The Social Enterprise: An Interview with NewsGator

Social media use in the enterprise has been a hot topic lately, and a number of vendors have developed platforms and services to provide the benefits of social media to a corporate setting. I’ve written a bit about this topic in the past, and growth and interest in the “social enterprise” has soared over the last few years. A recent survey conducted by the International Data Corporation (IDC) revealed that 41% of survey respondents in IT indicated that they were exploring social business initiatives. 

I’m not talking about bringing Facebook into the enterprise, which is a non-starter. Tim Walters covers content and collaboration topics for Forrester Research, and he sees social media as having potential in the enterprise, but only if IT leaders approach the technology with the right mindset. Here’s an excerpt from a recent blog post by Walters on the topic. 

To get another perspective on growth in the market for enterprise social software, I reached out to NewsGator CEO J.B. Holston and NewsGator investor Brad Feld, Managing Director of the Foundry Group. NewsGator publishes Social Sites for Microsoft SharePoint 2010, a product that integrates with SharePoint to provide social features like micro-blogging, social profiles, community and group creation, activity streams and more.

My email interview with Brad and J.B. spanned several separate emails, so I’ve posted a lightly edited combined transcript of the interview below.

James: The consumerization of IT had led to an increasing number of products aimed primarily at consumers – iPhones, iPads, Google Apps, etc. – finding their way into the enterprise. Do you think this trend will continue? In your view who are the potential winners and losers if this trend continues?

Feld: I think the consumerization of IT is a massive - and positive - trend. Software and IT innovation used to start in the enterprise and then migrate to consumer. This flipped around 2005 - it feels like the flip point might have been the emergence of social [media] combined with always on Internet (both broadband and mobile). The iPhone put the nail in the "enterprise leads innovation" adoption dynamic, firmly placing the leading edge in the hands of consumers and consumer driven companies. Long term this is a very powerful force - the cloud is just one example. Consumers are already used to having their data in the cloud and most enterprise IT organizations have acted like a "virtual cloud" for a long time. As a result, end users are totally comfortable with the idea that they can't actually physically touch their data, which is only layer of abstraction away from it "being in the cloud" instead of "being in a data center."

Holston: One phenomenon all enterprises are now dealing with is “bring your own device,” or BYOD. Fifteen years ago corporate IT gave you your cool computer on your first day of work, and it was cutting edge. Now, folks show up on day one at work comfortable not only with their smart device/s but also [being] socially networked with groups they know can help them at work from the start.  While they’re happy to consider expanding the functionality of those devices, and adding to their networks, they have no interest in giving up either, or learning new paradigms – whether UI or collaboration.  And, as Brad says, they’re increasingly indifferent to where the data -- or even the application’s smarts – reside.  They are, however, increasingly concerned about security and privacy, which means the individuals’ interests actually increasingly align with the organizations.  Neither want any breaches in trust – one of the big drivers for enterprise social computing is that enterprise networks are inherently transparent, with verifiable IDs – and a history of caring about security – so they have a foundation of trust that is increasingly difficult for consumer social networks to maintain as they explode in size and complexity.

James: Several vendors – Jive Software is an example – are trying to develop and sell social media platforms aimed at the enterprise. In your view, what companies are getting it right, and which ones are missing the mark?

Feld:  I think NewsGator has totally nailed it. J.B. can give you a deeper view from his perspective, but NewsGator started focusing on "enterprise social computing" in 2006 before anyone knew what it meant. Our shorthand for it at the time was "bring Facebook to the enterprise." Microsoft SharePoint provided an incredible platform for this - both as a technology backbone as well as the broad adoption it has seen throughout large enterprises. NewsGator has built a very rich, compelling social product set on top of this backbone.

Holston: The vendor space in this category is moving very, very quickly. As Brad points out, we took an early view that the game would become enterprise-class --- which meant that fundamental aspects of the offerings here had to operate at incredible scale and security.  We felt strongly that the primary platform providers had and would continue to develop enterprise-scale capabilities that are foundations for the ‘new social’ – search, single sign-on and profiles, globalization, and security models as some of the more important – and that it was smartest for an independent start-up software vendor to leverage those capabilities rather than try to compete with them. We focused on the Microsoft stack, with SharePoint as the focus but now including all the Office 365 components (Exchange, Office, and Lync too) because of their ubiquity.  SharePoint alone has over 100 million paid seats worldwide; is Microsoft’s fastest growing server product ever; and has been adding 20,000 seats per day every day for the last five years.
While there are a number of independent vendors in the space, Cisco, IBM, Salesforce.com, Tibco, and VMware have all aggressively entered; most in the last 18 months.  We’re very pleased to have chosen the ‘leverage the platforms’ strategy!

James: Speaking of Jive Software, what would you say to a potential client about the differences between NewsGator Social Sites and Jive Software? Just curious about what you see as NewsGator’s strengths/weaknesses vs. Jive’s offerings.

