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Blogs > Office Jotter

Yammer has plenty of ticker - Part 2
Roger Whitehead By: Roger Whitehead, Director, Office Futures
Published: 18th December 2011
Copyright Office Futures © 2011

Here is the second and final part of this profile of Yammer. In it, I try the software and give my assessment of the service and its future.

In use

The following might not represent the general user experience and is no substitute for first-hand testing.

It's hard for a one-man band to emulate an organization. Using the free version of Yammer, I've done the best I can by setting up two personae on my business domain.

I'm running the Microsoft Windows desktop client and the BlackBerry client under the same user name. The Web browser client can show either name, each in a different tab or window.

Yammer uses the Web client as its default and offers the most features on it. You can see how the Web and Windows versions compare in the screen grab below.

Screenshot

Browser and MS Windows clients for my Yammer account

Anybody with an independent domain name in his or her email address can sign up. (By "independent", I mean not from one of the public services like Yahoo! or MSN.)

That takes seconds. The system shows if anybody else on the domain is subscribed. Inviting that person or those people into a group takes a couple of mouse clicks. Users can create groups and, on the paid-for versions, external networks that include customers, trading partners and so on.

Inviting people on the same domain to join Yammer itself is similarly simple. You enter the relevant mail prefix(es) to a form and click a button. Alternatively, you can import your address book, either from the Web or from a CSV file.

Yammer is good at its basic function of allowing people to converse. Messages and replies appear quickly in all clients. Creating them is simple and there is a drop-down menu for sending to colleagues ('followers') or specific groups.

To send a private message, you start typing the name of the person or group you wish to share it with. The same applies to file sharing.

I would like the option of true message threading, with indents and guiding lines. (Mozilla Thunderbird shows one approach to this.) The chronological presentation Yammer uses can become hard to follow once you start getting replies to replies.

In the example below, from the Web client, Reply 1a should be directly underneath Reply 1 and Reply 1b directly below 1a.

Threading screengrab

Yammer's message display

There is  similar presentation in the Windows desktop client but with the newest message at the top, not the bottom. Neither client appears to offer a choice of date sequence.

The Windows desktop client is basic and keeps diving off to the Web for resources. It opens a browser window for help files, for example, or attached files or when editing a Page. You have to log on to the Web each time. Pressing F1 doesn't take you to the help files.

Yammer says that from January 2012, users of this client will be able to download or go to a file direct. It plans other enhancements.

Offline working is not possible on the Windows client; it simply will not start unless you have a network connection. This is a drawback. The itinerant worker does not always have access to the Web but might want to read existing material or prepare replies and uploads for when he or she is next connected. Another useful option would be downloadable help files.

There are even fewer features on the BlackBerry client. For instance, it does not show the Page that my other self has drafted. Also, it's currently showing "2 new" at the top of the screen but I can't find a way to identify those items, whatever they might be.

An upgrade planned for the first quarter of 2012 should allow the tracking of messages, and from the notification icon. As with many other suppliers, Yammer's BlackBerry client is not as functional as that for iPhones or Android devices. On the other hand, at least Yammer has one.

Only shared files are permitted on any of the three clients. If you upload a document, for example, Yammer won't accept it unless you specify a person or group to have access to it. That group can be the whole network.

Users might occasionally want to upload a file, say at the office, but not share it until later, such as when on the road. A suggested work-around is to upload to a private group. (Private groups of one are possible.) The user would then need to download the file later and upload it again, as Yammer does not permit private files to be shared directly with public groups.

When I set up a private group, Yammer told the rest of the network I had done so. The messages and files in that group aren't visible elsewhere but making news of its creation public is to miss the point.

File previewing takes place on a Web browser. I found inconsistencies here. Microsoft Word (.doc). Microsoft PowerPoint (.ppt) and Adobe PDF documents appeared promptly, with option bars for commenting and annotating. Shared editing of Word files was also possible, with colour coding of different users' contributions. Video (.mov) files showed properly.

I was unable to preview the following file types: ASCII text (.txt), Microsoft Excel (.xls). Web (.htm), pictures (.jpg and .tif) and sound (.mp3). This was the case whether using Google Chrome, Internet Explorer 9 or Mozilla Firefox. Yammer says all these files should be viewable, so there's a glitch somewhere.

Perhaps I'm expecting too much and too soon of these various clients. Yammer's popularity suggests that many people are happy with the service's features and user interface. There's little adverse comment on the Web.

Assessment

David Sacks and his colleagues have been both clever and lucky. In Yammer they have created a service that:

  • uses a modern, multi-tenanted architecture
  • is upgraded and revised often
  • has a familiar user interface
  • works on a wide range of mobile devices
  • uses a pricing model that encourages viral growth
  • arrived when the market was starting to expand
  • rides the wave of consumerised corporate computing.

The company has a strong management team, experienced in the ways of the Web. Critics say this might count against it when trying to sell to and support large enterprises but Yammer can soon recruit people with the right background. (It would be easier going about it that way than trying to teach elephants to dance.)

Money. Yammer Inc. is privately held, so does not routinely publish details of income and profits. One can take some guesses, though.

Here's the maths: 4 million users now, rising to 10 million in a year, means an average of 7 million users over the year. If, say, 17.5% of them are on a premium scheme, that means around 1.2 million paying users for 2012. If they each pay, on average, $50 a year (including discounts for large installations), Yammer's licence income next year will be roughly $60 million.

The company presently has around 250 employees and is recruiting energetically. Assuming the total rises to 450 by the end of 2012, the average headcount for the year will be 350. Annual revenue per employee for 2012 will therefore be around $170,000 (assuming no other sources of corporate income).

