“Social enterprise” is becoming the new battleground for network software vendors and investors. For years, the consumer network has been laced together via Facebook, Google, Twitter, Instagram and SnapChat, tapping into the huge audience and latent need to connect like minded individuals around a common theme.
As with most things, we are witnessing a swing in the market, as investors and entrepreneurs now think the enterprise is where the opportunity and money is. And they are right, because the enterprise today is still a graveyard of old desktop and server side software that is increasingly at odds with a generation Y audience that has been using the cloud platforms the social software entrepreneurs and investors built 5-10 years ago.
One cannot question Facebook’s financial means to build a workplace version of its ubiquitous social network, nor the fact that despite many detractors, it has become a real business with real revenue. So far so good. But what about its ethos; its business DNA? As a social network, Facebook is built on the principle that people “want” to share information with each other. It is a voluntary network with no predetermined goals or outcomes. One can do what they want on Facebook with whomever they wish. That is not very “enterprise”. An enterprise is built on pre-defined rules about outcomes, quantities, margins and repeatability. Workers are given roles and responsibilities, and the ability to perform these to the best of their ability can drive their personal success.
‘Facebook for Work’ is almost inevitable, with the likes of Slack, Asana and Drop/Box all banging on about enterprise value, and Google and Microsoft also throwing their weight around, too. But do you remember Yammer – The Enterprise Social Network? Microsoft bought it for $1.2bn with revenues of around $20m, generating a circa 60x multiple. Why? Because it had 100m users. And some schmuck at Microsoft thought that $10 CAC (Customer Acquisition Cost) was cheap, when actually it was CACK. And this is because a user account is not worth anything unless the user that it belongs to is using it and is deriving value from it.
This is the billion dollar issue with enterprise software: it has to drive value. And this is particularly true of SaaS vendors whose service mantra is judged by the ongoing value it generates. No value? – switch it off / stop using it. That’s what happened to Yammer. And that is what could happen to ‘Facebook for Work’ unless it can work out what the value proposition is for the enterprise.”
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