enterprise social software overviw
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PRIVATE AND CONFIDENTIAL TECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS.
Peter Falvey
Managing Director
P. 1.617.598.0437
Jason Myler
Managing Director
P. 1.617.598.0438
Jeffrey Cook
Vice President
P. 1.617.598.0439
Enterprise Social Software Overview
2
Enterprise Social Will be an Active Sector in 2013
Adoption of the Social Layer: Businesses are seeking to adapt Web 2.0 technologies customized for
the workplace in order to increase team and project efficiency and also connect with current and
potential customers
Enterprises are demanding an ecosystem of social apps: Businesses that currently use one social
application are finding that they need more: they want to be able to pick and choose from a suite of
applications that can be integrated into several business functions and verticals
Highly segmented market of point solutions: The maturation of social media has created a landscape
of diversified segments to deal with the numerous use cases of social media, both internally
(communication, collaboration) and externally-focused (marketing, customer care)
Large players will need to acquire to build solution sets: The vastness of segments in social
enterprise software has led to a dynamic in which only the large software players will be able to stay on
top of everything to be competitive
− large tech players have been testing the waters in 2011 and 2012, acquiring pure-play enterprise
social solutions
With solid growth prospects and attractive growth drivers, we expect the level of
acquisition and investment activity in enterprise social software to accelerate in 2013
3
Enterprise Social is the Solution to Business Collaboration
Enterprise collaboration needs have evolved from traditional email and instant
messages to highly integrated applications that provide on-demand solutions and
increase efficiency and productivity
Enterprise Social In
form
atio
n
Today’s workforce is mobile
and distributed
− Teams need tools to manage
project tasks, give status updates,
change/edit working drafts, and
engage in general collaboration
with their peers, who could
possibly be around the globe
− Must be able to access this
information anywhere on any
device
Actively connecting with
customers
− Web 2.0 technologies allow the
enterprise to receive critical
feedback and insights from its
customers about its products
and services
− A new avenue to attract
customers in real-time
High need for expertise on-demand
− Enterprises and employees alike need easy-to-use
solutions that enable immediate access to information
that usually would take hours or days to find otherwise
4
Impacts on the Value Chain
Enterprise social software provides unique collaboration capabilities within the
enterprise for key business processes, both internally between employees and
externally among the organization’s customers
Human Resources
On-boarding
Employee reviews
Feedback
Training
Optimizing processes
Best practices
New methods
New Product Development
Collective intelligence
Refinement of innovation
Employee / customer feedback
Sales
Improved sales
Complex opportunities made simpler
Tools driving performance/innovation
Manufacturing / Operations
Problem identification
Exception handling
Optimization
Customer Service
Access to better/on-demand information
Expertise
Collective action
Marketing
Reuse of materials
Access of expertise
Faster development of plans
Internal External
5
Aligning Social Business Value with Viability within the Enterprise
Source: Forrester Research
Adoption of solutions is a key challenge that drives
likelihood of business value add – different functions
have varying thresholds for social software usage
− Sales professionals often embrace tools that
drive performance and compensation
− Marketing professionals often have latitude to
embrace new work styles if results are good
Flexibility of processes within enterprise functions also
have a big effect on ability to implement social software
− Human resource value is medium but can be
higher when applied to processes like on-
boarding. Viability tends to be lower however, as
processes are often entrenched
− Operations and manufacturing viability are low, as
processes tend to be inflexible and workers are
often not willing to change them
The more layers of constituents and processes involved
can also hinder strategic alignment and viability
− Benefits can produce great value for product dev,
but teams must be open to external input
− While impact on customer services can be very
high, viability can be low if business owners,
employees, and technologies are not aligned
While enterprise social software can create business value in many different
enterprise functions, the dynamics of each function create varying degrees of viability
Business Value
Str
ate
gic
Alig
nm
en
t / V
iab
ilit
y
MANUFACTURING
OPERATIONS
HUMAN
RESOURCES
TRAINING
MARKETING
SALES
NEW PRODUCT
DEVELOPMENT
CUSTOMER
SERVICE
Highest likelihood of
rapid business value
6
High Growth Prospects Show No Sign of Receding
The market is currently ~$1B and expected to grow
61% annually
Maturity of social media driving enterprise adoption of
social software
− Almost half of enterprises invested in social
software in 2012
− 18% plan to expand/upgrade implementation and
another 12% plan to implement within next 12
months
Number of use cases for enterprise social continues
to show importance of adopting solutions
− Internal collaboration, external communication
and social relationship management
Social enterprise software becoming the new and
better alternative for companies – finally delivers the
functionality required to answer business needs
− 37% of IT decision markers plan to implement
enterprise social software, compared to 25% who
are planning investments in ERP, PLM and CRM
− These applications will surround and eventually
eclipse traditional UC&C software by 2016
A highly untapped market that will grow exponentially, as social media is adopted and
enterprise social solutions are implemented throughout organizations
KEY DRIVERS
ENTERPRISE SOCIAL VS. UC&C OUTLOOK
ENTERPRISE SOCIAL MARKET SIZE
Source: IDC, Gartner, Forrester Research
$600 $970
$1,500
$2,500
$4,000
$6,400
$4,000
$5,600
$7,400 $7,100 $6,600
$4,200
$0
$2,000
$4,000
$6,000
$8,000
2011 2012 2013E 2014E 2015E 2016E
Enterprise Social UC&C
7
Fragmented Market with Ample Opportunity
Market share is highly fragmented and excludes many of the typical enterprise
software vendors, creating opportunity for independents and consolidators alike
IBM, 14%
Jive , 9%
Communispace, 8%
Telligent, 6%
Socialtext, 4%
Mzinga, 4%
Lithium, 4%
Yammer, 3%
NewsGator, 2%
Vmware, 2% Other, 44%
ENTERPRISE SOCIAL MARKET SHARE CONSOLIDATORS NOT IN TOP 10
Source: IDC
8
Market Divided Between Internal & External Enterprise Social
External Internal
= Acquired / Operating Subsidiary
Sc
ale
S
ma
lle
r L
arg
er
Both
9
Point Solutions Consolidating into Platform Suites...
