Jive Software's initial public offering earlier this month opened some eyes for skeptics of social enterprise software. Expect major consolidation in the space to commence in 2012.
After Jive Software
(NASDAQ:JIVE) priced
its initial public offering at $12 a share
Dec. 12, its shares began trading 27 percent higher the next day at $15.12 per
share, and closed that day at $15.05.
The result? At the end of
the day, Jive, which had banked some $100 million in funding, was worth $888.9
million based on the company's total outstanding shares.
Jive's public debut won't be
confused for social gamer Zynga's later that week, and it certainly won't hold
a candle to Facebook's IPO next year. But that's about what you'd expect from a
standout in the social-collaboration software sector that has quietly gone
about its business.
Jive makes on-premise and
cloud-based software platforms that let company employees host online
discussions, publish blogs and host polls, share documents and post
Twitter-like status updates.
The company also offers
social-media monitoring software to help business marketers get a handle on
what consumers and rivals are saying about their brands. Jive's 600-plus customers
include McAfee, Informatica and Allscripts.
Jive competes with Microsoft
(NASDAQ:MSFT) SharePoint, IBM (NYSE:IBM) Lotus Connections, Salesforce.com's
(NYSE:CRM) Chatter and dozens of smaller companies in the competitive market
for social-collaboration tools.
Jive's IPO is good news for
both the long-time tech incumbents and for smaller players, Jive's rivals
claimed.
Rob Tarkoff, CEO of social
software maker Lithium was among the first Jive rivals to congratulate the
company on its public offering. He told eWEEK:
"The company's IPO is clear validation that social has gone mainstream for
the enterprise. We welcome the competition, and I believe that customers and,
ultimately, investors will recognize and reward the strongest players."
Analysts who cover
collaboration software are also sanguine about the prospects of the social
enterprise.
"The enthusiasm for Jive
certainly shows that there are great expectations for the social
enterprise," Nucleus Research analyst Rebecca Wettemann told eWEEK. "Beyond the initial buzz,
companies will look at how social networking integrates with other
infrastructure and applications they have; Salesforce.com still has a leg up
there."
IDC research shows that 42
percent of companies in North America are working on some social-collaboration
play or something of that ilk, IDC analyst Michael Fausette said. Moreover,
Fausette said fund managers and investors he spoke to have a very positive
outlook regarding the use of social technologies for business.
Of course, the next logical
leap is that Jive's IPO will trigger not only other IPOs, but more market
consolidation. Jive wasn't even profitable, yet the market is valuing it at
nearly $1 billion.
Lithium's Tarkoff is
predicting some industry shakeout in 2012. Fausette agreed, noting that there
will be a lot of consolidation in the social enterprise in 2012 as companies
lacking compelling social-enterprise tools and strategies grow hungry for some
smaller fish.
"Oracle, SAP,
Salesforce.com, IBM, Microsoft, etc., will likely buy up many of the better-known
social companies to jumpstart their own offerings," Fausette said. Jive, I
think, won't be an exception. I should point out that Jive already has a close
relationship/partnership with SAP, and there have been rumors that an
acquisition has been discussed ... of course, who knows what will happen."
Indeed, and if SAP's $3.4
billion bid for SuccessFactors is any indication, the enterprise software maker
is not shy about shelling out for cutting-edge cloud software specialists.
Jive, with its proven
technology and customer base, may get acquired yet, despite the existence of
hundreds of smaller, cheaper players. To wit, keep an eye on Lithium, NewsGator, GetSatisfaction,
Igloo, Yammer and other Jive rivals that could get acquired before going
public.
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