Pretzel Logic – Social and Collaborative Business

I almost missed 2 very important social events when I was in Bombay earlier this year. One of these with my childhood pals that I don’t get to meet unless I’m visiting. Boy would that have sucked.

Why? Because I don’t carry a Blackberry. And by extension, don’t use BBM – RIMs Instant Messaging Service for its Blackberry Phones. (great primer here on BBM, btw)

What is BBM?

For those of you (like me) who live on the iPhone and are not BBM users, its Blackberry’s IM client that lets you engage with other BBM users on Blackberry devices. You can friend one another, create groups and share pictures and videos. There’s millions out there that don’t exchange Skype and Gtalk handles. They exchange their BBM handle.

What gained traction as a way to bypass costly SMS, BBM is now the preferred mode of text based communications amongst GenY-ers, team members and groups of friends. That’s how you arrange drinks at the local pub, partake in American Idol gossip and collaborate with teams at work. Think of it as Twitter with group functionality + a (very) light weight Yammer / SocialCast for business interaction. But all mobile, no character limits,  always on and in real time.

Here’s a short Video

Apple recently filed a patent for messaging called iGroup that enables Apple to command control over specific social networking metaphors. Here’s a short summary from the AppleBlog:

An interesting patent of Apple’s relating to a social networking app surfaced recently. Dubbed iGroups, the app aims to solve the pitfalls of traditional social networks, like Facebook, that require users be a member before being able to participate. Instead, iGroups creates a virtual social network based on proximity.

The thing is while Apple’s focus, for the most part, has been on hardware + data / applications RIM is quietly giving the rest of the world hardware + participation.

Threat: Mobile only folks

Granted that the Blackberry is no iPhone when it comes to overall experience but Apple faces the threat of being beaten at a game it invented: couple hardware with seriously useful software software to create simple, unmatched experiences.

Whilst the webs proliferation in the west started on a PC, there’s tens of millions of people out there outside the western world that skipped the web on a PC for the most part and went straight to a phone. Wireless access in these highly mobile parts of the world meant get a more powerful smart phone as opposed to a PC. These folks are not tethered to iTunes on their laptops, and use SMS as a primary form of text based interaction. Facebook, if at all, is experienced over the mobile phone but the primary interaction is conversations (as opposed to data access and even sharing). Conversations around where to hang out tonight, or debriefing after a sales pitch – all done via BBM and on their mobile device.

This group of people also have little appreciation for the App Store and all that it has to offer. Communicating with people they know takes precedence over consuming data and applications on a mobile device. And so iPhone apps that the rest of us are so very mesmerized by take a back seat. The network wins.

Apple needs to stem this land grab and stem it fast. Communication networks built off of Blackberry to Blackberry interaction are super sticky – as sticky as the networks many of us have created on Facebook. And that’s hard to replicate.

Opportunity: The gaping hole that Facebook leaves

Many digital socializers, especially GenY-ers using the desktop web are either just baffled by Facebooks shifting privacy policies, get disapproving stares at the office when they fire up Facebook or couldn’t turn down mom when she be-friended them.  Also there’s nothing instant about Facebook. Its far too asynchronous, party because the metaphor still very much looks like this: post > wait > receive > wait > react. And its not set up to create quick groups that can converse on a social or business topic and disband.  That’s the missing metaphor that represents a very common interaction amongst a lot of people. Whilst Twitter works well to consume broadcast from magazines and Aston Kutcher, it remains gobbldygook for those newbies looking to converse. BBM in contrast, has this interaction metaphor locked up, for now.

Business Implications

Most of us use one mobile device for both personal and business communication and that’s a Blackberry for many many users. Whilst a plethora of Enterprise microblogging vendors duke it out to become the ‘engagement system of record’ with features on their desktop, web based apps and lighter weight mobile siblings, BBM may well be the most convenient and killer Enterprise 2.0 app for the mobile masses. Ofcourse there’s a lot more to business collaboration than engagement, but for many, this might be just the missing component that compliments their existing process and document collaboration investments.