Industry-Specific
− Features tailored to specific industries
− Construction, education, and media are most
common industries
Project Management
− Track, monitor, and assign tasks
− Interactive Gantt charts
− Budgeting and costing
− Contains many similar collaboration features
− Wikis and microblogging, live updates and notifications
− Blanketed access to all group members/employees
− May be comprised of some social elements
Collaboration
− Activity streams, user profiles, live comments
− Social network within company and/or customers
Platform Suites
One-stop shop platforms with a
network of applications to provide
all aspects of Enterprise social,
both internally and externally
focused.
A segmented market of point solutions is quickly consolidating into platform solutions
that offer functionality across all Enterprise social spaces
Pure Social
10
Target Date Market Solution
Jun 2012 Enterprise social networking
Jun 2012
Mar 2011
Sep 2011
Social media marketing apps
Social media monitoring
Customer service management
Oct 2012 Collaboration software platform
Jun 2012 Social CRM
Dec 2011 Online community software
May 2011 Collaboration software
Jan 2011 Enterprise social applications
May 2011 Enterprise social applications
Jan 2012 Customer communication software
Apr 2012 Collaboration software platform
...as Large Players Build their Platforms Through Acquisition
Source: Public filings
Acquirer
Large Enterprise social platforms are forced to snap up point solutions in to order to
build their portfolio and keep up with the vastness of segments in Enterprise social
11
Investors Remain Active in Enterprise Social Market
Source: Public filings
Target Date Round / Total Raised Investors
April 2013 $84M IPO
March 2013 $3.6M / $3.6M Austin Ventures, First Round Capital, Valhalla Partners,
CrunchFund, Floodgate
February 2013 $2.5 / $3.3M CincyTech, Individual Investors
January 2013 $6M / $9M Qualcomm Ventures, Individual Investors
January 2013 $5M / $34M NXT Capital Ventures
November 2012 $30M / $70M Investor Growth Capital, North Bridge Venture Partners,
Sigma Partners, Accolade Partners
October 2012 $16.5M / $30M Greenspring Associates, Escalate Capital, University
Venture Fund
August 2012 $100M / $100M Andreessen Horowitz
June 2012 $12M / $48M Benchmark Capital, Vintage Partners, Carmel Ventures,
DAG Ventures
May 2012 $24M / $38M Jafco Ventures, Eden Ventures, Matrix Partners, DAG
Ventures
February 2012 $10M / $21M Anthem Venture Partners, Telesystems
January 2012 $53.4M / $107M New Enterprise Associates, SAP Ventures, Emergence
Capital
12
Falvey Partners Overview
FOCUS SELECT TRANSACTION EXPERIENCE
December 2011
Has acquired
July 2012
Has been
acquired by
September 2011
Series D
Convertible
Preferred Stock
Led by
September 2012
Has been
acquired by
A portfolio company of
July 2011
Has been acquired
by a portfolio
company of
April 2011
Has been
acquired by
July 2011
Has been
acquired by
February 2011
Growth equity
investment from
July 2011
Has been
acquired by
March 2011
Has divested
its diagnostic
solutions unit
November 2010
Has received an
investment from
A portfolio company of
October 2010
PGI Notify and Send
platforms acquired by
August 2010
Two divisions have been
acquired by a portfolio
company of
April 2010
Has been
acquired by
August 2010
Series C
Convertible
Preferred Stock
Led by
SERVICES
Sell-side or buy-side M&A
Growth capital raising
Board and corporate advisory
SECTOR
Software / SaaS
Tech-enabled business services
IT services
Internet / digital media
COMPANY TYPE
$50M - $250M in enterprise value
Growing, with established scale
Profitable or near-term path to profitability
Falvey Partners is a leading advisory firm serving
mid-market clients across technology sectors
Founded in 2012 by Peter Falvey and key members of the Morgan Keegan / Revolution Partners team
Falvey Partners professionals have closed dozens of software transactions representing billions of
dollars in transaction value