For comparison, Salesforce.com's employees brought in $330,000 each over the last 12 months, nearly double that rate. Although mainly in the CRM market, Salesforce uses a similar sales model to Yammer and has comparable user numbers but has been in business longer. This might encourage Yammer's board.

(Microsoft's income per employee for the last financial year was $780,000 and Google's was $1.06 million! Neither is directly comparable with Yammer.)

Yammer is unlikely to show a profit for at least a year. Even though it exploits viral marketing methods, making larger sales will cost money, as will looking after customers. (Yammer has this month opened a London office, with a staff of 25.)

None of this has discouraged Yammer's investors. They have put more money into the business this year, bringing the total funding to $57 million. Naturally, they will be expecting a decent return in due course.

Like most start-ups, Yammer's future could go one of three ways — a public offering, being taken over (or merging) or slowly fading to insignificance. I can't see the present management team putting up with, or staying around for, the last of those. Many customers would feel likewise.

Looked at simplistically, the most obvious candidate to buy Yammer would be Facebook but that would give corporate customers the heebie-jeebies. They're presently willing to trust Yammer with their data but few would want it in the hands of Mark Zuckerberg's notoriously butterfingered operation.

Perhaps one of the big line-of-business system suppliers will take a punt. If not, an IPO is likely but probably not until well into 2012 at the earliest.

All this will matter to Yammer's larger corporate customers, who presumably have asked for and received assurances. Unlike on-premise software, which keeps on working whatever happens to its maker, SaaS offerings are wholly and directly dependent on their supplier's well-being.

The company gives no figures for churn but the number of blue-chip customers with long-term installations suggests that it's low at that end of the market.

Competitors. Another factor in Yammer's growth and survival is how deeply and broadly embedded it can become in its customers' operations. Is it a supplier of enterprise-wide social software or a supplier of social software to enterprises?

The company has plenty of case histories on its Web site but few of them mention the size of the installation. Unless that gets near the potential maximum in each case, a customer would find it relatively easy to move its users over to a rival supplier.

As well as Jive and Salesforce, those competitors include small companies like Blogtronix, Moxie, SocialText and Traction Software. Unless Yammer makes a serious blunder, going to any of the latter group would be unlikely to appeal to a disappointed large customer.

A greater threat to Yammer is whatever Google and Microsoft have up their respective sleeves, probably to be revealed in 2012. IBM lurks, as always.

Integration. While not denying its usefulness, Yammer's Ticker presently seems to me more like cohabitation than integration (see below). If copying and pasting is the only way data can get from one application program to another on same screen, the two are not integrated. The API in that situation is a human being.

I think of Ticker more as a set of endoscopes, peering into and casting light on the workings of the systems of record and action inside the body corporate. Perhaps I'm being overly pedantic. The customers might love Ticker, and it's they who matter.

Yammer says it intends to integrate Ticker deeper within business workflows. Users will then be able to deal from within Yammer with approvals and other assigned system tasks

Another area for consideration by corporate IT departments is Yammer's choice of protocol. They need to check whether its espousal of Open Graph would be problematical for them or, conversely, if it offers opportunities not available through other methods.

Marketing. It is fashionable for suppliers and commentators to drone on about 'driving' this, that or the other thing. Such thinking is the opposite of what social networking is for and how it works.

There's an old saying from the south of England that "Sussex won't be druv" (driven). Social networkers are mostly of like mind. They would rather be encouraged and even enticed to use enterprise social networking.

Yammer is doing exactly that. One commenter on Quora said, "Yammer has found its way into the organization via the backdoor." That seems a smart approach. It's what the big social media networks do, which is no coincidence.

Pressure on customers. One of Yammer's rivals accuses it of holding the IT function to ransom. Users of the free service store and move company data without IT’s oversight. If the IT function wishes to take control of the data from those users, it must pay the premium that Yammer demands.

This is true, as it would be for any freemium service, but who loses (other than that competitor)? The IT function clearly wasn't providing an attractive-enough social service before, if any, so can now help users adopt something they've shown they like.

In turn, users get a social network better attuned to their organization and its line-of-business systems. They might even enjoy the unusual sensation of having held the IT function hostage, instead of the other way round.

(Accenture's October 2011 report on the consumerisation of corporate IT suggests this sort of demand will increase. Compuware's report of December 2011 says the trend worries many IT departments.)

A more constructive way of looking at the matter is to see if the users are making good use of any social networking system. If they are, there would be a cost to abandoning it. As a senior manager in Cargill, a US-based agribusiness, put it about his company's Yammer network:

Do we understand the risk [to employee engagement] of shutting this thing down?

That's good news in three ways. The users are benefiting, the organization is benefiting and managers are recognising the system's contribution.

Conclusion. It's hard to argue with success but it's prudent to ask if that success is well founded and sustainable. In its first three years, Yammer has shown enterprise in developing and marketing its service.

The company now needs to gain more users, both overall and within each customer organization. Its November 2011 announcements show that Yammer takes seriously the need for some form of integration with users' central systems.

This supplier is at a delicate stage in its growth. To take an astronomical analogy, Yammer is like a young planet. It is beginning to develop a significant gravitational field, which will help it attract more mass (that is, customers and partners). However, it is not yet large enough to resist being captured by a nearby larger planet or to compete for larger pieces of space matter.

Will Planet Yammer stay in orbit, survive and grow? I think it will but it has work to do.

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Published by: IT Analysis Communications Ltd.
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