Enterprises don’t buy what’s best. They buy what’s good enough. BBM is a perfect example of light weight collaboration that’s always on, always with you, designed for mobile, wired into your company contacts folder, and with groups functionality to host private conversations.

Ofcourse, Apple is Apple and its highly likely that when they do come out with an alternative to BBM it will re-define messaging in some way or another. And that might well be the basis for the iGroup patent. That said, we’ve entered a world where The Network is the ultimate resource. And that can well be a powerful powerful antidote to any remarkable design Apple comes up with.

Related Posts:

Lee Provoost: Generation Y and the iPhone-Blackberry dilemma  http://ow.ly/1S9wY

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Next month I travel to Milan to speak at the 3rd International Forum on Enterprise 2.0.  A premier event on next generation enterprises and the processes and technologies that will power them, this event attracts business and technology executives across Europe and respected thinkers, advisors and practitioners that play a role driving business performance at leading organizations.

There’s some excellent content on tap at this event. The agenda is packed with purpose driven sessions around Marketing, HR and Innovation showcasing real world, practical experiences on applying new, more current techniques to performance.

Keynote

The conference has a great line up of keynotes and speakers including Andrew Gilboy – Oracle and Emanuele Scotti – Open Knowledge, Hutch Carpenter – Spigit and Verna Allee of Value Networks.

I will be keynoting the conference on the implications of the social customer on today’s organizational design and infrastructure. As important, the need for collaborative enterprise design to engage customers, partners and employees, to cater to this new customer dynamic.  I hope to help frame the discussion for executives as they prepare to respond to these changes in customer dynamics.

Workshop

In addition, I’ll do a workshop on the first day that provides a primer on the process from Idea to Launch. This 4 hour workshop will include instructional content, do’s and don’ts, pitfalls to avoid, and how to align the promise of open, collaborative constructs with discrete performance goals. One particular area where we will go deep is the pitch – in addition to instructional content, we’ll moderate a panel of vendor CEOs that pitch the most skeptical customers on a daily basis on how newer collaborative approaches can move the needle. We’re thrilled to have leaders at Telligent, Broadvision and Blue Kiwi join the panel. A special thank you to them for giving back to the larger Enterprise 2.0 community by sharing insights and practical knowledge. Finally, we will also involve practitioners that will tell their story on how they launched Enterprise 2.0 initiatives at their organizations.

More about the conference

The conference has three primary themes as stated on the website:

• Inside the organization: Intranet 2.0, Community Management, Human Resources 2.0, Social Learning, Organizational Network Analysis, IT Governance

• Outside the organizations: Social CRM, Sales Communities, Social Media Marketing, Social Media Monitoring

• Innovation: Idea and Innovation Management, Crowdsourcing and Idea generation, Prediction markets

An excerpt from an interview conducted by ComputerWorld (translated from Italian) with Emanuele Quintarelli, one of the organizers of the event:

Among the more than 40 actions to point out the contribution of Hutch Carpenter on 3C innovation to Sameer Patel on the use of collaborative approaches to improve business performance and ultimately the joint submission by Mark Tamis and Esteban Kolsky on how to compete by building a business client-centered. In addition to experts and also indicate that twelve managers of major Italian companies will go up on stage to confront so candid and transparent about the real risks and opportunities of the introduction of similar approaches in business.

More on the conference, the esteemed list of speakers, and agenda here. 

Hope to see you there!

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These are my favorite videos from SAP SAPPHIRE 2010.

Mobile: Vishal Sikka on the Sybase acquisition

You got the sense that one of the most important objectives of this Sapphire Event was to instill confidence in the market about SAPs continued prominent role in the business software. That comes, in big part, from clarity in intent. Vishal is dead clear in this video about why SAP purchased Sybase (after being prodded by Vinnie Mirchandani). My favorite, most well articulated video across the board.

