How Facebook IPO Impacts Social Business Space

Facebook's $16 billion IPO will have direct and indirect effects on companies evaluating and deploying social business solutions.

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6 Social Sites Sitting On The Cutting Edge

6 Social Sites Sitting On The Cutting Edge


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The Facebook IPO will be the largest tech IPO in history, and reverberations will be felt throughout the social business space.

Today, more and more organizations are using or evaluating business social networking solutions to improve collaboration and communications, increase brand awareness, more actively engage with internal and external customers, and streamline customer service and help desk operations. While none of the experts we interviewed thinks that Facebook has any interest in getting into the internal social networking business, the company's landmark IPO--priced at $38 a share and expected to raise $16 billion--will increase awareness of, and interest in, business social networking. As Dachis Group Chief Strategy Officer Peter Kim put it, "A rising tide lifts all boats."

Indeed, said HootSuite CEO Ryan Holmes, the IPO should put an end to any discussion around social networking being just a fad. "I think [the IPO is] a huge stamp of approval," said Holmes. "It validates the space in a big way. I think social business is going to be really heavily embraced now. The conversation around, 'Is Twitter, is Facebook here to stay?' is now over. We now know this is an amazing business model and not just a fad."

Eugene Lee, CEO of Socialtext, agrees. "I don't believe Facebook’s IPO will steer people one way or another about which tool to use. However, I do believe that their IPO will continue to raise awareness of social tools in general and get more mainstream people to consider them for practical business use."

[ Now that Facebook's IPO is underway, there's plenty of work to be done. Read more at 6 Facebook Problems Need Fixing. ]

As businesses are growing not just more accepting but more savvy about the use of social networking, they are thinking about the tools as more than "Facebook for the enterprise."

"We're entering the next phase of internal and external social business collaboration now, where customers will demand much more than emulating features of public social networks," said Sameer Patel, global VP and general manager, Enterprise Social Software, SAP. "The world of work is both transactional and highly collaborative. Those social business platforms that can deliver both deep integration of social data from Facebook and business network collaboration to core customer, employee, and partner transactional processes will truly deliver operational and financial performance."

While the market for internal social networking is growing, the experts we interviewed (most of whom have a horse in the race) don't expect Facebook to make a play for it.

"Enterprise social and collaborative capabilities need to be made available where users need access to their people network to get work done and in the context of business process," said SAP's Patel. "That could be on an internal social network. But it must be infused in process to improve functions such as forecasting, risk and compliance, supplier relationship management, sales life cycles, and the like. This requires a broader design paradigm than what is offered by a standalone, one-size-fits-all consumer social network."

Socialtext's Lee thinks an incremental enterprise version of Facebook would fly in the face of the social networking giant's fundamental model. "Facebook's fundamental business model is to monetize an amazing subscriber base--amazing size, impressive engagement--by selling advertising and other marketing tools to brands who want to reach customers via precise demographic and psychographic information," he said. "I don't see this model working effectively for an internal 'Facebook for the enterprise.'

With all that said, experts believe we can expect Facebook to use at least some of its newfound wealth to make investments that will bolster the effectiveness of companies using the platform to engage externally with customers.

For one thing, experts expect to see Facebook make several key acquisitions to extend its platform, especially in the areas of mobile and gamification.

The Dachis Group's Kim thinks it would be a good idea for Facebook to also make an investment in more robust built-in analytics. "It would be a wise move for them to reinvest that money into their infrastructure," he said. "It would make sense for them to make talent hires and also technology acquisitions in order to make their built-in analytics more robust."

No matter what the specific fallout from today's IPO, there is no doubt that the Facebook IPO is an auspicious event for social.

"What Facebook has created goes well beyond a product used by nearly a billion people," said Salesforce.com CMO Kraig Swensrud. "Facebook has changed our society. And this is only the beginning of the social revolution that will transform how companies conduct business and engage with customers."

Follow Deb Donston-Miller at @debdonston.

The Enterprise 2.0 Conference brings together industry thought leaders to explore the latest innovations in enterprise social software, analytics, and big data tools and technologies. Learn how your business can harness these tools to improve internal business processes and create operational efficiencies. It happens in Boston, June 18-21. Register today!

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