The attack of the huge Enterprise 2.0 vendors

A funny thing happened at the Enterprise 2.0 conference in Boston [1] between last year and this year. All of a sudden larger vendors have discovered this space in a big way and it's changed the complexion of the conference and of the market. For the last couple of years, with the exception of Microsoft [2] (NASDAQ: MSFT [3]), small vendors with small booths including Socialtext [4], Jive [5] and Traction [6] dominated the show. And while they're all still here, the big boys like IBM (NYSE: IBM [7]), Cisco [8] (NASDAQ: CSCO [9]), SAP [10] and Novell [11] have shown up too. A trend like this is hard to ignore and it means the market is starting to mature.

Where did they come from?

It seems these big players have come out of nowhere with tools that look eerily similar. They have watched the space from afar and seem to sense the market has reached a point where customers are looking for more complete solutions from established brands. That said, these tools all have a Facebook look and feel and they all do basically the same thing, providing a place to build a profile, add friends, post links and status updates and so forth. There seems to be very little to differentiate these players from one another. Of course, the same goes for the smaller vendors, but it leaves me wondering: When the big guys take over the playground, do the little guys stand a chance?

Survival in the niches

While there will very likely be some significant consolidation in the market moving forward, this probably isn't a death knell to all of the small players who have been around for a while and understand the market so well. For instance, I was talking to Chris Yeh, VP of marketing at PBWorks [12], a SaaS-based Enterprise 2.0 tool. It too has a standard look and feel, but Yeh says, he saw this convergence coming last year and he had his team focus on specific niches. So the company has decided to concentrate on agencies like PR and advertising because these customers engage in a lot of collaboration in and out of house. 

They look at smaller companies in these markets who don't want to build infrastructure and the SaaS solution provides them with Enterprise 2.0 functionality without making huge investments. What's more, PBWorks lets people outside the customer's company use the service for free, something that the license-driven big players aren't likely to do. (Microsoft offers a special license for this purpose, but it will cost extra of course.)

Big players move slowly

Another way that the original wave of Enterprise 2.0 companies can continue to thrive is through innovation. Ben Kiker, CMO at Jive, candidly admits he doesn't have Microsoft's marketing budget, but he believes his company can move more quickly and innovate faster than the larger companies can (and I agree). And Jive has large customers today like Alcatel-Lucent [13] and CSC [14] (both of which presented at the show) proving that they can compete with bigger brands for large customers.

Platforms and infrastructure

Andrew McAfee [15], the MIT professor who coined the term Enterprise 2.0 back in 2006, said at the Keynote on Tuesday that the focus of Enterprise 2.0 today is on building a platform and backend infrastructure to support the software. This plays to the sweet spot of the larger vendors looking to sell some combination of software, services and hardware. The platform appeals to enterprise customers looking for a single point solution that covers the functionally they are looking for. 

At this point in its evolution, many companies recognize the value of Enterprise 2.0. The smaller vendors have laid the groundwork over the last several years, and now the giants are coming in for the kill. It might not be fair, but it shouldn't be unexpected. It's the nature of the business for bigger players to watch and pounce when the market is ripe.  As the Enterprise 2.0 market matures, change is inevitable, and we seem to be on the cusp of a major one. It should be interesting to see where this goes in the next year. - Ron [16]