• 05/18/2012
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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.
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 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.

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re: How Facebook IPO Impacts Social Business Space

While the Facebook IPO will bring even more confidence to social media startup investment, as an event IGm not sure that it will do much to boost the value perception of social in business. Like it's cousin, Unified Communications a few years ago, is "collaboration" currently too nebulous or is it technology in search of a business problem?

Perhaps when organizations can connect their customer experience efforts on social with their existing order status, customer service and technical support platforms then theyGll see the potential of collaboration in and out of the enterprise. They know more and more that their customers are engaging with them on social platforms. I agree with Sameer that companies need more than just social engagement tools, they need integrated solutions. Collaborative solutions that bring the visibility and analytics of social with existing customer experience platforms into a single view represent a real quantifiable opportunity.

re: How Facebook IPO Impacts Social Business Space

Thank you for your comment, Mike. I agree that the potential is huge. It's also a huge cultural shift in the way most companies collaborate and communicate.

Deb Donston-Miller
Contributing Editor, The BrainYard

re: How Facebook IPO Impacts Social Business Space

I was also thinking about a "Facebook for Enterprise" product that would be privately hosted by a company. That could be a winner!

re: How Facebook IPO Impacts Social Business Space

Several vendors of internal social networking tools pitch themselves as "Facebook for the enterprise." It doesn't seem like they will have competition from Facebook itself--at least not in the near term.

Deb Donston-Miller
Contributing Editor, The BrainYard

re: How Facebook IPO Impacts Social Business Space

Hi Debra. I agree. lol those nights were spent alone iirc.

ftw. google ad words are also "fail"

Still working on it.

re: How Facebook IPO Impacts Social Business Space

Several things: 1. I agree, polish the technology. More slick, elegant, integrated, intuitive. This is needed to retain the customer base which ultimately is the goose that lays the golden eggs, no? It's also needed to attract partners.
2. Absolutely analytics. Can't get ad revenue if you can't prove "circulation" in a credible and consistent way. Either acquire or else hire the right expertise to roll your own.
3. I agree that Facebook in the enterprise is not a guaranteed hit, but what about all those corporations that go onto Facebook? Currently anyone can join period, so in effect Pepsi advertises for free by "being on Facebook". Is there a way to monetize corporate usage without it being a downer to Facebook's image as free to and for all?
4. Goes without saying, acquisitions, but hopefully there's a well-thought out strategy behind them. Facebook is far from where it needs to be to achieve the projected ad revenue that justified its initial valuation. At this point everything they do has to be about getting there and/or finding other unexpected revenue streams to make up the shortfall.