Home The Paradox for Jive Software

The Paradox for Jive Software

I find Jive Software to be a bit of a paradox. . I like the people and the company they’ve built. They’re a local success story here in Portland. They have transformed from a client-technology, software forum provider into a collaboration leader.

They seem to be moving in the right direction. The company is headed for an IPO. So, what’s the paradox?

Solutions oriented companies build custom configurations. These can become costly for the vendor and the customer. They also place an emphasis on providing on-premise offerings.

On the flip side, Jive is taking the first steps in building a developer community. The company has substantial financial backing and its riding strong in providing social technologies to the enterprise.

Jive’s Trajectory

Jive can make it running on the path they have chosen. The biggest challenge will be costs that come with building a business that has any number of custom, customer configurations and complex licensing structures. The answer to Jive’s future will come in how the company balances its developer community with the pressure to show substantial revenues that come with solutions contracts and large consulting engagements.

Kleiner Perkins sees promise. The prestigious venture capital company invested $30 million in Jive last summer. Jive’s financial trajectory puts it on track to make it a company that can be publicly traded and attract investment. That will mean it has to show revenues. To really extend, the developers that the company attracts will have to be organized into an ecosystem that gives it deep reach across the enterprise and associated channels.

This means that it has to have a clear path as a SharePoint alternative. To succeed, Jive has to lead the march in providing customers with modern uses of Web oriented technologies. To do that they need the help of others seeking to topple Microsoft’s dominance. And help comes in the form of other companies and the sharing of development efforts.

Formidable Competition

Jive also faces formidable competition. Salesforce.com has to be considered a rival. The company fits into a dynamic that others such as Yammer are fully exploiting, too. These companies are application centric and have their own respective developer communities. For example, Salesforce.com has the Force.com platform and relationships with VMware and Google. Yammer is extending its footprint with relationships with companies such as Crocodoc, which we covered over the weekend in our post about how networks are flattening.

Acquia’s Tim Bertrand wrote a post earlier this month. In it he critiques Jive for playing the same game that enterprise providers have played for the past 30 years:

  • Everything is a “customization.”
  • Customizations cost lots of money.
  • Organizations need to rely on the company or its partners to perform customizations.
  • The (already) proprietary instance of the software becomes too customized, it costs even more when it comes time to migrate to a new release.
  • Repeat and start the vicious cycle all over again.

Bertrand works for the competition and so it is understandable that we get this degree of snark. But to some extent the critique is valid.

Jive is arguably a solutions provider but it does provide cloud-based services. It builds on-premise application stacks. It is hard to imagine Jive as anything else. Companies are doing massive overhauls of enterprise infrastructures. Jive’s model is to serve the needs of those big clients. That means it has to serve customers who have compliance and governance matters to abide by.

In an interview last month, Chief Financial Officer Bryan LeBlanc said that last year the company did a record number of deals worth more than $1 million. In some case the entire portal is replaced for the customer. He says a major goal is to displace SharePoint and homegrown systems that companies have cobbled together through the years built on Broadvison, Interwoven and manually built HTML-based environments.

These are expensive projects. But the cultural climate is important to consider. Companies want security and they want the communications to be centralized. They want guidance which they pay for handsomely.

Jive has an extensive consulting practice. Its methods are to centralize customers to its platforms from various wikis, blogs and the other systems people use inside companies.

Matt Tucker is Jive’s CTO and co-founder. He says it is in Jive’s best interest to do as little customization as possible.

He sees a further emphasis on delivering SaaS solutions to customers. But there is still a need for on-premise offerings. Tucker is a technologist. You can see the influence the developer community has had upon him in the direction the company is taking. At the same time, he knows that there has to be ways to accommodate the larger clients.

But there is more to this, too. You can see it in the comments from Christopher Morace, who runs Jive’s product strategy. On Quora, he responded to a thread about the competition between Jive and Yammer. Morace said he has found that when it comes to strategic business conversations most decision makers still want solutions hosted by Jive on a box they control. He said It won’t always be this way but as the market shifts from early adopters to pragmatists there is a resurgence in customers who want more control.

He gives a revealing reason why Jive started offering activity stream technology:

So, what is my point? Cloud delivered solutions for enterprise collaboration face an uphill climb. The reward quite frequently for successful adoption is getting on the radar of IT and ultimately getting ripped out. The entire reason we even pulled Twitter/Yammer like functionality into Jive was at the request of IT who wanted to get rid of user adopted cloud solutions where strategic conversations were now residing beyond their control.

No one has meaningfully demonstrated in the enterprise (that I am aware of) a way to do a freemium solution that gets their business above $15M outside of really tactical point solutions (and I’m not even aware of any of those). The sweet spot for cloud delivered, inside the firewall solutions continues to be SMB who have no existing infrastructure, value price above almost everything else (like customization, integration, configuration, and control), and are the least regulated.

Morace shows a pretty clear intention for Jive to continue offering solutions oriented offerings.

You can see then why it makes sense for Jive to partner with companies such as Alfresco Software. The company must work with third parties to offer broad solutions.

Enguerrand Spindler owns a consulting company called Alfstore, specializing in Alfresco Software integrations. He recently wrote about how Alfresco is integrating with Jive Software on a project for a large French, industrial company.

According to Spindler, Jive is used as the front-end solution (for social collaboration around documents), and Alfresco is used as the document repository:

From the Jive interface, people can upload documents into Alfresco, and then get the corresponding link to collaborate around it using the Jive features.

That’s the kind of integration Jive will need to continue growing.

Other partners in Jive’s developer community include Tungle.me, Box and Giffy.

Am I still torn? I have no question about Jive’s success. It will most likely become a very large company.

But I can’t help but see an emphasis on appealing to IT and its command and control preferences. And that to me can be a problem. Why? IT could be better connected to the front lines. They have their own ideas about collaboration that are often disconnected to the realities of the average users. Those users want to use services that make sense for them.

Jive is far ahead of Yammer in the market. The company is on a $100 million run rate. That’s far bigger than Yammer and others in the market. But its approach reminds me more of large, enterprise solutions providers than nimble applications companies.

That’s evident of a market dichotomy that we see unfolding in the enterprise. Solutions oriented companies work with CIOs. Those relationships help garner significant deals that are in excess of $1 million.

But in the long run, users will prefer to work with loosely coupled application services that give them choice and flexibility.

That’s a big reason why it is so important for Jive to build that application network. They need a loosely federated model to keep the user satisfied.

Will that work? Perhaps. But I’m still torn. Solutions oriented approaches require large project teams. Those teams cost a lot to run. Applications companies seek to be more efficient on the application stack. In the long run that means engaging users as much as possible and lowering the costs to scale the company.

Jive and its competitors have divergent approaches but in the end, the applications providers are creating services for an in increasingly flat world. To truly compete, Jive will need to embrace the developer community and offer a full spectrum of services through its ecosystem.

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