Bullish Forecast for Enterprise Social Media Software

David Needle

Updated · Dec 20, 2010

Facebook’s Mark Zuckerberg won Time magazine’s Person of the Year award, but it looks like the social media software revolution he helped launch is reaching well beyond consumers.

Research firm Gartner sees healthy revenue growth for enterprise social media software this year and on into 2011. For 2010, Gartner said revenue is on pace to hit $664 million, a 14.9 percent increase from last year. For next year, Gartner expects revenue to reach $769.2 million, a 15.7 percent bump up from 2010.

“The social software market is evolving in response to the demand for flexible environments in which participants can connect, create, share and find people and information relevant to their work,” Tom Eid, research vice president at Gartner, said in a statement.

“Social software improves the connectedness of workers, promotes collaboration and helps capture informal knowledge,” he added. “Social software excels in business contexts that leave room for individuals to interact informally, brainstorm, explore ideas and encourage or challenge peers. Specific business value can be derived through customer intimacy, product/service excellence, operational effectiveness and creating innovation.”

The news comes at a time when a raft of relatively new companies are pushing solutions tailored to enterprise users with more security, management and compliance features than consumer services like Facebook and Twitter. Established enterprise suppliers have also moved to add social media features to their offerings. For example, Salesforce.com (NYSE: CRM) has been aggressively promoting Chatter, the Twitter-like addition to the company’s CRM system. Salesforce CEO Marc Benioff said he uses Chatter himself to help identify which of his employees are doing the best job of solving problems. Salesforce has seen huge growth in its free Chatter service in a short amount of time.

Eugene Lee, CEO of enterprise social networking provider Socialtext, said he’s not surprised by Gartner’s aggressive revenue forecast.

“From our perspective, we’ve been noticing the size of customer’s deployments are growing quickly,” Lee told InternetNews.com. “We’ve gone from the early days of experimentation around the tools to adoption at the department level. Now those departments are realizing it doesn’t make sense to be operating in a silo, but to extend the benefits across boundaries — why give social software to just one department?”

Another trend Lee noted is that Socialtext gets a lot of calls from companies who say ‘My intranet sucks. It’s static, not social.’

“What we hear is comments like, ‘It’s a place to get the HR forms and that’s about it,’ so that’s a great opportunity for us,” he said.

Gartner’s report noted that cloud-based and SaaS models have many potential advantages for social software deployments because buyers tend to be business executives with specific marketing, R&D or HR budgets. Cloud-based and SaaS offerings have also opened up access to collaboration and social software technology to small and midsize businesses that would not otherwise consider on-premises deployments.

“Success is to be found in managing the information and relationships in support of business initiatives and not the simple deployment of technology,” said Gartner’s Eid. “One of the major goals is to capitalize on community involvement to drive higher leverage and productivity.”

To that end, Gartner said enterprises are interested features such as blogs, bookmarks, discussion forums, presence, profiles, rating engines, tagging and wikis that are being combined into applications designed for specific business outcomes, including product reviews and testing, brand marketing, community development and other purposes.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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David Needle
David Needle

David Needle is an experienced technology reporter, based in Silicon Valley. He covers big data, mobile, customer experience, social media, and other topics. He was previously the news editor for Enterprise Apps Today, TabTimes editor, and West Coast bureau chief of Internet.com.

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