This week represents an important inflection point for the Enterprise 2.0 market, a set of software vendors that sell social networking technologies to businesses. Analysts say the number of competitors will consolidate in the coming year as Microsoft captures greater market share. The start-ups that will survive must carve out a longterm place for themselves by building applications that are far more innovative and cheaper than those of the incumbent software giant. In addition, they must convince businesses that Microsoft SharePoint's "good enough" strategy is not, in fact, good enough for today's enterprise collaboration needs.
As Enterprise 2.0 vendors convene for their annual industry conference here in Boston this week, many continue to fight the complacency of businesses who prefer to use Microsoft as a default choice for all their enterprise collaboration needs. SharePoint, an application that started as a document management system to store (among other items) Microsoft Office files, has since added social features, including profiles, blogs, and wikis. Although Microsoft's smaller, more nimble competitors have built more sophisticated social networking applications for businesses, analysts say SharePoint has been "good enough" for many companies.
"Microsoft is turning social collaboration into a commodity pretty quickly," says Oliver Young, a senior analyst at Forrester who follows the Enterprise 2.0 market. "Social collaboration through an app like SharePoint is a given, since so many companies already have SharePoint. They can leverage social features at no or very little extra cost."
In addition, industry experts predict the quality of the social applications in SharePoint will improve drastically next year when the vendor releases SharePoint 2010. It will represent a significant upgrade to the product, which last enjoyed a major iteration nearly three years ago - an eternity in Web years, though normal for Microsoft's traditional, multi-year R&D cycles.
"From everything we know, SharePoint will get better," says Susan Scrupski, an Enterprise 2.0 and collaboration expert who pens the ITSinsider blog. "It's likely going to be more social, collaborative, and easier to use."
Young predicts SharePoint 2010 will be nothing short of a "day of reckoning" for the Enterprise 2.0 vendors, making this year's conference an important benchmark. As potential business technology buyers battle difficult budgets and examine their existing IT systems, when it comes to social software, many will decide between SharePoint or a cheaper alternative - and, in some cases, a bit of both.
Dancing with SharePoint: Damned if you do, damned if you don't
The Enterprise 2.0 market poses a tricky dynamic. For the start-ups who sell social software, they must not only compete for business with Microsoft SharePoint, but also build out their products to complement it. Because the SharePoint server is utilized by more than 17,000 organizations, and caters to 100 million users, its brute market strength cannot be ignored. Thus, top Enterprise 2.0 vendors such as Socialtext, Jive Software, Newsgator and Atlassian have built their social applications to play nicely with SharePoint. The thinking: a company might use SharePoint to manage their documents as in years past, but use one of the Enterprise 2.0 vendors' apps for social collaboration.
"These vendors have to dance with the elephant," says Rob Koplowitz, a Forrester analyst. "Over time, they want to be your social networking and social computing vendor, but at the same time, they partner with Microsoft to work with SharePoint."
For better or worse, many large U.S. companies have come to rely so heavily on SharePoint because it was rolled out to be a kind of glue to hold together documents and applications all over the enterprise. While SharePoint is, on one hand, an application and an accompanying server, it's also a platform on top of which companies can build custom software specific to their business. As those custom apps become entrenched in the enterprise, any social software that gets added must communicate nicely with SharePoint.
During the past year, the Enterprise 2.0 vendors have tailored their products to mirror that reality. Newsgator, for example, has had particular success embedding its Social Sites product on top of SharePoint. Social Sites allows companies to build a corporate intranet on top of SharePoint. When implemented, it behaves much like Facebook's News Feed - information about what actions an employee performs is streamed into a centralized homepage. Universal McCann, a communications and marketing firm, used Social Sites (with SharePoint) on its intranet.
But as the feature set for SharePoint improves in 2010, customers say it will be a harder choice to buy from the Enterprise 2.0 vendors. Customers whom we spoke to just before the Enterprise 2.0 conference say they could go either way, depending on how much the Microsoft app actually improves.
"If SharePoint has what I need, and I have lots of freedom to configure, that would certainly be attractive, but there is no limit to the number of use cases out there," says Jason Harrison, senior vice president and director of digital solutions for Mediabrands (the parent entity of Universal McCann). "We paired Newsgator with SharePoint originally because of RSS and content syndication this time around. I'm sure there will be a whole raft of [new] capabilities out there the next time around."
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