Microsoft to marry Yammer

The old guard are marrying off upstart competitors into their product portfolios. But is the battle for supremacy among Microsoft, IBM, SAP and Oracle still relevant -- and has it scarred long-term relationships with customers?
Written by Oliver Marks, Contributor on

We're deep into the wedding season in the software world, with lots of rumors and proposals flying around as mature suitors eye the vitality of relatively young brides. Deep pocketed, mature enterprise companies are increasingly moving to roll up innovative challengers and convert them into features of their suite offerings.

The whole reason for the Enterprise 2.0 movement, which became visible around six years ago, was sheer frustration at the lack of innovation and momentum around on-premise enterprise software. A grass roots revolt in the cubicles by people aware of the promise of Web 2.0, cloud and mobile innovations quickly fueled a nascent industry of agile, fast moving upstarts.

Next week sees the latest Enterprise 2.0 conference in Boston, with rumors swirling around the probable purchase of Yammer, the freemium model enterprise social network service by Microsoft for 1.2 billion US dollars.

Microsoft are the heavyweight champions of the fremium model having trojan horsed their Sharepoint product onto countless companies servers, who then upgraded to a pay model over the last ten years, and now use it for their Microsoft Office document content management. The Enterprise 2.0 movement was in large part a reaction to the shortcomings of that product, so it will be interesting to see what Microsoft do with Yammer, if and when they own it,  and Skype the voice over ip telephony company they have owned since May of last year. It will also be interesting to see where the loyal partner ecosphere around Sharepoint - particularly Newsgator, who have made current iterations of Sharepoint somewhat more of a viable internal social network - fit into future Microsoft plans.

The world is currently awash with free lightweight collaboration software, but the deeply ingrained old ways of working around printable documents remains the vast majority of office workers modus operandi, and Microsoft (probably by design) continue to profit mightily from individual seat licenses of Microsoft Office. This expensive and time consuming way of working is increasingly an anachronism in our byte sized, ultra connected world, which is rapidly moving to a mobile, always on model and away from the qwerty keyboarded, file tree PC era.

Enterprises internal battles are essentially a battle between bureaucracy and agility, and products like Yammer, Jive Software, Traction, Moxiesoft, Huddle, Social Text, SocialCast (recently purchased by VMWare), and many others have succeeded inside companies as point solutions for line of business to outflank the blocked IT veins that prevent innovation and connectivity. The old guard firms can buy as many of these new breed companies as their deep pockets can stand... the bigger question for end users are whether they will then emasculate them into check -the-box features of suites, triggering another round of Enterprise 2.0 style worker revolt.

The battle for supremacy amongst the old guard of Microsoft, IBM, SAP and Oracle ('MISO') is not unlike Elephant Seals battling for control of the beach and the rights to sire future generations, except that their beach is now of questionable relevance and there are deep seated concerns about past dominance and maintenance contract price gouging. One vendor hand to shake and one throat to choke may have worked in the past, but the one suite approach is of questionable value going forward, as actual end users like Burberry have demonstrated. Their clever vendor management includes a front office of cloud vendor Salesforce drilling down into elements of SAP's erp and supply chain for back office and is a poster child for the new generation of agile, cloud based global brands.

As the old guard peleton catches up with the more successful breakaways and marries them off into their product portfolios, the larger question remains of whether the deep pocketed old guard will go the way of the Digital Equipment Corporation (DEC) and Wangs of the world. Old guard enterprise software vendors would fall about laughing at this idea, but history has proven that end user preferences go through sea changes - just look at RIM/Blackberry - as their business needs change and they evaluate their mature vendor relationships.

Software entrepreneur and investor exits are ipo's or buyouts; enterprise and business customer needs endure and change, and familiarity can breed contempt. The larger question is whether the pace of innovation (and innovation purchase) by the old guard is enough for them to thrive in our rapidly changing business landscapes.

Editorial standards