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Microsoft may acquire Yammer social networking tools for SharePoint

James Furbush

Microsoft appears poised to scoop up Yammer for $1.2 billion in an attempt to modernize its SharePoint collaboration platform and other legacy tools.

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For SharePoint to remain relevant, tools like Yammer will be necessary.

John Doyle,
director of technology and communications, Alure Home Improvement

The acquisition report came to light on Friday and though neither company has confirmed the deal, many IT industry experts said the union makes perfect sense.

Yammer Inc.'s social media tools would be a huge benefit to Microsoft's SharePoint product in that it would provide better social networking and external collaboration, said Robert Helm, vice president of research at Directions on Microsoft, an independent research firm based in Kirkland, Wash.

"Those are areas that SharePoint has started down, but it would help if it moved a bit faster," he said.

SharePoint offers some social networking features, but most companies don't use them, industry watchers said.

Meanwhile, Yammer is often referred to as the "Facebook and Twitter for enterprise" because many of its collaborative features -- such as chat and a wall for posting and sharing information -- are similar to features offered by those social networks.

"For SharePoint to remain relevant, tools like Yammer will be necessary," said John Doyle, director of technology and communications at Alure Home Improvement, a contracting company based in Plainview, N.Y. that relies on Yammer.

Yammer has an advantage over SharePoint in social collaboration because of its "cloud reach" and "significant customers on board that are already joint customers with SharePoint," Helm said.

The company claims it has five million customers, more than 85% of them Fortune 500 companies as of Q1 2012.  However, only about 20% of its customers use the paid version; the rest use the free version.

Not all IT pros are convinced of the deal's upsides.

"I guess I'm not sure what buying Yammer does, except make better the features people aren't using in SharePoint," said Dan Antion, vice president of information services at American Nuclear Insurers, a nuclear power plant insurance company based in Hartford, Conn. Antion uses SharePoint extensively for document management, but not much else. "Social is real contact between people."

Alure Home Improvement has moved away from email and relies on the paid version of Yammer to coordinate employees shuffling between job sites in real time.

"My hope would be that [Microsoft] wouldn't make it a requirement to have a SharePoint platform to utilize Yammer," he said.

Yammer could modernize SharePoint, Dynamics CRM

Microsoft needs a social media tool such as Yammer to make SharePoint relevant among the slew cloud-based, enterprise social collaboration platforms such as Jive, Igloo, Alfresco, Citrix Systems Inc.'s Podio and VMware Inc.'s Socialcast.

It will also strengthen Office 365 against competition from Google Docs, provide Microsoft with a Google+ competitor and make Microsoft's products viable alternatives to Salesforce.com Inc., said Brad Shimmin, an analyst with Current Analysis, a research firm based in Washington, D.C.

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"The current climate is skewed towards socializing, so Yammer does give [Microsoft] some moxie to say, 'We're not just a legacy system -- we have a modernized solution on par with other companies,'" Shimmin said.

Salesforce purchased Buddy Media, Inc. in early June for $745 million to add social-marketing tools to its CRM platform and Yammer could offer the same benefit to Microsoft's Dynamics CRM product.

"Microsoft is trying to play catch-up to Salesforce, who changed the game beyond CRM with cloud app integration, Chatter and different features of that nature," said Patrick Harding, CTO of Ping Identity, an identity service provider based in Denver, Colo.

Even though social networking tools aren't all that common in enterprises now, "enterprise social will be considered passé in two years" he said, because the majority of business applications will have social features baked into them.

In April of this year, Yammer integrated its services with Microsoft Dynamics as a plug-in, offering universal search capabilities across enterprise applications and devices.

Given that Yammer also integrates in the same manner with SharePoint, Helm said, the more interesting aspect of this deal is not how Microsoft intends to use Yammer, but rather, into which part of the company Yammer will be integrated.

Currently, there are three different groups developing social networking capabilities at Microsoft. If the acquisition deal goes through, where Yammer ends up on the organizational chart could go a long way to determining the success of the acquisition, Helm said.

"Yammer is a young company that has grown up as a cloud service," he said. "Trying to fit inside a fundamentally on premises software company is going to be a challenge for the Yammer software engineers." 

Both Microsoft and Yammer declined to comment.

Let us know what you think about the story; email James Furbush or follow @JamesFurbush  on Twitter; like SearchConsumerization.com on Facebook.


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