Tools to help companies communicate internally have always existed. From faxes to email to chat clients, organizations constantly seek new ways to improve collaboration and information sharing.
That’s why it’s not a huge surprise that Yammer has grown so quickly. Yammer combines social networking style interaction with more traditional enterprise needs like team workspaces and content collaboration to reduce communication friction. The technology has grown even more important as more companies use distributed and remote workers.
Yammer’s approach has been extremely successful. In the four years since its inception, Yammer has been implemented by over 85% of the Fortune 500. In 2011 alone, the company tripled sales, employees and licensing. This momentum allowed the company to raise US$ 85 million in its fifth round of funding, which was led by venture capital firm Draper Fisher Jurvetson, for a total of US$ 142 million in financing.
Yammer will use the cash infusion to scale its sales and engineering staff globally and launch new marketing efforts. The funding will also allow the company to consider making strategic acquisitions to expand its platform offerings, which will likely be critical for the company to maintain its market leadership.
What This Means
As in the consumer market, social networking has become thoroughly entrenched the enterprise. Organizations use the technology to market their brand, provide customer support and collaborate internally and externally. However, the technology is far from stagnate. We will likely see many new market entrants over the next few years as enterprise social evolves to integrate with tools like analytics and workflow. Eventually it will become pervasive in almost every business operation.
This may sound like hype, but consider how integral items like databases, word processing and even email are to how we work. Investors obviously have confidence that the trend and Yammer have lots of potential.