I had a good conversation with Laurie Flynn of the New York Times about corporate adoption of social networks; a big chunk of our conversation made it into her article titled MySpace Mindset Finally Shows Up at the Office in the Technology section of the April 9th paper.

While adoption is picking up and Forrester predicts corporate social networking growing from $258 million this year to $2 billion in 2013, it’s going to be a difficult market for pure-play companies focused on delivering internal corporate social networks. There are two reasons. First, incumbents like IBM Lotus are building very strong products. Second, the adoption of these networks is threatened by public networks like LinkedIn and Facebook, which have become defacto corporate networks for most companies. Laurie and I touched on this in our conversation:

Today the battle lines in corporate social media are being drawn
between established technology companies like Oracle, Microsoft and
IBM, social media companies like Facebook and MySpace, and start-ups
focused from the beginning on business…“It’s an open question who’s going to win this battle,” Mr. Brydon said. “As a whole, the question the Fortune 500 is asking is where is the Facebook for the Fortune 500 that can do for us what Facebook and MySpace have done for consumers?”

Right now, Fortune 500 executives are asking for a corporate Facebook to drive a more focused and controlled company collaboration, but it’s impossible to mandate adoption and replicating the level of activity, engagement and interaction on internal networks will be a big challenge.

IBM itself is an interesting case study. They are eating their own dog food, using Lotus Connections extensively, and the profiles, blogs, bookmarks and
conversations that are built out are impressive, although they were coy about usage and adoption when I visited their booth at Web 2.0.

At the same time, Forbes cites vast numbers of IBM employees on Facebook and LinkedIn:

IBM’s spokespeople claim it has 24,000 Facebook users and 155,000
LinkedIn users, giving it one of the biggest corporate representations
on both sites. IBM also boasts that its 350,000-plus employees maintain
around 10,000 internal blogs and 15,000 wikis, discussing everything
from collaborative software development to idle water-cooler chat.

The functional overlap is significant and it’s clear that IBM employees are
dividing their time. In fact, many of these 155,000 employees on LinkedIn are so heavily connected to other IBM employees that their LinkedIn network may act as an superset, encompassing both their corporate contacts inside IBM and professional contacts outside the company. If an employee has a question, for example, he has a clear decision to make: post it on Lotus Connections for IBM-only, post it on LinkedIn where his IBM colleagues and external professional colleagues can assist, or both.

Digging into the Forrester numbers confirms that corporate deployments are substantial for the first year, but that the growth is more focused on external networks than internal networks. Only $60 million of the $258 million spent this year and $208 million of the $1.7 billion projected for 2013 is expected to be spent on internal corporate networks; the bulk and the balance will be spent on external social networks (“communities”) that connect the companies with partners, prospects, customers, etc.

Companies like Jive, Awareness and Mzinga have recognized this and are all building suites that include both internal collaboration networks and an external community networks:

  • Mzinga distinguishes Workplace & Customer Communities
  • Awareness calls them Internal and External communities
  • Jive delivers Clearspace collaboration and Clearspace community

That’s important because the major incumbents like Lotus have made a decision to build instead of buy when it comes to internal networks. I suspect that the opposite will be true for external community networks, where a different set incumbents will prefer to buy.

Bottom line: A large and open market for corporate social networking
start-ups focused on external communities, but a smaller and competitive market for internal networks where incumbents like IBM Lotus will be tough to beat.

Update: It will be interesting to see the internal/external mix of Austin Ventures’ $50 million enterprise social software suite

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