Social business software gets common
A few of days ago I blogged about a conversation I had with an industry analyst. A key quote I heard from him that conversation was this: "The feature set for social business software is now pretty well known." And again today I heard from another well-known social business software consultant that he thinks "There's not much IP (intellectual property) in social business software; it's not hard software to create."
If I were an analyst today (I was one at Forrester in the mid 1990's), I'd say it's time to write a complete report about what this means for enterprises.
What it means is that organizations should be cautious about buying into expensive proprietary solutions, since those products - and companies - are now highly vulnerable to being commoditized.
Let's look at the functions in social business software, and see if there are any surprises:
- Blogs. Yup - the leading ones all let users (> 1) blog.
- Discussions. Threaded discussions or discussion forums, or both, are pretty well understood & known.
- Documents. There's slight differences here depending on whether the software is for internal teams, or external communities. The former need more in the way of formal document management. BUT, the leading solutions don't try to do DM directly; they integrate with entrenched systems like Documentum, Alfresco, etc.
- Wikis. The leading products can now supply Wiki capability (wiki linking, wiki syntax, etc.) as a feature. (There are some products that are only wikis, but they are quickly being passed-by.)
- Friends. Many products provide a Facebook-like tracking of what your associates are saying and doing.
- Groups. Nearly all provide something like Groups, or Spaces, or other ways of grouping people or content. (Even Facebook - the king of 1-1 interactions - has finally figured out that people need focused areas where users of like interest can congregate & talk.)
The list can go on to include things like events, RSS, projects, etc. But none of these are really surprises. And in fact, that was the point of the analysts: None of these features are new, or surprising.
And that's the point: What this means for you is that there's little that's new and rocket-science about social business software itself. Which means the market is ripe for ushering in the effects of commoditization, which include:
- Rapid convergence of feature sets among similar products. Within a release cycle or two, you can bet that those products that are not already architecturally stuck in a single mode (e.g. wiki-only products) will have all these features.
- Differentiation becomes based on factors beyond end-user capabilities. Capabilities besides end-user features will start to dominate; thinks like how "open" the product is for integration into existing business systems, brand adaptability, systems management, and other similar things that affect deployment success.
- Downward purchase price pressure. What once used to cost $250-500,000 now needs to cost no more than $50,000 - or similar declines at relative pricepoints.
- Emergence of follow-on revenue tricks. When proprietary vendors hooked on license revenue see the potency their drug of choice weaken, they have to get their hands on it twice as often (e.g. charging for new releases) in order to maintain their revenue levels.
A viable open source alternative accelerates feature-parity. Take the case of Drupal Commons. To create this alternative to proprietary systems, we at Acquia spent a fraction of the engineering time that the proprietary vendors have invested. Why? Because we have a ton of re-usable Drupal code available to use. Yes, we had to stitch it together to make a social business solution, but we didn't have to worry about either inventing it, or put it through deep, long testing for cross-site scripting attacks, etc. Drupal brings that to the table already. There's just no way a proprietary vendor can keep up with community-powered innovation in a massive open source community like Drupal has.
My two cents, anyway.
Footnote: I once wrote an analyst report while at Forrester that is amusing to recall just now. (I'd link to it here, but unfortunately, Forrester doesn't have my reports from the mid-1990's online. They were all done before Forrester started posting their research on the web.)
There were literally dozens of IP networking equipment vendors at that point in time (1995). It was a hyper-growth time for them, and many of the vendors had gone public. In researching the state of the industry, it became clear to me very quickly: (Just as with social software now..,) "The feature set is well known, and everybody has it."
So I felt my report had to predict consolidation - and fast consolidation, since there was so little differentiation. I not only wanted to state that generally, I felt I knew which vendors had a future - and which ones were toast - and I wanted to name names. This was a risky bet. Many of the companies I was going to say wouldn't survive were paying customers, and if I named somebody as a "toast", my report was likely to cause them to not renew. I give credit to George Colony, the CEO of Forrester, for giving the go-ahead name names, even if it cost us revenue. Our analytical integrity was the paramount cultural force.
It was a controversial report, both inside Forrester, and outside. Forrester had been a leading firm in predicting and analyzing the explosive growth of this segment. The market was hot, and I was massively contrarian.
Both things happened as we predicted: I guessed pretty darn well about who would survive and who wouldn't. And we did lose the business of those vendors I said would fail. (I won't accept that my report caused any of them to fail; the ones that did had problems well beyond an analyst's prognostications.) I'm proud I got to call it as I saw it, regardless of the commercial impact on us as an analyst firm.
All that to say, this feels like a similar moment: "The feature set is well known..." It's time for commoditization of the social business software market.