Social media for business a growing challenge 14 September, 2009 By Steve Wexler

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According to IDC, 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. Dominant vendors reported double-digit growth rates in 2008 and higher-than-expected growth in the first half of 2009. Overall, the 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 implications -- and opportunities -- for businesses, vendors and the channel are huge, she said.

The social networking market really started to take off in 2007, and while the business growth did not meet expectations in 2008, Dangson said people are looking for the same types of capabilities and experiences at work, and if they aren't provided, will bring them in themselves. This ad hoc approach, and the lack of metrics make it very difficult to determine the business value of these initiatives but she expects the situation to improve next year.

"We're starting to see vendors add metrics to their products." And there are case studies and other data available for helping to determine the business benefits, she added.

IDC's advice is that organizations understand what you will do with the community and how it will tie back into your core objectives before you deploy this software. "It's an extension of what you're already doing. Companies are looking at this as something separate, but it's not."

The lack of clear-cut objectives and guidelines are not the only challenges. Concerns about security and changes in corporate cultures are additional barriers.

"There's definitely concern with some companies about how secure these platforms are," said Dangson. "Is this really enterprise class with the security?"

The culture change can be even more of an inhibitor. "The idea of opening up conversations online can be scary to companies not used to operating that way." It's a definite challenge for companies to shift in that mindset, she said.

She said management, i.e. the CIO or IT manager, can bring value by getting involved and steering this initiative. "What we're recommending is to have specific business objectives in mind. It's more than just total audience measurement, but it's still a work in progress."

Jumping on the social networking bandwagon is not trivial, she added. "This software requires great upfront investment in technology and time." While she doesn't have the data to support this yet, she believes a lot of companies are struggling with the ROI is. They haven't seen the benefits yet.

As the market -- and usage data -- grows, it will be easier to demonstrate the business value, said Dangson. It's also a good opportunity for professional services as users look for help in planning, deploying and managing these initiatives.

"The technology is sort of the easy part. What you do with it has been more of the challenge."

The IDC study, U.S. Online Community Software 2009-2013 Forecast: Strong Growth Despite Recession  Corporate Culture Remains Inhibitor (IDC #219642), forecasts expenditures on online community software by businesses in the United States from 2009 to 2013. Historical and forecast revenue data is shown for the total U.S. market.