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Can Yammer Help Microsoft Conquer the World -- Again?

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Posted September 25, 2012 By Drew Robb     Feedback

Microsoft bought Yammer to give it a leg up in the burgeoning social software space. But how will it do that, exactly?

Since Microsoft's initial press release on the acquisition of Yammer in June, Microsoft hasn’t said much about its plans for the social software provider. It already integrates with Microsoft Dynamics CRM as well as SharePoint. Now the connection is rumored to be deepening.

Yammer is an enterprise version of popular consumer social networking sites, akin to Twitter for the business world. A basic version is free, while paid upgrades add administrative and security controls and integration with enterprise applications. In four years it has attracted over 200,000 corporate customers (5 million users), including many at Fortune 500 firms.

Microsoft hints it will harness Yammer along with products such as Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype. A company spokesperson said plans for the product would become more clear in a couple of months. Until Microsoft goes public with its intentions, what are others anticipating?

No Social Revolution

“Microsoft bought Yammer to improve the social capabilities of its collaboration platform, especially SharePoint, and the Dynamics applications will connect to the improved platform,” said Rob Helm, managing vice president of Research at Direction on Microsoft. “That will enable Dynamics users to collaborate with each other, customers or business partners to capture accurate data, fix business problems that show up in an application, and pass on important data to others who don’t use Dynamics applications directly but depend on it for some aspect of their jobs.”

Dynamics CRM users might work together using Yammer's social features to figure out what’s up with a customer complaint, for example. Similarly, an employee might “follow” an expense report submission to track its status as it goes through a Dynamics ERP application.

Helm believes tighter integration with Dynamics CRM will show the earliest progress, as it has a head start on other Microsoft apps. However, he thinks social features will ultimately find their way into all Dynamics applications, and impact how Dynamics data gets out into the wider enterprise. Further, he expects Microsoft will incorporate Yammer’s capabilities into the next versions of SharePoint and SharePoint Online.

“That could mean that Yammer eventually disappears as a distinct product and its capabilities become parts of Microsoft’s basic collaboration platform,” said Helm. “In the long run, though, I don’t think Yammer or other social networking platforms will revolutionize business application design, any more than email or instant messaging did.”

ERP Impact

Louis Columbus, senior manager for Marketing at Cincom Manufacturing Business Solutions, a Global Strategic Partner for Dynamics CRM and Dynamics AX, is enthusiastic about the deal. He thinks Microsoft will use Yammer to bring the collaborative benefits of social media to the enterprise, as well as the medium and small businesses that are Cincom's target audience.

He believes Yammer will improve the SharePoint user experience by making knowledge sharing more real-time and fluid. Such benefits, he said, will enable Microsoft Dynamics AX users to get more value from their ERP systems and stay better connected to suppliers, customers, distributors and service providers.

“Dynamics AX will benefit by providing a real-time collaboration layer to companies whose manufacturing or service operations are geographically distributed,” said Columbus. “Yammer has the potential to significantly streamline BI, CRM and ERP workflows given its collaborative design and time to deploy.”

Another advantage comes in the form of the Yammer user interface, which many consider more customizable and intuitive than the interface used for SharePoint’s existing social networking features. A more user-friendly interface could increase adoption in SharePoint-based companies looking for a stronger collaboration platform. For now though, Columbus sees the immediate future in terms of Microsoft partners selling Yammer as a standalone application.

IDC's Prediction

How do the big analyst firms see it? International Data Corp’s (IDC) take is that Yammer will become part of the Microsoft Office Division. IDC rates the social capabilities of Microsoft Dynamics well behind those of Salesforce.com's Chatter. Yammer gives the company a chance to pull closer.

According to the latest research, IDC scored Yammer as the fastest-growing firm among those operating in the enterprise social networking space. Its year-over-year growth rate of more than 130 percent is double the market average.

Social Strategy

No one knows for sure where Microsoft is heading. But raw numbers indicate the software giant isn’t likely to let the intellectual property from its Yammer acquisition languish for long. Consider first that 80 percent of the Fortune 500 have purchased SharePoint and 85 percent own Yammer. SharePoint’s dominance shows up in terms of sheer licensing volume – 125 million vs. 5 million. (Some Yammer usage may occur under the official licensing radar.)

Strategic bullet point number two is rates of expansion and adoption. As noted earlier, Yammer’s expansion curve is spectacular. It is adding 250,000 new users a month. Meanwhile, Microsoft advertises SharePoint as its fastest ever product to reach a billion in sales. When you combine the two, you get plenty of up-sell leverage and 700,000 SharePoint developers worldwide gaining expanded coverage courtesy of Yammer, which reaches 150 countries and 23 languages.

What the eventual result will be is anyone’s guess. But a short PR piece on the Microsoft website made this boast about the SharePoint/Yammer combo: “Together we will deliver the most complete solution in the marketplace.”

Drew Robb is a freelance writer specializing in technology and engineering. Currently living in California, he is originally from Scotland, where he received a degree in geology and geography from the University of Strathclyde. He is the author of Server Disk Management in a Windows Environment (CRC Press).

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