Yammer girds loins in battle for collaborative layer in Enterprise 2.0

Just as individuals and consumers are flocking to social networks, enterprises are looking to embrace social computing to improve employee productivity. The question is not if, but how and when. Oh, and which vendors will be winners in looming war for the collaborative technology layer in organizations.

As Axel Schultze pointed out recently, email is old technology that is not well suited for the agile communications that modern corporations need. And I would add that voice mail in the same boat. Both are too slow and inefficient for our always-on world.

So what’s the solution? From the CRM angle we have Salesforce.com pushing Chatter — a robust collaborative solution for those already using a CRM tool. Chatter may help drive the Force.com platform deeper into the enterprise. Good strategy for the Benioff bunch, but a bit pricey if companies just want a ubiquitous communication platform for all.

I like the more lightweight and viral approach that a newer entrant Yammer is taking. Like Twitter, users can sign themselves up at no charge, and join a company network. Users grow by viral propagation if they like what the tool does for them.

Unlike Twitter, Yammer has usability features that business people really need, like message threading, support for attachments, groups and more. I’ve played around with it a bit and found it easy to figure out, unlike some other tools I’ve tested. The ability to instantly use without any training is critical.

So I can see why Yammer has signed up 1 million users in the past 2 years (per VP of Marketing Steve Apfelberg). Yammer’s freemium approach turns the enterprise software sales model on its head. Because anyone can be the first person to start a company network, and others can easily join a la Twitter. Users are selling themselves! (Apfelberg notes that Yammer does also sell direct with its own sales force.)

The critical issue with a freemium model, of course, is converting free users to paid. On that score Apfelberg says about 15% have upgraded to get access to more features, security, etc. Much higher than normal freemium conversion rates, he says.

Paid Yammer accounts are quite reasonably priced, at $3-5 per user per month, a fraction of what Salesforce.com charges for Chatter, and also less than the $10 or so per user that I’ve heard quoted from other social networking vendors like SocialText and Socialcast. Personally, I think the pricing is going to fall into the low single digits for large companies to embrace as a universal solution.

However, for Yammer to make money, someone has to step forward to fund a paid network. That’s tricky when one department may see value, but doesn’t have the budget to fund everyone.

But still, nice problem to have. Let’s say a company already has hundreds or thousands of happy (free) users on Yammer, and then the company wants to get everyone connected on a private/secure internal network. Yammer will be a great position to be that enterprise-wide collaborative layer, and other alternatives will be effectively shut out. Users won’t want to switch.

Recent announcements show that Yammer is serious about playing nicely in the enterprise software ecosystem. Yammer supports new applications development on its own platform, including partnerships with social/collaborative apps from Lithium, Box.net and others.

What’s next? Well, I believe that after enterprises sort out their own internal collaboration strategy, the entire value chain must be included. Contractors, suppliers, outsourcers, partners of all stripes… there are many players in the value chain that have to coordinate their activities to deliver what customers want quickly and cost effectively. Conventional CRM, ERP and SCM systems handle some of this if well structured and repeatable, but can’t easily fill the gaps like social apps.

Yammer’s solution for these cross-company nets is to form “communities” which are kind of like a specialized network where contacts from other organizations can be invited. Seems like a sensible approach although I haven’t had time to play with this yet.

My prediction is that we’ll see these collaborative nets develop much like email did 20 years ago. Lots of vendors will fight it out the next few years to be one of the survivors with the “best” solution. Then standards will be developed for cross-network exchange, because not everyone will end up on the same nets. The we’ll see truly interconnected communications up and down the supply chain, and more time and cost will be squeezed out in the process.

I wrote about this quite a few years ago as “Collaborative eBusiness.” Glad to see it starting to come into sight, courtesy of social technology. We’re probably looking at 10+ years for this to play out. In the near term, it will be interesting to watch vendors battle to try to “own” this critical collaborative layer for enterprises.