Video Credit: Dennis Howlett

Collaboration in Context: SAP StreamWork and ByDesign

Whilst I wish SAP does more in terms of radically re-thinking how discrete business activity needs to be executed by balancing engagement, content access and traditional ERP processes, this application of StreamWork is an excellent start. This video provides a sneak peak into the power of blending structured and unstructured data access and collaboration to improve business outcomes.

Video Credit: SapphireNow

Experience Design: Hasso Plattner demoing SAP apps on the iPad

As I mentioned in my post, modern interfaces are finally coming to the enterprise. Some of the Enterprise 2.0 pure plays have done a great job of bringing engaging, usable interfaces to business – companies such as Socialcast and nGenera for instance. Intuit is an example of a traditional enterprise company that’s also done a brilliant job with Brainstorm, its innovation platform. In this video, Professor Hasso Plattner shows how seemingly bland (ok, who am I kidding – totally uninspiring) enterprise experiences can come alive thanks to in-memory and the iPad.

Video Credit: SapphireNow

The Outside Perspective I: (Mostly Positive)

Video of Paul Greenberg, Vinnie Mirchandani, Oliver Marks and Me. From Dennis Howletts blog post, about this video:

The magic dust Bill sprinkled must have doped Vinnie. I have never seen him write such an effusive and enthusiastic post about SAP. And we go back way longer than the number of hairs left on my head. If Paul Greenberg had been any more bubbly, you’d think he was a shill for the company. He most certainly is NOT. SAPPHIRE virgin Sameer saw lost opportunities around the collaboration space and I sense he is right in talking about SAP using collaboration as an add-on rather than appearing to think about it in terms of rethinking business processes.

Video Credit: Dennis Howlett

                                                                                                                                The Outside Perspective II: (Tough Love)

Finally, Vinnie Mirchandani and Paul Greenberg, two well respected analysts, thinkers and authors, tell it like it is.

Video Credit: Dennis Howlett

Related Posts:

• Ray Wang: Event Report: Sapphire 2010 Brings Customers Back To A Sense Of Normalcy http://ow.ly/1OUHU
• Thomas Wailgum: 5 Must-Read Blog Posts from SAP Sapphire 2010 – CIO.com http://ow.ly/1OUFE
• Michael Fauscette: SAP SapphireNow 2010 http://ow.ly/1OUKf
• Sig Rinde: SAPPHIRE Now – huge surprise, good stuff and a couple of important issues http://ow.ly/1OUGa
• Oliver Marks: SAP Gets Mojo Back: Enterprise 3.0 | ZDNet http://ow.ly/1OVe1
• Thomas Wailgum: SAP Sapphire 2010: Observations, News and Tweets – CIO.com http://ow.ly/1OUGY

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That’s a quote from Bill McDermott, Co-CEO of SAP on the keynote stage. A message from SAP’s leadership to over 50,000 customers, employees and partners worldwide.

As I travelled back to Palo Alto last night from SAPPHIRE 2010, the central theme came clear to me: SAPs re-focus centers on leveraging people and relationships to redesign 1) its operations and technology strategy, and 2) its product design.

Operational and Technology Strategy

To net it out, there’s no question that this process enforcing company has gone back to the drawing board and come back with a singular focus: build together with people centric ecosystems. Partners, Customers and Employees. You sense clarity on a number of fronts -  sizing up the opportunity and execution path, frank recognition of its challenges in front of partners, bloggers and media and customers, it’s commitment to collaborative innovation, and more agility with respect to how it develops it’s products.

Most significant for me, was instilling a renewed sense of purpose for its employees. SAPPHIRE ‘veterans’ such as Vinnie Mirchandani had high praise for the event. In the context of fresh promise and tangible steps to move SAP forward, Dennis Howlett considered the content at this SAPPHIRE to be the best in 14 years (review here). The new leadership also embraced skeptical, critical feedback, extending a hand to those who have taken the time to express tough love.