Holston: Two of the biggest differentiators are: enterprise class and total cost of ownership (TCO).  Since we leverage the Microsoft stack fundamentally, our offerings have fundamental search, single profile, security, scalability, and globalization/localization benefits that are magnitudes ahead of the competition.  SocialSites 2010 on SharePoint also costs between 5% and 10% Jive’s costs on a TCO basis, largely due to much lower pricing but also because leveraging the existing enterprise stack means no custom investment in integrating search, profiles, etc., as is required in Jive deployments.  From a feature/function point of view, we release more frequently than Jive so prospects regularly tell me we tend to reflect the latest/greatest consumer trends more quickly.  Both Jive and Newsgator have worked hard to have best-in-class business consulting around all this, though, which remain important capabilities, particularly for larger enterprises embarking on the journey to the new world of work. [Editor’s Note: We’re extending the same opportunity for an interview to Jive Software as well.]

James: Microsoft’s SharePoint product family has become a billion-dollar business for Microsoft, but some Windows IT Pro readers find SharePoint difficult to use effectively. Do you both see these new “Facebook for the enterprise” vendors as a threat to Microsoft’s SharePoint business? And is SharePoint’s flexibility also a weakness, since some corporate IT departments may not know how to deploy and manage SharePoint effectively?

Feld: You just described the power of NewsGator. SharePoint + NewsGator Social Sites directly addresses the SharePoint adoption issue, creates a more compelling solution than the other "Facebook for the enterprise" companies that are not built on SharePoint, and does it in a seamless, easy to implement way that is tightly compatible with existing SharePoint infrastructure.

Holston: Brad has it exactly right. All the research indicates that the UI (under interface) and UX (user experience, broadly defined) for SharePoint –including for SharePoint 2010 out of the box – are perceived as weaknesses in the product.  SocialSites fills those gaps and keeps filling them by bringing the latest/greatest changes from the consumer market into the enterprise on top of the Microsoft stack. Recent feature/function additions from us include Quora-like Q&A capabilities; innovation management; badging and recognition (the beginnings of the gamification of the enterprise in our world); and YouTube-like video management, all on top of a horizontal social layer we add (activity streams, microblogging, communities, social graph, etc), all leveraging directly the pre-existing Microsoft stack (our stuff looks to enterprise architects like more Microsoft stuff, not web parts bolted on). One huge benefit of this approach is a TCO that’s a factor of 5 times or more less than any alternative in the market.  Best of breed from the end-users point of view, enterprise-class Microsoft stack underneath (and installed base), and lowest TCO by any measure.

James: I’ve been to several IT conferences – namely RSA and TechEd -- where some industry executives have urged large IT software providers like Microsoft, Oracle, Quest Software and SAP to develop software that takes design cues from consumer-focused web apps and services. One exec told me: “Millions of people are growing up with Google and Facebook, so why aren’t these IT vendors making software that leverages all of that shared experience?” Any comments on that?

Feld: The entire UI paradigm has shifted in the past few years. If you look at consumer facing software, people are completely comfortable with (a) the Web and (b) Mobile apps (iPhone and Android specifically). The UI characteristics of these apps are dominating much of the new app development you are seeing. If you dig down a level, you see that it's actually UI design libraries built on PHP, Java, or Ruby that have become pervasive. As a result, there is a very different UI / UX flow to many emergent apps, not just in the enterprise, but as HTML 5 starts to emerge and the richness that used to be associated with a dedicated client is completely available in the browser.

Holston: What’s particularly compelling about this trend is that it’s hardly slowing down.  When SharePoint 2010 was locked down by Microsoft about two years ago (it was launched in the market one year ago), no one knew from Twitter or iPads. Touch-enabled interfaces are at the design heart of Windows 8. Humans will interact with one another via technology in more gestural fashion sooner than we can imagine. Soon enough, the layer of technology enabling real-time work between any two or more folks will be immaterial.

James: Many mid- to large enterprises have a host of auditing, regulatory, financial, and compliance guidelines they must abide by when it comes to how they handle their corporate data. How much of an obstacle do you see these requirements to companies trying to launch social media platforms for the enterprise?

Feld: The challenge is substantial, but no different than what enterprises have been dealing with regarding email, IM, and other communication channels within and across enterprises.

James: Any other thoughts on social media in the enterprise or the consumerization of IT?

Feld: You ain't seen nothing yet!

Holston: A difference today is that the pace of consumer adoption of these technologies is far faster than was the case with any previous new communication/collaboration technologies.  Companies now all know they don’t have a choice here. They either enable these things for their internal and external constituents as a priority or they lose share (including market share in employee retention and recruiting) faster (McKinsey published some interesting research in May on the comparative advantage in market share and gross margin more-networked enterprises are already enjoying).  [Editor's note: see "The Rise of the Networked Enterprise"] With that adoption come all the traditional enterprise-class concerns you mention, [which is part] of our motivation for building out of platforms that have addressed those concerns.

Are you considering the adoption of products like NewsGator Social Sites or Jive Software that bring elements of social media to the enterprise? Let me know what you think by commenting on this blog post or following the discussion on Twitter.

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