Microsoft bought out the enterprise social network company Yammer, for a reported US$ 1.2 billion last June, announcing plans to add Yammer to its SharePoint 2013 and Office 365 application. It has also been selling Yammer packages at such a low price point that only massive sales will recoup its investment.

Microsoft clearly thinks that they are on a big business software winner by acquiring Yammer.

Certainly David Sacks, CEO of Yammer, believes his company is a pivotal player in business communications. At his recent product conference, he said, “social features are going to pervade every application.”

While I certainly agree with Sacks's optimism for the industry, it's interesting to examine what Microsoft hopes to achieve by forging this union, the repercussions of baking Yammer into its products and whether this merger of software can deliver the results that Microsoft needs for a return on its investment.

A New Identity

Microsoft has been struggling to keep up with the changing zeitgeist of IT. With a few exceptions, its applications have never really hit their mark and become dominant. Companies are often slow to adopt their new operating systems because it is so difficult to upgrade. It urgently needs a new identity.

By fully embracing pioneering and trendy Yammer, Microsoft will gain the desperately needed new legs which could lead it into new territory. It would be seen as the market leader who can still innovate and deliver winners.

Yammer is attempting to be the key driver for this recent paradigm shift towards business social networking. Microsoft believes that this socializing of business tools will have immediate and widespread appeal for business. It believes business is now ready for this great change, and that Yammer will be the vehicle for this transformation.

How Practical is the Vision?

Microsoft seems to have adopted an "all-in” approach. However, it is Yammer who appears to be in charge of the vision.

Through the Enterprise Graph in the upcoming version of Yammer, Sacks sees every file or piece of data available to everyone in the company, across every business application and so “connect every employee and every business object.” He also sees enterprise social networks eventually evolving into actual platforms.


I'm wondering how practical this is? The problem I see is that Microsoft could risk alienating businesses because it may not have thought through the broader implications of its strategy.

For example, does the creation and dissemination of all information need to be social? Can businesses even afford every application to be social? Does this total integration improve productivity? How well will it work for enterprise businesses?

The Implications for Larger Companies

Many companies, especially the larger ones, spend years developing culture and management style. This includes the way management and employees interact.

Socialization of working tools with private social networks can have a profound effect on the culture in an organization. It can change the way employees communicate with each other, change their attitudes, and empower them to try to change systems and procedures.

Microsoft seems unaware or unconcerned that many companies may not realize these implications, and if they are, may not be ready for them.

Integrating Yammer into its MS office products and SharePoint software and allowing it to be implemented in any situation (often through viral adoption) requires the software to be designed for the lowest common denominator.

The result is a "cookie-cutter," "one-size-fits-all" approach to its implementation. This limited flexibility may not be suitable for enterprise businesses, particularly larger companies with diverse and complex teams.

They have different stakeholders in different departments who will have existing systems they will want to retain. Integration with these systems will take time and compatibility issues may arise. The software will have to be modified to suit their specific needs.

Also, as employees start to use this software and understand its potential, they will ask for improvements and more modification will be necessary. Integration will be an ongoing process.

I have certainly found that enterprise businesses want to and need to retain significant control of the introduction, administration and moderation of the communications within the company. They also need communication systems that have flexibility.

Minor shortcomings in these systems which don't address specific business needs are often the difference between a successful or inefficient business network.

Microsoft seems to have ignored these critical requirements. Without addressing these issues, it has shunned the profitable top-end of the market in favor for a lower cost, mass appeal product. This may disappoint or even alienate larger businesses.

This is where the union with Yammer may show some cracks and where Microsoft’s offering could become significantly compromised. It may have bet early by purchasing Yammer, offering the product at such a low price-point and expecting immediate and massive sales.

What Next?

I have no doubt that private social business networks will eventually change the way people communicate in the business world. However, that will take time.

Microsoft’s strategy may now have unwittingly opened the door to new entrants who understand enterprise business requirements and can deliver flexible and customized solutions which better fit the market requirements. Only time will tell.

There is no doubt, however, that the ground around both Microsoft and enterprise social networking is now shifting fast and will continue to do so.

Image courtesy of burakowski (Shutterstock)

Editor's Note: To read a different perspective on the Yammer acquisition, check out Kevin Conroy's Microsoft and Yammer: A Fresh Take