In terms of technology strategy that will permeate most of its products and how SAP does business, global CIOs the world over will be hopeful of the commitments made here around technology excellence – in-memory and real time, virtualization, separation of user experience and business logic (more below) and a gradual move toward iterative design and innovation to replace outdated sequential multi year release cycles. Consider CTO, Vishal Sikka’s explanation of how SAP got a bunch of developers to build hundreds of mobile apps in just under 6 weeks. That’s agile from any company, let alone a global 50,000 employee, multi-national organization such as SAP.

Moving on to Products

Particularly striking to me was how SAP is now separating business logic from user experience, as described by Co-CEO, Jim Hagemann Snabe. They understand that end customers expect new, engaging ways to work as we move from the data centric web to the interaction web. As James Thomas, an executive in the BI group, summed up the experience design principle:

The devil is certainly in the (execution) details but the idea that enterprise software can offer hip-huggingly modernized experience design we see in consumer software, is extremely compelling.

As we described in our Enterprise 2.0 Whitepaper (summary post by Oliver Marks)  on Performance Acceleration, the consumer web and broadband have led to the ‘me” web in our consumer lives where data, engagements and content converge around the participant. It’s refreshing to see the enterprise understand the implications of this shift and begin the transition, away from the application centered user experience.

As you consider the strategic implications and enabling technology infrastructure that will power people centered, collaborative 21st century enterprises, SAP realizes that its core asset is being an enabler of critical customer, employee, partner and supplier processes for its customers. In principle, that positions the company extremely well to power in-context collaboration around business events.

Unfortunately, that’s where SAP missed the real opportunity to truly revolutionize business process facilitation in this first iteration of Business By Design. In speaking with customers and SAP executives the sense I got was that Business ByDesign (ByD) is a lighter weight rendition of SAP’s on premise suite. I sought comments from Paul Greenberg, ZDNet blogger and author, and someone who intimately understands process:

ByD enters a market that has already seen in-memory, lighter weight ERP offerings designed for the mid market and SMB.

The missed opportunity for me is this: Business Process Automation has not really seen “back to the drawing board” re-thinking in well over two decades. Since the early iterations of process automation, we’ve seen very useful but incremental improvement in how we transact and enforce process. But somewhere along the road we began to interchange business activity loops with how our ERP laden software enforced process completion. The reality is that in this day and age, customer expectations around engagement, and the opportunity to extract more from partner and supplier relationships have changed a lot since that original process automation design. And without question, at an accelerated pace in the last 36 months with the advent of new collaborative concepts and expectations on how people can work together to enrich business outcomes.

SAP has the chance to re-think how discrete business activities need to be conducted in the 21st century and what the optimal blend of process, engagement and content access truly supports today’s business needs. Customers opine openly on the consumer web and are looking for expert advice, beyond marketing, when they engage with businesses. Channel Partners want to do business with manufacturers who don’t just build good products, but those that make it easy to administer, sell and service the end customer. Suppliers who are getting commoditized, in reality, have critical component-level / raw material knowhow that can help them differentiate themselves as strategic partners to their customers. All of these examples require injecting some level of engagement and collaboration, alongside today’s largely ‘transactive’ and asynchronous data sharing enterprise process design.

Whilst I clearly heard a focused interest in adding collaboration to process, my fear is that collaboration and people engagement is being treated as a bolt on to age old process automation software. We see a glimmer of hope in StreamWork (which I think is a superb start towards collaboration in context), but it remains to be seen whether SAP has the chutzpah to truly ‘untether’ itself from a process first, engagement second mindset.

Relationships bring Agility

The good news is that its commitment to a people centric operational design and agile development processes can overcome this. As I said earlier, the most important objective at this time was to re-vitalize its relationships and sense of shared purpose with employees, customers, partners and community participants. And the company achieved this in spades. This new operational design, if executed correctly, will earn the markets patience as SAP tries to methodically expresses these new people centric, collaborative qualities in its products.

p.s. there’s a lot of  awesome content out there and I’ll do another post summarizing what I liked best. But for starters, check out Tom Raftery’s Photos on Flickr, here.

