Jive Software gets serious about social

The first time Jive Software changed course, it was back in 2009. The company originally sold software for online discussion forums but after receiving $12 million in venture funding from Sequoia Capital, it expanded its focus to include social collaboration within businesses.

Jive was a pioneer of the space, and one of the first companies to talk about applying the principles of social media to business collaboration. It grew quickly and in November 2011 raised $160 million in the only IPO to date by a dedicated social collaboration vendor.

There was a time when Jive’s only serious rival was IBM, whose Connections product has the market share lead, according to IDC. Now, though, social collaboration is a crowded market. In 2010, Salesforce.com launched Chatter; in 2012, Microsoft acquired corporate micro-blogging service Yammer. Meanwhile, a thousand startups have joined the market.

All of this prompted the company to shift focus once again, says Jive CEO Tony Zingale, “A number of pretenders came to the market with social collaboration software, so last year we started to pivot,” he explains.

The idea behind Jive’s ‘pivot’ was to focus on what is arguably enterprise social collaboration’s Achilles heel – its perception as a frivolous indulgence with no practical benefit.

“Social for social’s sake is dead,” says Zingale. “Facebook for the enterprise? Nobody cares. What they care about is a more productive workforce.

“So we decided to change the terms of engagement, and focus on the value of using the software by producing evidence for the use case,” he says.

In stepped management consultancy firm McKinsey & Co., which in July 2012 had published an in-depth study of the business application of social technology.

The study had claimed that social collaboration could add up to $1.3 trillion to the global economy by improving the exchange of information.

Jive Software commissioned McKinsey to investigate its customer case studies, “which by the way was not cheap,” says Zingale. “But we felt it was critical.”

The firm found that customers that deploy Jive’s software “at scale” experience an 15% improvement in employee productivity, on average.

Jive is also challenging is customers to get serious about social software. “We force our clients to deploy our product around a specific use case at first – we have 34 different use cases ranging from customer support to engineering – and measure the value,” Zingale explains.

“We don’t say ‘Give it to everyone and life gets better' because it’s not true. Customers have to measure their productivity gains and learn the value.”

Getting costs under control

Jive’s software is available on premise as well as in the cloud, but for all intents and purposes it is a typical software-as-aservice (SaaS) company – as fast-growing as it is loss-making. In the 2012 financial year, the company reported revenues of $114 million – up 47% from 2011 – and a net loss of $47 million.

“As a SaaS company, it’s all about growing the top line,” says Zingale.

“What you sacrifice for that growth is investing enough in the business to take advantage of a large market opportunity.”

Significantly, though, the net loss was down from $51 million the previous year, making Jive a rare SaaS supplier to have demonstrably got costs under control.

One way it did this was to change its hosting arrangements, Zingale says. The company had previously relied on a managed hosting service from SunGard for both its US and European operations, and that involved paying a premium. Jive has now moved into co-located facilities in the US and the Netherlands and manages the IT infrastructure itself.

Another way in which it cut costs was to establish a strict, quarterly software update cycle. “When you have a new release every quarter, you know when the train is leaving the station,” explains Zingale. “You become more efficient, with a more stable architecture, and you are able to add features much more rapidly.”

A recent focus of that development has been to integrate Jive’s social platform and the current standard tools for workplace collaboration – Microsoft Outlook and Office.

“We’ve realised over the years that the older population is not going to leave their Outlook inbox,” Zingale says. “So we’re providing a bridge from Outlook and Office into the Jive platform, which provides some social context to the emails and documents the user is looking at.

“If you send me an email, it shows me who you are, how many other emails I’ve had from you, what content you have authored in the Jive community, for example.

“Obviously, our not-so-hidden agenda is to get users out of Outlook and into the social platform, but this provides a bridge from A to B.”

As this reveals, while Jive may have some new competitors in the social collaboration market, its main competitor – in terms of user adoption – is still arguably email.

“I think in the next three years, email usage is going to be cut in half,” Zingale says. “We’ve already measured that customers that use Jive at scale see a 21% decrease in the usage of email.”

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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