Facebook) as the basis for this integration. As Bill Ives says The social graph offers new opportunities. This social activity is rich in metadata. The resulting social graph becomes a rich data set that is available through search or other means. Yammer are moving rapidly via Yammer Embed to integrate into with enterprise applications e.g. from SAP and Salesforce, and Microsoft, and the end result of this is actually the distribution of social to where it is used most easily and most effectively by the workforce e.g. in the CRM, ERP, HCM and Business Intelligence environments. Yammer now has the potential to become a significant platform or layer or fabric in addition to its social services, whereas Newsgator remains a plug-in sitting on top of Sharepoint, a destination. In fact Newsgators Social Sites are simply a destination within Sharepoint. The rise of Activity Streams seems almost innocuous, since they are ingrained in our current personal social activities e.g. Twitter, Facebook. But the so-called API Economy is a seismic force in reshaping that $600b enterprise software industry, and the players. Logically Tibcos Tibbr should be the natural owner of the enterprise Activity Stream layer given their heritage , but theyve come late and have essentially zero market presence. Microsoft will use Yammer to provide a consolidated activity stream across their applications. Conclusion So there you have it, the combination of So Mo Clo plus Activity Streams brought Microsoft to Yammers door with an offer that could not be refused. Well done Yammer. What it probably does mean for all social technology vendors is that all the horizontal social functionality which Yammer offers blogs, activity streams, tagging, groups, forums, wikis, polls etc are rapidly going to become commodity. The focus will have to move towards more vertical community or business process solutions with strong enterprise app integration via clever filtering of activity streams (including filtering via social graphs) and including new social services and objects. One thing for is for sure, cloud vendors without a compelling social story are going to be scrambling to find one, as said by Ben Kepes. NewsGator will have to fire up its efforts to capitalize on the discomfort some IT administrators have toward Yammers business model and cloud computing. It will profess remain in Microsoft Sharepoints on-premise plug-in inventory but wont get the Microsoft mindshare that it once enjoyed.

As a final observation perhaps Microsoft also see this as an opportunity to develop consumer-focused social platforms linking back in to the enterprise (building on Yammers external community features) thus playing catch-up to the likes of Telligent and other leaders in the analysts magic quadrant. Without that linkage Microsoft are really out of the game when it comes to social business strategy and business transformation opportunities. By the way well done also to Alex Manchester who just a month or so ago, in a detailed analysis of Yammer, said Yammers considerable growth and substantial funding from VCs and existing investors can also be interpreted as screaming For sale. What do you think was the most compelling reason that brought Microsoft to buy Yammer? Please comment below.
Follow @adamson WalterA http://xeeme.com/walter Tweet to @igo2

Related: Social Business 3 Keys to Success by Rob Howard.

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