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.
- 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.