challenges of being a social vendor, social business, social software

Between 200 collaboration and social technology user surveys and an indepth look at 16 collaboration vendors, we found use of these technologies has changed, and continues to evolve. And while there is no doubt that collaboration is important to any business no matter what size, not everyone means the same thing by “collaboration.”

Although CSI tracks about 2000 collaborative solutions, and we are briefed by about 300-500 vendors each year, our recent report on the state of collaboration focused on social/collaboration vendors more in the low-to mid range in functionality and price. Like the current market for wine, it is the US$ 15 to US$ 25 bottles that are selling well. While there is still a market for the US$ 100+ cult wines, it is much smaller, and is not growing as quickly.

In addition, many of the larger collaboration tools and infrastructure were initially developed pre-web and have been migrated not only onto the web but now on various mobile devices. We chose to look at most collaboration and social tools that are web native (although a few TeamWox, and TeamBox) also offer an on-premises solution).

Below is a summary of what we found from these 16 collaboration vendors:

  • Four offered a free version (Apptivo, Teambox, PBWorks and Podio (Citrix)), which 72% of the users said was a big help in deciding what to buy (not a trial of 30 or 60 days).
  • Most of the tools averaged in cost between US$ 15-30 user/mo, although there was quite a variety of pricing schemes we tried to standardize on a cost/user/month.
  • Many of the tools were also project oriented (AtTask, PBWorks, SocialBridge (Central Desktop), Liquid Planner, Clarizen and Wrike) and pricing was similar at US$ 20-$25/user/mo. except for Wrike which was US$ 5 user/mo. This is no surprise as over 87% of users of social and collaboration tools claimed to be doing multiple projects.
  • There were several companies (like Wrike) that were doing “disruptive pricing” including: Podio (US$ 9 u/m, Teambox US$ 5 u/m, MangoSpring US$ 6 u/mo and Apptivo at US$ 10 u/m. HyperOffice has more complex pricing, but for core collaboration functions it is $7 u/m. It is interesting to note that in our user survey 57% felt that collaboration/social tools should cost >$10/mo.
  • Besides the project oriented tools, many of these tools would be categorized as collaborative or social “suite” tools, i.e. many functions integrated, rather than a tool that focuses on one function and tries to be “best of breed.”
  • Over the past few years, and talking to many vendors we have found that the average conversion rate (free to paid) is about 3-4% for social/collaboration tools, but for the vendors we interviewed, the tools that were offered for free, had a conversion rate 2-3X higher than the industry average.
  • Most of these vendors were small with 10-300 employees, averaging about 100/company.
  • Retention rates (keeping a customer year over year) were as low as 3% and has high as 100+%

Specific Niches

These are two of the trends we saw both in the vendor and user surveys. Many of these vendors were focused on a specific market niche (MavenLink and FunctionPoint allow the integration of Quickbooks financials, PBWorks and SocialBridge focus on the creative/marketing industry) while some remain general tools and focus on the mid-market or enterprise market (Clarizen, AtTask, Jostle, and Huddle).

Jostle, which is a relatively new player, focuses on people rather than content (which most other collaboration tools focus on) and would probably appeal to HR or OD (organizational development) people in larger organizations. Many of these tools defined their market as “taking away seats from SharePoint.” Almost all of the 16 vendors we interviewed were doing well and all showed positive growth rates between 30%-100%.

Ease-of-use vs. Functionality

While every vendor strives for ease-of-use, very few achieve it. “It is a lot harder to make something simple than it is to add another function.” In our user survey we found 65% felt ease-of-use was more important than the 24% who wanted more features. Tools like Kibits that were built on mobile native first, strive for ease-of-use (which I define as 1-2 clicks to do anything) and look at the customer experience on a mobile platform, rather than just porting a Web application over to mobile platforms. Tools like MangoSpring, Apptivo, Podio and TeamWox all had the challenge of having so much functionality, that to the initiate, it was somewhat overwhelming.

Attraction, Attention and Revenue

All of the vendors complained about the “noise in the market” and “getting their message out.” With so many solutions -- 2000+ is our estimate -- it is often that the one that shouts the loudest that gets the attention, rather than the one with the best technology.

Although a few of the smaller vendors had revenues of > US$ 1M, many of those surveyed had yearly revenues of US$ 10-20M. In looking at the “sweet spot” where their tool would be used, it was a wide range from 6-1000 users, but the average was around 200 users.


The market for collaboration/social tools is alive and well. Estimated at over US$ 40B worldwide by CSI (software and services) each of the 2000+ vendors seems to feel they have the “secret sauce” to be a winner in this marketplace. For many of the vendors surveyed, they were doing well and growing their markets either through taking market share from SharePoint and Notes, or focusing on specific processes in specific niche markets.

While about 1/3 of those surveyed were not happy with their collaboration/social tools, which leaves a big opportunity in this market place, almost ½ were moderately happy with their tools. The way we translate this is that for the next year to 18 months many of the larger companies that were not happy with the pre-web infrastructure-like solutions are now willing to entertain buying SaaS tools from some of these smaller and more nimble collaboration vendors.

The role of IT is changing (in many ways) and more dollars are available now for marketing technologies. While some of these technologies, like social media, do not require collaboration, others like social networking, on-line communities, distributed teams, etc. do require these functions to not only get closer to the client, but to provide better services to their whole ecosystem (partners, customers, regulators, service providers, etc.).

It is also clear that collaboration is moving to mobile. While mobile devices continue to outsell desktop and laptop computers worldwide, many new users are just mobile consumers. Making native mobile apps that are easy to use, link with other data streams or social networks, can link to critical data, and can take advantage of the economies of scale seems the way to go.

Image courtesy of alphaspirit (Shutterstock)

Editor's Note: Looking for more from David Coleman? Check out Innovation, Collaboration and Engagement.