Yammer’s Freemium Model Creates a Viral Effect Inside Companies

I recently met with John Arrow of Mutual Mobile.  When I asked him about interesting applications being used in businesses, he told me about Yammer.  He introduced me to how Yammer gets their product into businesses.  Yammer takes over from the bottom-up as opposed to the top down.  Once the entire company is using Yammer, the CIO is, in a sense, “held hostage” if he wants to manage the company’s Yammer account.  The crowd overtakes the top.

Compare this to the traditional method of software sales: a salesperson takes the CIO out to play golf, convinces him that the software will do inane things and then mediocre software gets rolled out to the masses—and no one uses it.  Sound familiar?

As Adam Pisoni, CTO of Yammer says, “Yammer has a freemium business model.”  This business model creates a viral effect inside the company that can spread like wildfire.  From there, it’s a done deal, sales-wise.  “Once the business value has been proven, the organization can choose to purchase Yammer and roll it out to the entire organization,” Pisoni explains.  By having employees validate whether a product works or not prior to the sale, the company can see if it will be of value to the company.  As Pisoni describes, Yammer “primarily relies on employees to champion [their] software by trying it first.”  Evangelizing a product is a powerful force, more powerful than ads or sales pitches.

So what is Yammer?  Yammer is a “social collaboration [tool that helps] teams connect and complete the projects they are working on faster because they can find information, answer questions, poll colleagues and share ideas in real-time,” says Pisoni.  Yammer has a user interface (UI) that is similar to Facebook, making it familiar to most people.  Yammer has a downloadable desktop app as well as a mobile app, which also has a very clean UI and is easy to use. 

We’ve been experimenting with Yammer here at my company and there are mixed opinions.  Some employees find it unnecessary for a small company where we can just get up from our desks and talk to each other.  But other employees are not onsite and they enjoy it because they feel more connected.  One offsite employee said it felt like a giant instant message group since many employees are on Yammer, but it’s beyond an IM group. We can share content as well as send both private and public messages.  Though I like Yammer, I’m not going to force my company to use it until my employees demand it.  As Arrow says, “avoid shoving anything down employees’ throats” when it comes to implementing new technology.

Why not just use Facebook for your company?  Integration with other business-related applications is what makes Yammer an enterprise-friendly, social software as opposed to just another social network you have to join.  Yammer can integrate with email and even your company’s Salesforce account, which is a huge benefit. 

What does Yammer teach us about the future of the consumerization of IT?  Pisoni sees the tide shifting from selling executives mediocre products to having to please the masses in order to find success.  According to Pisoni,  “software companies are being forced to align their development with users instead of buyers.”  How will software companies accomplish this?  Pisoni believes software has to have the following qualities in order to be successful:

o       Simple to use

o       Requires little training

o       Can be implemented quickly

o       Has a clear ROI

Why should you pay attention to software like Yammer?  Pisoni gives a warning to companies who adopt new technology too slowly:  “Companies that cannot adapt quickly will be vulnerable to competitive companies that learn how to ride the wave of innovation faster and use it to their advantage.”  Essentially, you don’t want to be left in the dust.  Also, Yammer is a social tool, which is an area being ignored by many companies to their disadvantage.  As Arrow says, the biggest opportunity for companies regarding the consumerization of IT is “employee empowerment by removing the bottlenecks.  Social, cloud, and mobile are the three most significant emerging technologies that most companies neglect.”

What social technologies have been adopted by your workforce?  Twitter?  Google Chat?  Let me know in the comments below!  A big thank you to John Arrow and Adam Pisoni for giving me their insight!