TECHNOLOGY SPECTATOR: Yammer's grand ambition

The social network that calls itself Twitter for the corporate world has big plans in Australia – but can it convince companies to pay for its premium services?

Technology Spectator

It’s David Obrand’s first visit to Australia and so far Yammer’s chief customer officer likes what he sees.

The former Salesforce.com executive, who joined the social network outfit in October last year, is on a mission down under to drive the Yammer message home to Australian companies and hoping that they are willing to start making the move to its premium service.

Yammer touts itself as the Twitter of the corporate world. It can help staff communicate and collaborate with their work and in larger organisations can also help managers identify talent within the company.

Since launch in 2008, Yammer has four million users worldwide, with almost 15,000 companies in Australia on the network. Some of its big-ticket Australian users include corporate heavyweights like Deloitte, NAB, Suncorp, AMP and Westfield.

Obrand is confident that the Australian market is only going to get better, with plans to triple staff from eight to 24 employees in Melbourne by November.

However, there is one question that looms over Yammer’s success in this country. Will Yammer be able to convince companies that it has a product that is worth paying for?

The way things work on Yammer, companies can sign up for free and can then enhance the product through a paid subscription service. With the ‘freemium’ model working well, there may be a temptation for corporates to just stay with the limited service.

Of the 15,000 companies in Australia using Yammer only a fraction are using it on a paid subscription basis. Yammer’s ongoing success in Australia will rely on them being able to coax more companies onto their subscription service.

The plan

Despite the obvious risk, Obrand says that Yammer is on the right track in Australia and that once companies start using Yammer and "adopt the technology at their own pace”, they will begin to see a value in enhancing their system to the paid service.

According to Obrand, the existing business model puts continual pressure on Yammer to innovate and keep its users happy. After all if the company can’t keep people using it for free there is little chance they would want to pay for it.

Once a company has become familiar with the software, Yammer then demonstrates to the company – what Obrand calls – the "opportunities” that arise from moving to the paid model.

One of those opportunities is the ability to have a Customer Success Manager review your use of Yammer and recommend how to improve its use within your company.

Why pay for what’s free?

There is an inherent risk in Yammer’s business model that, despite all the add-ons, corporates may just be happy with the basic service. However, the business has its fans.

Telsyte analyst Foad Fadaghi says the corporate arena may be the best environment for a company to sell their product on a freemium model and Yammer’s model is a "strong strategy” in an industry where "enterprises first choose the software before looking at the prices”.

Fadaghi adds that as long as businesses are able to justify a return on their investment then they will be happy to pay for a service.

As far as its customers are concerned, Yammer’s subscription service does hold a number of attractive features.

For NGO group Earth Hour, one of the major draw cards of upgrading was the ability to add different users from different companies to a single group to collaborate.

On the free platform of Yammer, companies can only form a group with users who have the same email domain – creating problems for different companies who work closely with one another.

Earth Hour is part of a massive global conglomerate of NGOs that often collaborate and integrate campaigns with one another. According to Earth Hour’s director of technology Sid Das, signing up to the enhanced service to better communication with its counterparts was the logical choice.

"Email’s have their limitation and this form of communication makes the whole process transparent,” Das says.

"You can join a group [and by looking at their prior posts] see exactly what has been happening since day one.”

For National Australia Bank, the decision to upgrade to Yammer’s subscription service was driven by a desire to better brand and control their service.

NAB’s HICAPS chief executive Simon Terry said the upgrade has seen the company diversify and hone their use of the tool through Yammer’s CSM service.

Terry says that companies need to evaluate the software or themselves before making a decision on whether to upgrade.

"But there is a business case out there,” Terry says.

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