Jive Software announced a realignment plan Tuesday that will result in layoffs of 14 percent of its employees by the second quarter.
The 15-year-old Palo Alto, Calif.-based collaboration software company is cutting back and refocusing its efforts on the enterprise. The cutbacks will affect 100 employees and save the company an estimated $10 million a year.
“The decision to rebalance investments and reduce the number of employees has been difficult,” CEO Elisa Steele said in a statement. “Our top priorities this year are to improve execution and reach sustainable profitability.”
Jason Khoury, Jive’s head of communications, told CMSWire the plan will “enable Jive to reach profitability this year,” adding: “Jive is activating a realignment plan designed to sharpen Jive’s go-to-market strategy, continue the company’s commitment to cloud deployments and decrease costs to align more closely with revenue.”
During the earnings call where the layoffs were announced, the company also reported a year-over-year net loss of $7.4 million in the first quarter, compared to a net loss of $8.2 million in the first quarter a year ago. CEO Elisa Steele attributes the restructuring as a response to the “constantly changing” enterprise collaboration market.
But Esteban Kolsky, researcher and author of the blog ThinkJar, says Jive has been “on a downfall for a while.”
“There is a combination of reasons why things are where they are, but the employees are not it,” Kolsky told CMSWire.
“The product, as it was re-architected two to three years ago, is very good. Jive lacks vision and leadership that will make it perform as it should. There are also market forces at play, which made Jive miss their window of opportunity, but the product cannot be blamed for what ails them, nor the employees that built it or tried to promote and sell it as told.”
Turning to the Enterprise
Jive claims 30 million global users of its workplace collaboration solutions. In March, the company announced updates to its Interactive Intranet and customer engagement solutions at its customer and partner conference.
As part of its realignment strategy, Jive wants to "rally around the interactive intranet solution" and target enterprise customers like Virgin Media and Clickstop to push its employee engagement solution. Will shifting gears work?
Some think the news speaks to a growing challenge in the social and collaboration software market. Alan Lepofsky, VP and principal analyst at Constellation Research, said this market faces several challenges.
“First, large vendors such as Microsoft, Google, Salesforce, IBM and SAP are now providing very compelling social platforms. Second, startups such as Slack, Quip, Hipchat, CoTap and Glip are getting attention not because they are more feature-rich, but because they are new. Third, enterprise communication vendors such as Cisco and Unify are now creating social software. Fourth, Facebook is causing quite a stir with its upcoming Facebook for Work offerings.
"Customers want to buy platforms with the strong ecosystems, not just features. Those ecosystems are made up of partners and customers. These competitive pressures combine to create a much more challenging market for Jive to compete in versus what the landscape looked like just a few years ago,” Lepofsky said.