On a quest for the future of enterprise collaboration

Businessmen climbing upWith Box prepping its IPO, Microsoft bringing Office to the iPad and Dropbox announcing new business tools, it’s a good time to revisit the evolution of enterprise collaboration, which I last discussed in December.

Before looking at specific vendor actions, I’m going to take a step back and highlight three big fault-lines that cut across the enterprise collaboration space. If you’re not aware of these huge divides in thinking then it’s difficult to have a productive discussion. You need to know where people are coming from to properly evaluate what they’re saying.

1. Inside vs outside enterprise

This was highlighted for me at a EuroCloud UK meeting last week organized by board member David Terrar on the future of collaboration, with contributions from Huddle, IBM, Jive, SAP, and his colleagues from Agile Elephant. The emphasis there was very much on collaboration inside the enterprise (what used to be called enterprise 2.0) rather than outward-facing collaboration. Huddle was the one exception, for whom “secure external collaboration” is a sweet spot, as CMO Chris Boorman had told me at a meeting a couple of weeks previously.

Although it’s very commonplace, this divide seems false to me. While there’s a lot that needs fixing in the realms of internal enterprise collaboration, doing so in isolation from the outside world seems counter-productive. I do sympathize with the additional difficulties of grafting external collaboration onto a hitherto inward-facing collaboration landscape — it often means grappling with unfamiliar identity and access management issues, as for example Stanley Black & Decker found when rolling out OneDrive to users. But in an increasingly connected business world, these are challenges that should be faced and overcome sooner rather than later.

2. Document vs process centric

Whereas the collaboration provided by Google, Box and Huddle is centered around documents, others such as Jive, SAP Jam, Salesforce Chatter and Tibbr are designed to focus more around processes within other applications around the enterprise. Microsoft is extending its Yammer acquisition in this direction too, and being able to cut across both process and document platforms makes this more useful than just one or the other. But the time it is taking Microsoft to implement this illustrates how much of a challenge it is to get right.

Again, this seems to me to be an artificial divide. The fact that today’s enterprise collaboration solutions mostly fail to cross it speaks eloquently to the bind the IT industry has got itself into with all its separate stovepiped stacks of functionality. Effective collaboration surely has to cut across both documents and processes (or to put it another way, both unstructured and structured data stores).

At the same time, you have to ask the question whether integrating truly connected collaboration into legacy application stacks is really worth all that effort. My diginomica colleague Den Howlett recently parsed SAP collaboration chief Sameer Patel’s presentation on digital transformation and challenged the view that it’s useful to build repeatable processes that will work within the limitations of existing systems. I share those reservations.

3. Old world vs new world

The biggest divide is largely an undercurrent rather than visibly surfaced in many of these discussions. Former Windows chief and now Box advisor Steven Sinofsky took a headfirst dive into the nature of this divide between old and new ways in a blog post last week and an accompanying podcast.

Expanding on a theme explored in a panel session at last year’s Boxworks, he talks about the ways in which enterprise processes have been shaped by the technology used to automate them and challenges us to reconsider how we do things today:

New tools are appearing that offer new ways to work. These new ways are not just different — this is not about fancier reports, doing the old stuff marginally faster, or bigger spreadsheets. Rather, these new tools are designed to solve problems faced by today’s mobile and continuous organization.

The blog post ends with a thought-provoking list of ten things people do with the new generation of connected tools that they’re doing out of habits formed by using the old generation of digitized paper-based processes. Things like, “think your work is done when a document is done,” “Delay doing things until someone can get on your calendar,” or “Bring dead trees and static numbers to the table, rather than live, onscreen data.” I heartily recommend reading and digesting the full list to get an insight into how far work culture has to change before it can realize all the potential of connected digital technology.

Against the grain

Of all the collaboration vendors competing for enterprise mindshare, the least sympathetic to conventional enterprise mindsets is Google. The company appears to have an arrogant belief that if it pays too much heed to enterprise demands, it will compromise its offering. In its defense, this may not be so foolhardy a stance as it at first appears. Google’s uncompromising position pushes away those enterprises that are not yet ready to cast off the old ways. It can then focus on succeeding with those that are ready to work differently.

I spoke to one such organization earlier this year. The Weather Channel’s CIO Bryson Koehler emphasized that implementing Google Apps was part of a global change program for the business:

“We had to go through a cultural revolution. We needed to increase the velocity of change in our business, be able to multitask on many different projects simultaneously, increase the number of teams we work with both inside and outside the company.”

This was in contrast to another Google Apps implementation at a previous employer where he’d seen poor uptake because the cultural fit wasn’t there, he had told me.

With the right culture, new ways of working rapidly emerge, such as use of Google Hangouts for real-time video interactions in place of less immediate forms of communication. As Koehler told me:

“You get on a Google Hangout and it’s amazing what you get accomplished. Google rooms are a standard part of every office we build now. We’ve seen a dramatic use of the Hangout environment, which is exactly what my hope was — that, tied with the Google Docs and Sheets.”

