Consolidation activity is picking up in the provider markets, and the market for enterprise social software is no exception (see Josh’s post yesterday about SuccessFactors and Inform).  Two of the leading providers for employee communities and Enterprise 2.0, Newsgator and Tomoye recently announced plans to join forces.

I have followed both of these companies closely for some time, and I think this combination has tremendous potential. 

Newsgator has a well deserved reputation as a leader in enterprise uses of RSS, and their Social Sites product is one of the most well-rounded enterprise social platforms on the market today. Tomoye was an early entrant into the space and has been very successful – especially in the public sector – as a “community of practice” platform.  Their expertise and focus on employee knowledge sharing made them one of the very few pure social software providers that has had a eye on social learning use cases all along.  Tomoye’s Ecco product enables very successful Government 2.0 communities currently underway within the U.S. Army, the U.S. Air Force, and within the Federal Reserve System and Defense Acquisition University – both case studies in our research library.

There are obvious common points between the companies.  Both are based on the same technology platform: Microsoft .NET.  And both have found recent success employing a growth strategy based on selling to existing Microsoft SharePoint customers – their platforms addressing SharePoint’s inadequacies in the areas of Conversations and Connections while still benefiting from SharePoint’s Content strengths.

As for markets, while both companies tend to have larger, enterprise customers, both have traditionally focused on somewhat different buyers as best suits their respective strengths.  As noted, Tomoye’s success has been in the public sector – an area where Newsgator has not had a presence.   Tomoye also has several clients using their platform to support external customer communities as well, also not historically a focus for Newsgator. Finally, with regards to SharePoint, Tomoye has tended to work mostly with clients using the free version of SharePoint, and does not require SharePoint to be deployed.  Social Sites, on the other hand, requires SharePoint and is best implemented alongside mature, enterprise SharePoint deployments.

These differences speak to the combined company’s initial go-to-market strategies.  Tomoye typically implements faster than Social Sites, and requires fewer resources.  So Ecco will be positioned as the product for smaller projects, external audiences, small and midsized customers with fewer resources, and any buyer without an enterprise SharePoint installation.   Social Sites will be positioned as a potential step-up for current Ecco clients whose SharePoint deployment is maturing.
With this deal, Newsgator is purchasing Tomoye, the exact terms not disclosed.  The combined company plans to keep the two product lines separate for now, although work is already underway to enable some combined functionalities.  For instance, the company plans to quickly bring Newsgator’s extensive RSS support to Tomoye customers.  Both products have generally open architectures and both are used to working alongside another platform (SharePoint), so aggregating data across their two platforms is already possible.  The first order of business will be to combine sales and marketing efforts.  Combining the product roadmap will come later.
Congratulations to the combined team.  They have picked a good time for the combination.

And on that note, one other thought:

I have had two opportunities to discuss social learning in a large group setting recently.  First, I presented to a packed house at ASTD’s TechKnowledge conference on choosing a social learning provider.  Then earlier this week I had the pleasure of moderating one of our recurring roundtables for our research members on social learning.  The roundtables provide members with a forum to network with fellow members and to discuss solutions to common business challenges (one of the best benefits of being a member – I think).  While I’ve led similar discussions in the past, the tenor of both of these recent events points to a clear change in the overall ‘informal learning’ conversation.

At this time last year, most companies I spoke with where still getting their heads around what informal learning was and why we were even talking about it.   Questions focused on understanding the value and figuring out the relationship of social and informal learning to an organization’s overall learning strategy.  Don’t get me wrong; it’s not like companies today are not still struggling with similar questions. They no doubt are; but a year ago the conversations were almost always theoretical.
Today, companies are starting to address the practical aspects of these questions.  Now they say, “We know we want to leverage social learning in our efforts; we are starting to formulate an idea where will do so and why.  Now we need help with the how.  We need help communicating a business case to our stakeholders; and we need help developing monitoring and evaluation strategies to ensure alignment and business impact.”

This change in tone is not lost on the solution providers, be they the learning and talent platform providers or the pure social software players.  You can expect that they will all be making even more noise about their social capabilities this year than in the past.  And, good news for buyers, many of their offerings are starting to mature just as more buyers are ready to act.  I see the acquisition of Tomoye by Newsgator as a prime example of the next stage in enterprise social software – a stage involving more than just the early adopters.  Tomoye was a good (and rare) example of a social software company that had both the vision and domain expertise to successfully do social learning; they just struggled to be generally noticed.  Newsgator has great technology and great resources.  Combined the new Newsgator is definitely a company to watch.  Companies with existing SharePoint installations (regardless of the version) who are looking for a platform on which to build employee collaboration, communities of practice, and social learning should definitely consider them.

As always, comments welcome.
-David