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What IT needs to know about the Microsoft-Yammer deal

With Microsoft buying Yammer for $1.2 billion, Microsoft promises it will push the business collaboration/social networking platform into more of its cloud-based services. That means corporate IT pros will have to deal more with Yammer in their day-to-day jobs. To help prepare for that, here are some key questions and answers they need to consider.

BACKGROUND: Why Microsoft spent $1.2B on Yammer

MORE: Microsoft's 10 biggest buys

What do Microsoft and Yammer say about their product plans?

Microsoft's Office division president Kurt DelBene: "Over time, I see opportunity for exciting new scenarios by adding Yammer's stand-alone service alongside and integrated into our collaboration offerings with SharePoint, Office 365, Dynamics and Skype. I picture people being able to use Yammer to manage and expand their professional relationships, share and collaborate on Office documents, stay informed about content updates, and to seamlessly move from status updates and feeds into voice and video conversations."

Yammer CEO David Sacks: "This transaction is going to bring Microsoft's reach, distribution resources, expertise to help scale Yammer to the next level. Today's announcement is great for Yammer customers because they will continue to enjoy the same Yammer service that they've experienced to date with its focus on rapid innovation, simplicity, but at the same time we're going to look at opportunities to integrate with other Microsoft products. You're going to see more and more connections with Microsoft products like Office 365, SharePoint, Dynamics and Skype."

What Microsoft platforms will Yammer integrate with?

Yammer already offers SharePoint, Office 365 and Dynamics CRM integration, and both companies seem to promise they will expand that and add integration with Skype.

When will we see this integration?

Given that the companies already accomplished some integration before the buyout, further tightening their platforms could already be underway.

What does this mean for security?

Microsoft views Yammer's business collaboration/social networking software as a way to continue moving its core products to the cloud as it has already started to do with Office 365. IT pros have to practice ongoing diligence about compliance and security when business is done in a public cloud environment. They also need to set clear policies on what can and cannot be entrusted to the cloud.

Can't IT just say no?

Yes, but Microsoft is hoping that because Yammer has a free version, workers will start using it on the job, unsanctioned by IT. In announcing the acquisition, Microsoft CEO Steve Ballmer seemed fascinated by Yammer's "freemium" business model where customers get the basic product for free and once they see the benefits are willing to pay for more features. They can sell products through the front door by convincing decision-makers that there is a need for them. But if Microsoft creates demand for the products from within, the sale is made for them.

When employee groups find Yammer productive, and its use grows organically, at some point the business has to acknowledge its presence and get a handle on it. Ignoring it eats up network resources unpredictably and poses potential security risks.

Doesn't Microsoft already have products that perform the same functions as Yammer?

There is some overlap, particularly with SharePoint, but Yammer's familiar social-networking interface is more extensive and attractive to many users. Proof: Yammer customers are already willing to pay a premium for its Microsoft SharePoint and Microsoft Dynamics integrations.

What do Yammer services cost?

There is a free version, but a group service with more functionality costs $79 per group per month. A customizable version with administrative controls is $5 per person per month and the version that includes better security and SharePoint integration costs $15 per user per month.

Yammer also sells premium support, training and engineering services.

Who uses Yammer?

The company claims Ford, Deloitte, Intuit, DHL, Shell, eBay, Pitney Bowes and 7-Eleven among some big-name customers. The company also claims to have its products in use in 70% of Fortune 500 businesses.

Who are Yammer's competitors?

Competitors in the area of business social networking platforms include MangoApps and Jive, but larger competitors have made social networking acquisitions of their own. Cisco offers WebEx Social, IBM offers Connections, VMware has SocialCast, Salesforce has Chatter, Oracle has bought both Collective Intellect and Vitrue and Citrix has bought Podio, to name just some.

Does Yammer make a lot of money?

IDC estimates it made $22.3 million in 2011. With claims of adding 250,000 customers per month to its 5 million customer base, it could increase revenues nearly $10 million by this time next year if it converts just 10% of its new customers to its least expensive paying option. With links to Microsoft products and access to its sales infrastructure, it could grow even more rapidly.

Read more about data center in Network World's Data Center section.


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