Cultural leadership

Bringing about change on this scale requires top-down determination as much as it benefits from millennials on the ground. Huddle’s Boorman, who in addition to his conventional CMO duties heads the vendor’s customer success team, sees this in many implementations:

“It really is incredibly difficult to change the culture of an organization from the ways they’ve done things for years and years to suddenly going cloud-mobile-social.

“Cultural change is a very difficult thing. What we find works extremely well is starting small, engaging a group of users, make sure they’re extremely successful and using the power of employees to drive that across an organisation.”

This incremental approach is textbook for cloud collaboration roll-outs. The new ways of working must be pioneered by an advance guard who can demonstrate early successes and then inspire others to make the leap. In parts of the Yammer userbase, this process can spread over several years in a large enterprise.

Top-down cultural leadership is essential to hasten the pace. With the right commitment, that can be achieved within a single enterprise. But where collaboration crosses enterprise boundaries (as it increasingly must) transforming old habits is even more of a challenge.

What of Harmony?

After such a lengthy preamble, what is to be made of last week’s annnouncements from Dropbox, in particular its promised Project Harmony?

Dropbox’s skill in synchronization is what makes it such an invaluable tool for individuals. I personally rely on Dropbox far more than I should to keep files in sync across multiple devices. But what is a blessing for an individual becomes a curse within a team context. Although Dropbox has been working hard to improve its team functionality, keeping documents in sync when multiple participants are editing separate instances becomes a nightmare. There are other gaps in capabiliity too. As Ben Kepes observed last week, “there is far more to being a credible enterprise company than a checkbox of requirements.”

As for Harmony itself, the promised integration with Microsoft Office is a useful add-on to what Dropbox already does but I’m not convinced that the ability to converse around documents adds enough to be really interesting. For one thing, it seems to overlap substantially with Yammer functionality, which by the time Harmony arrives will be better integrated with Office.

More importantly, if you’re going to collaborate on a document in real-time then the collaboration you really want is in-document editing rather than merely conversing around it. That’s where Google Apps shines, so unless Dropbox is planning to bring Harmony into the Google environment too (which Google would probably not allow) then the appeal I suspect will prove to be limited. (Unless Dropbox has worked out how to enable in-document collaborative editing in Office. Now that would be something else.)

That Box IPO

And finally. There was a collective gasp of surprise when Box revealed its financials in the run-up to its impending IPO. It is burning up cash at a fierce rate and even after a successful offering could have as little as nine months’ run rate or so before it will need to top up reserves again.

While others were horrified, I was reminded of Successfactors, which had very similar financials in the run-up to its IPO in 2007. It’s not unusual for fast-growing SaaS companies to sport such numbers. Josh James, the founding CEO of Omniture, explained how the metrics work at a SaaS industry conference in 2008:

“Every time we add an incremental customer, it costs us more money that quarter — it costs us more cash that quarter … It is really important to trust the math. The investors were saying, slam on the gas, but you have that gut-check moment there.”

Omniture was relying on a simple calculation that produces a ‘magic number’ telling you when you should hire more sales reps to fuel your growth as a SaaS business. The formula takes the incremental growth in the current quarter, multiplies by four to annualize it, and then divides it by the amount spent on sales and marketing in the prior quarter.

So, for example, let’s say your company increases sales this quarter by $750k over last quarter. That’s $3 million annualized. If you spent less than $4 million last quarter on sales and marketing. then you spent too little. $3 million is OK — a magic number of 1 is “pretty good,” said James. But ideally you should squeeze that ratio down to .75, even as far as .5 — “Go hire some more reps.”

Box is certainly being aggressive — based on the numbers in its S-1 filing, it has squeezed its ‘magic number’ for the past two quarters close to 0.4 — but the figures also show the investment paying off in growth achieved. Box is throwing as much as it can into expanding its footprint in what is a huge market opportunity and where the winners will need to have scale. I’m also reminded that both Successfactors and Omniture ended up being acquired. Box will want to remain independent, but if it finds that impossible I imagine there will be no shortage of potential acquirers eager to scoop it up.

Verdict

  1. Old-school enterprise collaboration is siloed in ways that get in the way of connecting people to relevant information or across enterprise boundaries.
  2. Organizational culture has to change dramatically to take full advantage of today’s connected digital collaboration technologies, which are themselves continuing to evolve.
  3. There is a huge gulf between how most enterprises behave today and the type of collaboration that will become mainstream in the future, which implies that there is still a massive unserved addressable market up for grabs.

Disclosure: SAP and Salesforce.com are diginomica premier partners. Box is a diginomica partner. The author is chair of EuroCloud UK. Box and Microsoft have contributed T&E to attend their respective events.

Image credit: © Nomad_Soul – Fotolia.com

Phil Wainewright

Phil Wainewright

Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant since 1998. As well as documenting the transformation of 21st century enterprises by digital technology, he is co-founder of industry advocacy group EuroCloud.
Phil Wainewright

@philww

web cloud SaaS expert, blogger @diginomica, LibDem, dad
Phil Wainewright

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