Application Vendors Eyeballing Social Software

(MoneyWatch)  If you're one of those people wondering how vendors of social software, like Jive Software, Mzinga, and Communispace -- not to mention free public platforms like Twitter and Facebook -- can survive in the long run, you're not alone, and you're probably onto something.

Social software vendors offer applications that facilitate business communications both internally and between partners, and add value to distinguish themselves from free consumer-based services by offering analytic services that businesses can use to measure the impacts of those communications on revenue growth and cost savings. And unlike Facebook and Twitter, which have rejected overtures from, respectively, Microsoft and Google, those vendors are unlikely to continue going it alone.

Just last week, RightNow Technology, which competes with Salesforce.com in the market for on-demand sales applications, acquired social networking vendor HiveLive, while Salesforce.com announced technology partnerships with both Twitter and Facebook. Both companies say their customers will benefit from having greater insights into what their customers and market are saying about them.

Earlier this summer, SAP, which sells software used by companies to allocate resources, track inventories and manage accounts, began selling a data mining application through a partnership with Jive.

The market for social applications is growing at a scalding-hot 42 percent annualized clip between now and 2013, according to a report from IDC released today, giving established software vendors good reasons to prick up their ears. But it's as hard to make a compelling case for enterprises to invest in these applications as it is illogical for them to run them independently of other programs.

Most enterprise demand for social applications is emanating from marketing departments eager to measure market and customer sentiment, making it yet another application running in parallel with many others. A saner and more economical approach would be to run it in conjunction with applications used by sales departments to manage customer accounts. Caroline Dangson, who authored the IDC report, told me this morning that she advises customers "to tie this into [their] core business objectives, and not just allow it to be driven by marketing."

This relationship between traditional sales applications and emerging social-based ones isn't lost on established software vendors, who also see the value of integrating data from a variety of sources. That's why, while you might not see Twitter tying the knot with Google anytime soon, you're likely to see companies like Oracle, IBM, and Software AG snapping up social software vendors before they get too hot.

[Image source: Mediaspin.com]