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There’s a quiet revolution pulling some numbers down

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Steven Rosenbush and Clint Boulton of the Wall Street Journal did some interesting analysis of the social business — or work technologies — market recently, and determined that various analysis firms have been dropping their estimates of the size and growth of that market, quite considerably.

For example, they report that IDC said in 2012 that the market would have a five-year compound growth rate of 42%, hitting $4.5 billion by 2016. But the firm has cut that back, now saying the growth rate is only 23%, and will hit $2.3 billion in 2018.

They quote Vanessa Thompson, an IDC research manager,

One reason for the change, according to Ms. Thompson, is that social and collaborative elements will be embedded in all manner of applications and tools, reducing the reliance on standalone software. “But that will take a very long time,” she said.

I think that Thompson and the authors are half right. The sales and adoption of the now-mainstream social collaborative applications — Yammer, Jive, IBM Connections, Chatter — has slowed.

That slowing is in part because the productivity claims of that class of software have not been met. However, the reasons are complicated.

First of all, these tools are the reflection of an idealized company: the company intended to use such a tool. And I believe that this idealized company is a poor match with today’s business (and perhaps it never existed at all).

One way to think about the gap between this idealized company and today’s reality is this chart, which I borrowed from a recent presentation by Mary Meeker.

contextual conversation chart 1

She’s making the point that we are witnessing a transition on the consumer web from apps like Facebook and Twitter, toward chat-based apps like HipChat and Snapchat. In the chart above you can see that this is a movement away from communications in a ‘scene’ — a large number of contacts that communicate infrequently — toward communications in ‘sets’ — a small number of contacts that communicate frequently.

I think the same shift is happening in the enterprise, a theme that I explored recently in a research note, Contextual conversation: Work chat will dominate collaboration. There’s enormous interest is solutions like Slack, Flowdock, and Hall. Slack just raised $43 million in April (see Work conversation tool Slack raises $43M), and founder Stewart Butterfield was profiled in a great write-up by Mat Honan (see The Most Fascinating Profile You’ll Ever Read About a Guy and His Boring Startup). Slack now has 120,000 daily users, and 200 organizations using it, including Expedia, Intuit, Dow Jones, eBay, Paypal, Mint, Citrix, Heroku, Happy Cog, Wall Street Journal, Motley Fool, The Times of London, Crossfit, MyFitnessPal, DailyBurn, Fitocracy, Rdio, Pandora, Nordstroms, Polyvore, Vinted, Urban Outfitters, Blue Bottle Coffee, GoDaddy, Urban Airship, Sony, Dell, AOL, ITV, NBCUniversal, Lonely Planet, TV4, Galen Healthcare, Shutterstock, SmugMug, Stripe, Venmo, Braintree, Airbnb, Adobe, Typekit, Behance, Foursquare, Yelp, WordPress, Moz, SurveyMonkey, Tumblr, Trunk Club, Seagate, Tibco, Trello, and HBO. Some serious names.

These tools are very different from the traditional social business platforms. They are based on a very different idealization of who would use them and how. It’s not a large company, not a scene of hundreds or thousands of users communicating, but small teams of intensely networked individuals.

Yes, of course people can work on many small teams, and teams of teams connect, too. But the big difference is that this generation of chat tools is focused on the small scale interactions of teams, and they aren’t trying to solve the bigger, top-down organizational problems that traditional tools seem focused on.

So, back to the projections: I think the analysis firms aren’t including the potential growth of firms like Slack. Note that none of the companies mentioned by Rosenbush and Boulton fall into that group: they are all more traditional social tools.

So it’s not that the enterprise won’t be spending money on work technologies: they will. But it’s going to be a different spread of tools, and ones that are based on a different conception of how to get work done. Namely, in small, intensely networked teams.

And of course, that can be going on quietly, possibly unobserved, even in companies where a corporate deployment of Jive or SAP Jam is in place.