Feb 24, 2012 (11:02 AM EST)
Yammer's Game Plan: CEO David Sacks Explains All
Read the Original Article at InformationWeek
Delivered as cloud software, Yammer claims 4 million users of its private social networks, which anyone can start for just the price of a company email address, with paid upgrades for those organizations who take the application seriously enough to want greater administrative control and features such as Active Directory synchronization. About 20 percent of those 4 million users are paid accounts, Sacks said, but the fact that you can get started for free allows Yammer networks to enjoy the same kind of explosive growth as consumer social networks. While other software products try to bring social interaction inside the enterprise, "to my knowledge, Yammer is the only one that has got this widespread voluntary adoption," according to Sacks.
Sacks met with me for a wide-ranging interview about the philosophy and strategy behind Yammer on Presidents Day, when the firm's office in downtown San Francisco was mostly deserted. Among the topics of discussion were my recent critique of Yammer's freemium business model and what it means for organizations that wish to shut down an unsanctioned Yammer network. Sacks was also still grumbling about the jibe from Jive CEO Tony Zingale saying the Yammer approach is to "hand out a bunch of drugs at the schoolyard, and we'll come back and charge you for them later."
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The freemium model is valuable to employees because it allows them to have more say in the software they use at work, but it's also valuable to enterprises because they can "de-risk adoption" by seeing that people want to use the software before they pay for it, Sacks said. "You can not only try Yammer before you buy it, you can experience it--you're using the real thing."
Not every enterprise sees it that way, however. When individuals sign up for a free account, Yammer assigns them to a compartmentalized social network associated with their company email address (you can't get a free account using a consumer Hotmail or Gmail address) along with any other users from the same email domain. This creates what looks like a private social network for people from that organization--which can be a problem for organizations that don't want their people collaborating about business on a cloud service. Critics accuse Yammer of extorting companies into becoming paying customers, just to gain administrative control.
I discovered a few weeks ago that the Yammer's initial response to an organization wanting to shut down a Yammer social network is to say the organization has no power to do so. In the absence of a contract with that organization, Yammer's position is that the data is owned by the users who registered with the service. It turns out there is another, more enterprise-friendly answer you can get if you push harder. "You can send us a DMCA takedown notice, just like you would to take down a YouTube video," Sacks said.
That's a reference to the Digital Millennium Copyright Act, which provides a basis for asserting copyright over communications employees posted to the service without authorization. Sacks insisted Yammer's concern is with honoring the promise it makes to individual users when they sign up for an account. Although they are told their accounts will be subject to the control of whoever owns their Internet domain, should that organization become a paying customer, they should not have their accounts deleted lightly, he said. On the other hand, an organization that has its lawyers draft the DMCA paperwork is taking serious, official action and providing Yammer with the legal justification it needs to close the unpaid accounts, he said. If you insist on closing a rogue social network, Yammer will "walk you through that process," Sacks said.
Yammer almost always gets its start in organizations as a grassroots initiative where "virality lets us start the conversation," but in success stories like the Supervalu grocery chain, that meets a top-down recognition of the value of the social software employees have already started using.
Meanwhile, Sacks is as dismissive of competitors like Jive and Salesforce.com's Chatter as they are of Yammer.
Like a lot of software vendors, Jive likes to associate itself with the idea of "the cloud" but spends a lot of time talking about "private cloud" and "hybrid cloud" scenarios that were "invented by people who didn't really believe in the cloud," Sacks said. The cloud is just another word for the Internet, and true cloud computing services live on the Internet, he argued.
Sacks said Jive's Project Thunder, an upcoming product enhancement for self-provisioning that Zingale discussed during a recent earnings call, sounds a lot like Jive trying to adopt its own version of the Yammer cloud and freemium model. (Zingale said it would make it easier to offer free trials, not necessarily accounts that are free indefinitely).
Currently, Jive provides application hosting, but it doesn't operate in the same Software-as-a-Service mode as Yammer, where all customers are automatically upgraded to the latest software release. Many of those "public cloud" Jive customers are running a 4.x version of the software, months after the release of Jive 5. On the other hand, many of those customers like having the option of choosing when to upgrade--an option they wouldn't get with Yammer. Yammer's enterprise customers have some checkbox administrator options of what features to enable, but they get upgraded to the new version at the same time as everyone else, Sacks said.
That deployment model allows Yammer to keep its costs and prices low, while also forcing the service to be disciplined about preparing customers for coming changes and testing them to ensure a smooth rollout, Sacks said. Upgrades are incremental rather than sudden, so users don't have to adjust to too many changes at once, he said.
Salesforce.com is serious about the cloud, but "their idea of a social business is an organization that buys all their products," Sacks said. While Salesforce may be trying to convince people not to use Yammer and sign up for Chatter instead, Sacks insists the opposite is not true. "We're fine with people using Chatter. To us, it's just a feed for activity in Salesforce," he said. "Creating a workflow app for sales is a valuable application, but it's just not company-wide."
As an enterprise social network for the whole organization, Chatter falls short because it is too full of robotic activity stream updates from the Salesforce application, Sacks said. "The velocity is high, and it tends to push human conversation off the page." Yammer has taken a different approach, displaying automated updates in an activity stream that is separate from the main feed of posts from other users, he said.
Yammer is also actively seeking to expand the application feeds it has access to and just announced new technical partnerships, including a connector for SAP systems created by the consultancy Freeborders, and integrations with PlanView, Kindling, Sparqlight, and GageIn. In addition, Yammer added an affiliate program for consultants and integrators.
Yammer's approach is as much about consumerization as it is about cloud computing, Sacks said. He believes consumerization, defined as "enabling end users to have more control over the products they use," is yet another paradigm shift in business computing, as significant as going from the mainframe to client-server, or from client-server to the web and the cloud.
IT organizations that fight consumerization and the cloud are fighting against their own interests, Sacks said. The mindset that IT needs to control the pace of upgrades is a relic of another era when "the onus was on you to make sure it didn't break," but now cloud services can take over the drudgery of systems maintenance, he said. Meanwhile, accepting the consumerization trend exemplified by a freemium service like Yammer means "you don't have to be a cheerleader for adoption anymore," he said-- you can let employees use applications they like, rather than compelling them to use ones they don't.
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