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I read, with great interest, an interview with Jeff Clavier of SoftTechVC in Network World. Jeff’s had notable successes in the consumer world (Mint, MyBlogLog, and Userplane). I’ve never interacted with Jeff (other than recommending a Dim Sum Restaurant on Twitter) but I’ve always had respect for him – unlike many others, he’s adequately self deprecating when it comes to his passing on an opportunity to invest in LinkedIn. : -)

On the topic of Enterprise Software, Jeff says:

Most of SoftTech’s investments have so far been in the consumer space. “Innovation is slower on the enterprise side,” Clavier claims, and “beset by security issues.” “It’s a mature market with only a few acquirers; sales are more difficult and investors have little leverage when there are so few buyers. Low cost, consumer applications that leverage the Web offer capital efficiencies not matched on the enterprise side – and they are fun to work with.”

I’ve had conversations with scores of CEOs of traditional and Enterprise 2.0 companies on this topic. I’m still sticking with my analysis of over a year ago about Commoditization that’s partly due to a lack of focus on process and context, too much reliance on nebulous measures such as productivity and little alignment with tasks at hand. That’s played out with CubeTree’s purchase for $20 million. Anemic by Enterprise standards.

But leverage is coming. I’ve been reading a galley copy of The New Polymath by Vinnie Mirchandani, due out later this summer, and its clear how enterprise application infrastructure, based on customer expectations is ripe for a re-haul. It’s not just about the cloud and its also not just about SaaS vs On Premise business apps. Simpler, better, faster-to-update ways of GTD in context, and in a way that connects people, are about to hit. And that opens up organic as well as M&A opportunities on the technology supply side.

There’s quite a few opportunities’ that are large enough to have significant impact, but I’m going to touch on a few areas I see when talking to end customers, discounted by the pace of innovation, to date.

• Decision Facilitation: Yes, in-person meetings and email are time consuming, expensive and often un productive. The answer is not to simply move those to digital interactions powered by Enterprise 2.0. That’s a first step. But that can also mean moving the same unproductive discussions to a digital platform and arguably more of them since its less time consuming. We still need to wrap a decision facilitation layer around it to drive better results. OpenAPIs, activity streams, data and document access all in context is where its at.
• Exception Handling: Somewhere between your Enterprise 2.0 platform and your structured employee, partner and supplier processes, lies a wide open gap. It’s a myth that we can get by with process laden technology since it solves 70%, 80& 90% of repeatable process tasks. The other 10%, 20%, 30% is where things can go horribly wrong and cost millions. Weaving in a social fabric to deal with those exceptions to standard process outcomes is barely tapped today.
• CRM 2.0 (or socialCRM) is DOA with Enterprise 1.0. You can have the most sophisticated customer community but remember, prospects and customers are looking to bypass marketing and talk to experts deep inside your org and partner ecosystem. You cant have a vibrant and successful community if you’re rely on a 1990s style latency riddled, portal/intranet/extranet inside the firm. Even a “facebook for the enterprise” that cant methodically wrap around real time customer interaction demands is but a first step.
• Performance: I joined a panel on SugarCRM’s SugarCon event last month with Esteban Kolsky, Jeremiah Owyang and Diogo Rebelo where we discussed who owns Social  Data in the enterprise. Traditional BI tools extract results from structured data systems. New performance applications will blend social and analytical data to improve discrete business performance outcomes  – HR and Talent, Spend Management, Communication Performance. Etc. Ultimately moving from “here’s the report” to “here’s what to do about the data”.

Each of these can spawn vastly different value propositions for end customers.

Jeff’s spot on when he talks about simple consumer constructs starting to influence how Enterprise users interact with people and data. And all of the opportunities, above, will expect this as a price of entry. The big consideration though for large mature enterprises will be to avoid siloed efforts and the need to form a central collaborative back bone that’s still flexible enough to show concrete improvement around specific business tasks (sales, marketing, innovation, etc). Last month, Oliver Marks and I  presented at Interop on Performance Acceleration via Enterprise 2.0 and this was further validated by a very mature audience of technology managers and executives.

