Yammer, the enterprise social network in the cloud that claims more than 5 million corporate users, is about to become part of the Microsoft Office Division.
Microsoft confirmed the $1.2 billion purchase of Yammer Monday, more than a week after credible rumors surfaced of the acquisition surfaced in the business press.
This puts Yammer at the center of Microsoft's enterprise social software strategy, although it will coexist with the SharePoint portal and Microsoft's Lync unified communications platform, both of which offer some social features. Microsoft particularly expects Yammer to join the cloud-based versions of those products in its Office365 online office suite.
Exactly how Yammer will fit in remains to be seen. In the press conference announcing the acquisition, Microsoft Office Division President Kurt DelBene said it was too early to give specifics about how Microsoft will deepen Yammer's integration with SharePoint, or what that will mean for the future of the social features Microsoft has embedded in SharePoint. SharePoint gets limited respect as a social platform, but it does offer base features like profiles and activity streams that consultants and third-party vendors (notably NewsGator) have built on.
Microsoft CEO Steve Ballmer said the embrace of Yammer certainly doesn't mean Microsoft will focus any less on SharePoint. "SharePoint is a tremendous success and has a bright future, and Yammer is a tremendous success and has a bright future," he said.
Ballmer also expressed great admiration for Yammer's viral adoption model as a sales tool. At the same time, Microsoft will have to address the controversial aspects of Yammer's freemium strategy, which allows employees to join for free but requires companies to pay for administrative control over these social networks.
Yammer is one of the leading feed-centric enterprise social networks, initially tagged a "Twitter for the enterprise" because it started with a simple news feed (albeit, not limited to 140 characters). Over time, Yammer has broadened its platform to include richer post types, feeds from applications as well as other users, and collaborative editing of web documents.
Yammer is offered exclusively as a cloud service, in contrast with competitors like Jive Software that try to balance the requirements of on premises software and cloud computing. VMWare's Socialcast has struck a different compromise, leading with the cloud but offering a virtual appliance for on premises deployment of the same software.
Yammer's David Sacks has always maintained that sticking to a pure cloud computing model is a prerequisite for success, allowing his developers to better keep pace with the advance of social technologies in the consumer world. With this acquisition, Microsoft seems to be ratifying that approach.
But will Microsoft be able to resist the siren song of those who want an on premises option? How many of the social software requirements of Microsoft's base will Yammer really address, if it remains available exclusively as a cloud service?
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One of Yammer's attractions for Microsoft is that it already offers some integration with SharePoint, with Web Part components that can be embedded in SharePoint pages, groups, and MySites. This is not a terribly deep level of integration, but it's a start.
How much deeper will Yammer get into SharePoint integration and how soon?
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One of the consequences of Yammer's freemium model is that any employee can create a cloud-hosted enterprise social network by providing a corporate email address. Other employees from the same Internet domain who join Yammer are then added to the same enterprise social network – and can begin collaborating about work issues, often without the knowledge of management or corporate IT.
Yammer's policy is to treat users who sign up individually as a collection of individuals, only granting administrative rights to the organization if it signs up as a paying customer.
Organizations can respond to this one of three ways:
-- Embracing the initiative of employees and making the unofficial social network an official platform for collaboration, as at companies like SuperValu.
-- Ignore or tolerate it as harmless. The UBM TechWeb example shown here was set up by employees experimenting with the platform, but it gets little use because we use Jive internally.
-- Go ballistic. Although Yammer customer service isn't quick to volunteer this information, it's possible to get one of these networks shut down with a stern letter from a lawyer citing a violation of the Digital Millennium Copyright Act because employees posted confidential information without permission.
Will Microsoft institute a more IT-friendly policy? Can it do so without choking off the viral growth that made Yammer attractive in the first place?
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Will the acquisition of Yammer follow that of Skype, which has been allowed a degree of autonomy after its acquisition? Will it keep a separate identity and continue to pursue the mission that attracted its current customer base?
During the press conference, Ballmer said, "Sure." However, although it will be allowed to keep its operations in San Francisco, Yammer will report up through the Microsoft Office Division. In contrast, whereas Microsoft established a separate division headed by Skype CEO Tony Bates (shown above with Ballmer).
SharePoint already functions as a basic social platform, and the next release that's just about to enter beta testing is supposed to build on that base.
To what extent does Microsoft's embrace of Yammer mean they've decided it makes more sense to pursue social software functions as part of a cloud service, separate from SharePoint? Or, will Microsoft continue to invest in SharePoint as a separate path of social software development?
Since NewsGator introduced its Social Sites product as an enterprise social network implemented as a SharePoint application, it's challenge has been to continue to innovate faster than the SharePoint engineers. So far, it has been successful, taking advantage of the additional profile and activity feed features introduced in SharePoint 2010 while still enhancing them. But now what?
Microsoft officials have hinted that the additional features in the Wave 15 update, which may be called SharePoint 2013, will be limited to platform-level plumbing for social networking functionality. That would leave room for partners like NewsGator to round out SharePoint for customers that want a more complete enterprise social network on the SharePoint platform. It also leaves room for other customers to adopt Yammer as a cloud-based social supplement to SharePoint.
But to what extent will Yammer now get the inside track on the best ways to integrate with SharePoint? Even if Yammer is favored, will NewsGator retain its own advantage from tighter integration with the SharePoint platform? And which of those – tight integration, or web-centric integration in the cloud – will prove most attractive to enterprises?
Yammer was already working on tighter integration with Microsoft's collaboration tools. In April, it made its first acquisition, buying OneDrum, a folder-based file synchronization tool with collaborative editing capabilities. The inset image above shows social tracking of which collaborators changed different cells in a spreadsheet.
Yammer still plans to release an update this summer that will use OneDrum's technology to synchronize desktop folders with file repositories associated with Yammer groups. How will this mesh with technologies from Microsoft, which has file synchronization technologies of its own?
In a blog post on critical decisions related to the Yammer acquisition, Forrester Research analyst Rob Koplowitz asked, "Does Yammer become the next Groove, a bold vision of collaboration that goes to Redmond to die?"
When Microsoft acquired Groove Networks in 2005, Groove had created an impressive desktop collaboration tool with peer-to-peer file sync and an offline mode that made it attractive to the military and humanitarian organizations operating in areas with unreliable network connections. Founded by Ray Ozzie, previously famous as the creator of Lotus Notes, Groove was supposed to be a collaboration tool that would help Microsoft reinvent the workplace.
Today, the technology lives on as SharePoint WorkPlace but doesn't really have a life of its own. Koplowitz wondered "whether this will be one of so many botched acquisitions we've seen in our industry, or one of the few really good ones."
To be one of the good ones, Koplowitz believes Microsoft must allow Yammer to remain largely autonomous, maintain the cloud-only model that keeps it nimble, and fulfill the version of a service that can integrate with many enterprise systems, not just SharePoint and its kin.
Shortly after Ray Ozzie joined Microsoft, becoming its chief architect, he wrote a company-wide memo warning that Microsoft had to shed its complacency and recognize the danger posed by competitors like Google and thousands of startups more attuned to the the effective use of Internet technologies. "It's clear that if we fail to do so, our business as we know it is at risk," he wrote. "We must respond quickly and decisively."
Ozzie left Microsoft in 2010, having steered it toward a greater recognition of the importance of cloud computing, but the fact that Microsoft had to acquire Yammer rather than creating the technology on its own raises the question of whether the message sunk in. Or maybe it did, and this acquisition is one of the quick and decisive actions Microsoft is taking to catch up.