Whether you call it “social networking,” “social media,” or “online collaboration” depends on your point of view. In business, the term tends to be “online collaboration,” which suggests complex jobs getting done more efficiently by teams of people wherever they are located. The productivity gains – which are substantial, albeit often hard to measure – have drawn lots of companies into the market. As the market matures, we will see consolidation. And we’re interested in seeing what form this consolidation will take.
Historically, the game was to lock in users and then “sell” to that user base. That may be changing. The game is now all about user adoption, and lock-in is minimal. User interface magic may matter more than balance sheet clout. In this post, we’ll take a look at what features and services make up online collaboration in the enterprise and what will likely drive their consolidation.
The 10 Categories of Online Collaboration
Here are the categories we see today:
1. Forums. Yes, forums seem very old-school Web 1.0. But they are an effective tool and are being updated by vendors and included in integrated online collaboration services.
2. Wikis. This is currently a hot space, hugely competitive with many vendors, but also with a lot of adoption. Wikis nicely fit the gap between email (which is unstructured and bad for creating shared content) and traditional content management systems (which are too process-intensive).
3. Blogging. Blogs and comments are a good way to spread and find information.
4. Microblogging. The 140-character limit forces brevity, a huge blessing in the corporate context! There are many “Twitter for the enterprise” offerings. They feel more like features than distinct products, ripe for integration in larger offerings.
5. Document workflow. This seems really old school, even pre-Web 1.0, but most business processes require a document of some type. Some vendors are putting these features in the cloud as well as integrating them with other collaboration tools.
6. Email. We don’t even think of this as collaboration. It’s just what we do all day, every day, like breathing. But the evolution of email and its integration with other tools is an area seeing a lot of innovation.
7. Document creation. This is the office on the web, the online alternative to MS Office on your hard drive. Collaboration capabilities are the driver for this market.
8. Conferencing. Whether for text, voice, or video chatting or screen-sharing for demos, web conferencing is the alternative to expensive, eco-damaging, nerve-wearing travel.
9. CRM. As CRM moves more online, it becomes more about online collaboration. Some simple online collaboration tools can be alternatives to low-end CRM. We see opportunities in CRM 2.0 that really take advantage of online networking.
10. Contact networking. This is the space dominated by LinkedIn and Facebook. In our view, it is the key to CRM 2.0.
How Suite it Is to Be Truly Integrated
Our point here is that vendors are moving from offering individual features to integrated user experiences. But not suites. There is a big difference between an integrated user experience and a suite. Too many vendors are still pursuing strategies based on the concept of the suite, which is really irrelevant today.
The MS Office suite (the mother of all suites) was integrated mainly for the sake of distribution. It was easier for a manufacturer or physical retailer to work with one packaged delivery, and Microsoft played that game masterfully.
MS Office integration at the user level fundamentally meant being able to copy and paste. That is a given today. We can copy and paste between most online apps. Occasional glitches occur and extra work is sometimes needed, but not enough to overcome the advantages of working with purely online apps and having vastly more choice.
Today, we can count search as an integrated tool. Every tool has search functionality. Google tends to do it better than most, but tools that encourage or facilitate good tagging practices can offer even better search.
Copying and pasting and search are now the baseline for integration. What differentiates integration today is the user experience, which, in simple terms, means less time switching and syncing data between apps.
The key to this level of integration is, first, a semantic base and, secondly, some UI magic. The semantic base may be as simple as a taxonomy, but this enables automatic integration of concepts that the user finds useful in context: customers, projects, employees, etc. This actually is the relatively easy bit. The hard bit is coming up with a magical UI design, which, like great art, you cannot define but know when you see it. You cannot describe the iPhone with just a feature list.
It’s Easy, Then: Just Clone Steve Jobs
Or Jason Fried, or [enter the name of the designer whose app you love to use]. Seriously, though, not just any corporate CEO strategist in a corner office can do this. CEOs can use their market and financial clout to buy all the innovative companies they want. They can hire really good marketing folk to make the assembled creation look like an integrated user experience. But all that is exposed with the first click of the user.
So, the genuine competitive advantage in this round of consolidation is different. This has very big implications for everybody in the eco-system. Here are the old rules that governed consolidation in enterprise software:
- Top-down buying by the IT department favored fewer, larger vendors, the ones you never got fired for choosing. With bottom-up, one-click-at-a-time adoption, this matters less.
- Acquired companies typically were either public (and investors took a 20% premium over the current price) or VC-funded (in which case the exit deadline was known to all). A lot of today’s up-and-coming SaaS champions are self-funded and profitable, with no pressure to exit.
- Acquirers could integrate their services over multiple years, safe in the knowledge that customers were locked in. In a world with minimal lock-in, customers can simply switch to another service, making acquisitions much riskier.
The conclusion: this wave of consolidation may not be driven by mergers and acquisitions.
If Not M&A, Then What?
Consolidation may happen simply because a few vendors emerge that offer a truly compelling combination of value and productivity, driven by a great UI. That would be pretty cool. As they say in sports, May the best person win — not just the vendor with the deepest pockets.
Our Ongoing Series on Online Collaboration
We plan to track this market as it evolves, diving first into each segment and then seeing how integration and consolidation play out. As always, we want to hear from those of you who are using and building these new services.