I’m expecting to have a lot of interesting conversations on this topic over the next few weeks. Tomorrow I head to SAP SAPPHIRE, then to the International Forum on Enterprise 2.0 in Milan where I’ll be talking about 21st Century Enterprises and the Role of Social, and finally at the Enterprise 2.0 conference in Boston where were going to be focusing on business value of E2.0.

I’ll update this post after I’ve processed what I learn.

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It’s fascinating how we consider New Product Development /Research to be investments (by implication, a return can be had on these) on one hand, but we allocate marketing and customer acquisition as an expense. In plain English that translates to: We’re ok with considering what we design, build and sell, an asset that will yield returns. But not the effort it takes to serve prospects and customers that may be interested in what we purvey. Baffling, no?

Marketing has this almost comical, inverted model of inputs and outputs that defies Economics 101. A business typically buys inputs at wholesale and sells products at higher margin retail thereby seeking to make a profit. In contrast, marketing uses big picture estimates such as ‘customer lifetime value’ to estimate how much you can make from the average customer (output). But excluding branding, cost inputs to acquire prospects and sell more to customers are at hefty, mind boggling, retail costs – point advertising spots to sell a product, product launch emails, webinars, promotions, and recently, SEO/SEM campaigns. Hell, we financed Google’s insane success thanks to this model, if you think about it! 

Moving from Transactive vs Relationship Elasticity

I see customer acquisition model as a mindset of ‘transactive’ elasticity. In other words your spend goes only as far as supporting each transaction. So, your spending over and over again to sell new products to the same target customer. And that tactical design can’t be treated as anything but an expense. Conversely, investments are nurtured over time, are less susceptible to cuts in a down market, and yield results at intervals or in perpetuity. 

Contrast this with a model where you invest in relationships with your customers by engaging authentically with them in communities. These communities give the money you allocate to customer acquisition far more elasticity by spreading the wealth across the life of the relationship with relatively smaller spikes in expense that correlate with new product awareness. They center on investing in fostering and facilitating a dialogue with your customers, your partners and your prospects. Dialogues that far outlast single transactions. And via a platform to engage with them between transactions. Sounds like an investment and not an expense to me now.

This is articulated really well in, “CRM at the Speed of Light”, a must read by the terrific Paul Greenberg:

“Transaction is not the paramount artifact of the interaction. Instead a transaction becomes the side effect of rich relationships that are built on conversation. This notion is fundamental, and is a radical switch in priorities for the interaction between customer and vendor”

Edge Relationships Don’t Scale

Creating true relationship networks, whether on third party participatory networks (such as Facebook or Twitter) or on your own branded communities require a clearly defined approach, mindset and interaction design.

Umair Haque, Director of Havas Media Labs and blogger at Harvard Business Review wrote a superb post “The Efficient Community Hypothesis”  (that I recommend you read in full):

“People, truth, identity, reputation, values are the five elements of an efficient community”

I agree with that and they apply to communities that foster these relationships.

That said, community building often gets limited to efforts managed by the “social media expert” or the community manager. Its no doubt a first, extremely important step and herculean at that, (just ask Rachel Happe) but edge efforts don’t scale easily. And if the effort is superficial, they quickly start reeking of old school spam marketing (just see many of the groups on LinkedIn, for example, that sport the same old marketing pitches).

To be truly valuable, customers want to bypass marketers and get to those that have the highest quality information. The best information, void of spin or marketing speak, are in the minds of your other customers, your channel partners who may interact with customers more than you do, and your suppliers who know more about individual components that make up your product.

To enable such a design you need a collaborative design and enabling technology infrastructure that allows for the right minds to wrap around the customers needs. Marketing needs to broker and facilitate that, and then get out of the way. That’s the new customer acquisition design for the 21st century enterprise.

For a more in-depth overview of how to respond to this new customer dynamic and to move from a transactive model to a relationship model, take a look at a recent piece I published with Oliver Marks and TechWeb (email required).

