Online Community Software Market to Reach $1.6 Billion in 2013

The market for online community software, including social networking applications, is expected to grow to $1.6 billion in 2013, spurred by increased use in the enterprise, according to a recent study by market research firm IDC.

With consumer social networks going mainstream, people are demanding similar applications in the workplace that provide easy-to-use and many-to-many personalized online experiences for creating, publishing, locating and sharing content internally and externally with colleagues, customers and partners, IDC said.

Moreover, according to the IDC study, if these social community applications are not provided by an organization, employees are bringing them in on their own. Thus, one of the best ways to secure social networking activities is for the organization to provide social software for employees to use, IDC officials said. This emerging business need has created a suddenly crowded market of online community software providers aiming to make the business world a more social place, the company said.

IDC forecasts that the U.S. online community software market will grow from $278.4 million in 2008 to $1.6 billion in 2013 at a compound annual growth rate of 41.8 percent. While the U.S. online community software market was not immune to the recession, dominant vendors in this space reported double-digit growth rates in 2008 and higher-than-expected growth in the first half of 2009, IDC said. Overall, the U.S. online community software market doubled in revenue from $135.3 million in 2007 to $278.4 million in 2008 based on the promise of online community software to help organizations deepen relationships with customers and innovate at much faster speeds, the company said.

The overall growth rate for U.S. online community software did not meet expectations for 2008 due to the tough economy and drastic cuts in marketing budgets, IDC officials said. However, IDC expects a resurgence of growth in 2010 as the economy recovers, more traditional enterprise players enter this market and methods for measuring return on investment become more standardized, the research firm added. Still, gaps in adoption will remain based on the failure among some organizations to adjust to these more transparent ways of operating, and some community initiatives will fail due to the lack of understanding about the human capital investments required by the community management model.

"The lesson that technology is only as good as its user will be a hard lesson learned for many companies needing to focus more on community strategy and management than on the technology solution," said Caroline Dangson, an IDC research analyst, in a statement. "Online community software enables new ways of working that require a shift in mindset and culture. IDC finds that traditional corporate culture acts as a major barrier to adoption today, even more so than the economic downturn."

More information can be found in this IDC study, U.S. Online Community Software 2009-2013 Forecast: Strong Growth Despite Recession – Corporate Culture Remains Inhibitor (IDC #219642), which forecasts expenditures on online community software by businesses in the United States from 2009 to 2013.