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Can Jive survive alone?

I meant to write about Jive around the time of its second-quarter results at the end of last month, but because I stupidly put the task in the wrong folder it fell off my radar screen. The skinny is the company’s sales number were up, growing 31 percent over the same period last year, but the company lost more money than expected: $17.78 million, or $0.27 per share.

More of a concern is the tone of CEO Tony Zingale’s comments:

“Our second quarter financial results met or exceeded our guidance on both the top and bottom line. However, the evolution of the market toward the mainstream buyer, combined with our go-to-market execution challenges, led to longer than expected sales cycles at the end of the quarter.

[…]

“While the move to mainstream buyers is not without new challenges, we believe the reward for winning this opportunity will be substantial. We expect the Company to deliver improved execution in the second half of the year, and we believe that Jive is well positioned to be the pure play winner in the social business market.”

Jive is in a tough position. The current generation of social collaboration technology has become mainstream, and it is being sold by the largest enterprise software companies, like IBM, Microsoft, SAP, and Cisco. Many of those companies are banking on increased revenues from social tools as other parts of their businesses are losing money. Consider IBM, whose hardware business is in free fall (see “IBM’s future in doubt, according to Credit Suisse“), or Cisco (see “Cisco announces 4,000 to be laid off, and no mention of collaboration“). These are much larger companies, with developed global sales teams that can sell social tools just as well or better than the specialists at Jive and more effectively, since they have a broader spectrum of things to sell.

And I don’t see that being a pure-play social business company — at least based on today’s collaboration-based paradigm for social tools — is a good place to be. It’s not clear to me that it benefits customers, especially when you consider what Jive has been pouring its energies into: Jive StreamOnce.

“Jive StreamOnce, a new platform that allows people to seamlessly bring together all their business applications, including email, CRM systems, conversation streams, marketing productivity tools, document storage and data storage systems, into Jive.”

Wouldn’t it be a better proposition to get all of those capabilities from one vendor, which would decrease the likelihood of version skew and expensive integration?

I am not making this analysis based on a feature-by-feature evaluation of the company’s software offerings but simply based on an economic argument. The economy has recovered a bit in the U.S. and Europe, but spending is still way down and sales cycles — as Zingale said — are lengthening.

There is also the threat of a new generation of work management tools appearing, based on a fast-and-loose model of business operations, and starting a movement away from the rapidly aging model of group-based, push-oriented collaboration.

I think Jive ought to find a larger partner that could benefit from its deep understanding of social and whose existing solutions are incomplete. Perhaps Cisco or Oracle.