Getting There

I’m not suggesting we stop advertising products when they launch. But do we have to buy marketing, over and over again at retail prices to sell that same customer time and again? Instead, why not invest (not expense) in more elastic relationships that defrays a good chunk of that retail cost?

Customer Acquisition seriously needs a new name to affect any institutional change in how organizations consider the actions and investment behind customer engagement. Customers never gave us permission to acquire them and it’s a bloody expensive to acquire them at retail, anyway. Tomorrows winning CMOs and Marketing leaders will be making a case for this to their CFOs and CEOs, today. I’ve been fortunate to work with some of these forward thinking folks. It’s not about big bang, it’s about etching away at it piece by piece and having it emerge, organically.

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SuccessFactors, a very well known provider of business software, particularly with an HR and Workplace performance focus has acquired enterprise social business software provider, CubeTree.

The terms of the deal from the press release are as follows:

SAN MATEO, Calif. and REDWOOD CITY, Calif.  – May 3, 2010 – Today SuccessFactors, Inc. (Nasdaq: SFSF) announced a definitive agreement to acquire CubeTree, Inc. a visionary leader in the rapidly growing social business software category. SuccessFactors is acquiring the company for $20 million in SuccessFactors stock at closing plus a contingent cash payment three years from closing to bring the value of the total consideration to $50 million.  There is no contingent cash payment if the value of the stock issued exceeds $50 million at any point during the three year period and to the extent the holders have disposed or hedged their holdings.  The guarantee is considered contingent consideration and will be recorded at fair value and marked-to-market each quarter through the statement of operations.

 

Couple of thoughts:

• $50 million doesn’t seem like a whole lot when compared to your average enterprise software deal but there’s more to it. Whilst CubeTree counts SAP, Cisco, LG, and Adobe as customers, I’ve confirmed that at least 2 of these companies do not use CubeTree across all employees. So the pricing seems warranted.
• On the $50 million thing, another point to consider. Many founders/CEOs of E2.0 companies have been open about that fact that social software is not hard to build (form an IP stand point). So effectively the exit for most will end up being an execution play or a technology transfer. In that context, $50 million on the table looks pretty good.
• Based on my interaction/work with the space as a whole, HR or employee productivity focused offerings are very serious about adding social and collaborative features to process. It’s the most natural fit in the enterprise. SuccessFactors is ensuring that they have a forward looking solution. And the timing is perfect.
• Cash is king of course, but the $30 million payout may well be a good bet for the CubeTree team. And it also goes easy on SuccessFactors’ wallet. Following little or no innovation in the last decade with respect to Enterprise Software, we’re at the beginning of a new cycle of overhaul when it comes to enterprise systems of record. In some cases its due to the need for SaaS, in others, its the need for better engagement. And as we see here, you get both. The likely hood of upside for CubeTree and its investors is better now that its been for a while.
  • For that cross section of customers that use both SuccessFactors and Saleforce.com, they now have an alternative to SalesForce.com’s Chatter, should they choose to look for one. Ben Kepes covers this.
• For the Enterprise 2.0 segment, my sense is that this is actually very good news from a valuation stand point. There are a few players such as Jive Software, Socialcast and Socialtext that have been attracting somewhere between reasonably sized to very large customers for a long time. And the emerging Enterprise 2.0 services ecosystem (disclaimer: My firm is one of those) will only raise awareness for the applicability of these technologies to address business challenges. If CubeTree could secure $50 million after it’s relatively short life, the prospects look good for other prominent players in the space that have a marquee customer base and as important, highly engaged platforms.

About a year ago I sensed that standalone Enterprise 2.0 faced serious commoditization and the lack of process and context was going to be a big problem. I still consider these to be significant impediments to getting to IPO for most vendors. That said, Chatter and now CubeTree serve as excellent reference architectures for other traditional enterprise software companies to see how process injected with engagement can lead to accelerated business performance for end customers. And subsequently look to make a purchase or build their own.

Congrats to both companies.  I’ve heard nothing but good things about CubeTree when its come up in conversations and it’s great to see that they have found a good home.

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