Social enterprise software: $4.5 billion market by 2016

Enterprise software giants are gearing up to chase the social application market. The catch is that these enterprise players are scrambling for what is a fast-growing but smallish revenue pie through 2016.
Written by Larry Dignan, Contributor on

Every enterprise software player---SAP, Oracle, Salesforce.com, Microsoft and others---has been talking up social applications and acquiring parts of a stack. IDC has put some numbers behind the growth rates these software giants are chasing.

According to IDC, enterprise social software will be a $4.5 billion market in 2016, up from $800 million in 2011. That growth represents a 42.4 percent compound annual growth rate.

Globally, IDC expects aggressive growth in the Americas for the social enterprise movement in the early years. Europe, Middle East and Africa as well as Asia Pacific will take a longer time to join the social enterprise parade.

Microsoft paid $1.2 billion for Yammer. $1.2 billion is 25 percent of what the total social enterprise software pie will be in 2016.

Microsoft paid $1.2 billion for Yammer. $1.2 billion is 25 percent of what the total social enterprise software pie will be in 2016.

Given that outlook, enterprise software players are scrambling to acquire social parts. Microsoft's $1.2 billion purchase of Yammer is just the latest in an acquisition spree by enterprise software companies. Salesforce.com recently acquired Buddy Media to go with Chatter and Radian6. Oracle is talking up social relationship management.

The IDC report currently ranks IBM, which has its Connections software, as the leader in the social enterprise software market. IBM has layered Connections into its analytics tools such as Cognos.

Going forward, the big question is whether social enterprise software is standalone or something that's integrated throughout various applications.

Here's Oracle CEO Larry Ellison doing his social enterprise rap as the company rolled out its public cloud:

The whole issue of social relationship management means using modern media, Facebook, Twitter, Google+ and so on to see what people are saying about our products. To establish a presence on Facebook. To establish a presence on Twitter to drive them to a store to inform them about our products all using social media. That is the whole new category called social relationship management.

Social relationship management is a little bit different than Customer Relationship Management. It is more comprehensive than customer relationship management. It allows us to work with people for their customers, to build those relationships so they will be better customers.

And then there's Salesforce CEO Marc Benioff and his social meets CRM meets marketing vision:

With the social revolution, the marketing industry is undergoing the biggest transformation it’s seen in 60 years. Facebook has become the new corporate home page and according to Gartner, CMOs will surpass CIOs in spending on technology within the next five years. We’re doubling down on the Salesforce marketing cloud.

The catch is that these big software players won't all be social successes. It's not like Salesforce, Oracle and Microsoft will split the $4.5 billion social software pie in 2016. For context, Microsoft's $1.2 billion valuation of Yammer accounts for 25 percent of all enterprise social software revenue in 2016. It remains to be seen whether Microsoft garners 25 percent of the social software market by then. Ditto for Oracle and others cobbling together social suites.

In other words, there's a social enterprise land grab going on right now to chase a relatively small-ish---but fast growing---market in 2016.


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