From retail chains to electric utilities to manufacturers, a growing number of U.S. corporations are harnessing the power of social networks to modernize how their employees communicate with each other, business partners and customers -- making these firms more nimble in the marketplace and leaving their less Facebook-savvy rivals trailing.
In the last 18 months, hundreds of thousands of companies have signed up for private cloud-based social networking services such as Yammer, Chatter, Huddle and Jive -- all of which are modeled after Facebook.
Today, millions of U.S. workers are using these social networking services on the job instead of e-mail, Intranet sites, wikis, blogs or other collaboration software. CIOs are reporting significant returns on their investments in these services, which cost $5 or less per user, per month.
"Social networking is really powerful because it allows people to have real conversations with each other, and it's unfiltered," says Chris Laping, CIO of the Denver-based Red Robin Gourmet Burger chain and a Yammer user. "It's a great way for me to get a pulse check on the topics that people are talking about in the regions, whether it's labor costs or food costs. ...There isn't a week that goes by that I don't see some conversation on Yammer that I don't think: 'Wow, that's interesting.'"
"I can't imagine going to another company and not having this," says Jon Green, vice president of IT with DenMat, a Santa Maria, Calif., dental products manufacturer that deployed Chatter 20 months ago. "We have a very aging employee base, and, quite frankly, I've been surprised at how many of them are on Facebook. ... Companies that don't adopt social networking will have a lot harder time recruiting or exciting their staffs.''
In the three years since it launched, Yammer has signed up 100,000 corporate accounts, including 80% of the Fortune 500. Among its 3 million users are employees of AMD, PitneyBowes, Deloitte and Ford. The cloud-based service provider is growing at a clip of 200,000 new users per month.
"Most of our traction is in large companies. That's where we are effecting the biggest change," says Adam Pisoni, co-founder and CTO of Yammer. "Companies are coming to Yammer realizing that social media like Facebook and Twitter are a new forum...but companies want a secure and private forum."
Like Facebook, Yammer offers real-time and mobile communications. Users can create profiles, write blogs, self-organize into groups, share documents and engage in instant messaging. Yammer conversations are archived and searchable.
Nationwide Insurance has 15,000 employees on Yammer, which it deployed nearly three years ago. The Yammer service has fostered 320,000 connections between Nationwide employees, and the resulting conversations have been searched more than 2,000 times. All of this collaboration is happening without the intervention of Nationwide's IT department, which doesn't need to do software installation, maintenance or training because Yammer is a cloud-based service.
"The reason why this is happening right now is particularly because of the economic downturn," Pisoni says. "Companies are realizing they need to do more to stay competitive. They need to leverage the knowledge of their employees better...They need to leverage new technology better."
Yammer has raised $57 million in venture financing, including $17 million in September from a fund led by a former Facebook executive.
"This year has been a really, really big year for enterprise social networking," Pisoni says. "We're spending less time trying to convince companies of the value of social; they're coming to us knowing the value of social now and how it...improves the transparency within their organizations....The big change is the increased hunger companies have to solve the problems that we help solve."
At Red Robin, Yammer is replacing SharePoint portals, e-mail and instant messaging as the favored way for regional directors to communicate with each other and with staff in the home office. Begun as a pilot project 10 months ago, the Red Robin Yammer Network has nearly 300 users and is growing virally.
"People have a hunger to communicate more and more with one another," says Laping, who was the seventh Yammer user at his company. "For people to be satisfied at work, they need to feel connected: connected to one another, connected to the best practices in the organization, connected to the way others are working, and connected to the current state of affairs in the company."
Laping says social networking tools like Yammer do a better job at many-to-many communications than e-mail, which is hierarchical, not immediate enough and not truly searchable. Instead of e-mail, Red Robin employees use Yammer to give feedback on corporate initiatives, share operational improvements, and discuss issues that are impacting the business - all in real time.
"You get better adoption on initiatives and greater return on strategy when people feel involved and bought in," Laping said. "You can have great ideas and the promise of returns, but what gets between them is this nasty feature called behavior change. If you can't drive or enable behavior change, you don't see the return. That's where Yammer helps us tangibly."
Companies that fail to adopt social networks internally are losing out on the opportunity to build a more engaged workforce, Laping warns.
"Companies are missing a great collaboration opportunity, a great feedback opportunity, a great pulse check," he says. "Social networking ups the ante in terms of getting work done. It improves how employees connect with the work they are doing and how incredibly impactful that work can be."
Similarly, Salesforce.com is seeing dramatic uptake of Chatter, which became available as a separate application 10 months ago in addition to being integrated with Salesforce. Among the 100,000 companies that use Chatter are Kelly Services, Burberry, Saatchi & Saatchi and Dell; these companies have created 200,000 custom Chatter applications.
"What we're seeing happening with social technologies is that the barriers are falling down in terms of who is an influencer,'' says Scott Holden, senior director of product marketing, Sales Cloud at Salesforce.com. "Everyone gets a voice, and the best ideas are bubbling to the top. Employees are using these technologies to turn themselves into meaningful voices in the room."
In surveys, more than a third of Chatter users say they are seeing productivity gains from the social platform. Specifically, 30% said they are sending less e-mail, 27% report attending fewer meetings and 52% say they are finding key information faster.
The latest version of Chatter, which shipped a week ago, allows users to communicate with customers as well as to send private messages internally. The file sharing features are improved, and the latest version of the desktop makes it easier to follow Chatter updates from key people and groups.
Holden says companies need to prepare their employees for social applications like Chatter. They need to be clear that the purpose is to share business information, not make frivolous statements. They also need to share use cases and explain proper etiquette.
"This is not Facebook for your company. This is taking the best social features of Facebook to make you more productive," Holden adds.
DenMat has overhauled its IT and its corporate culture since rolling out Chatter and Salesforce in February 2010. More than half of Den-Mat's 400 employees use Chatter, and the rest of the employees are being added to Chatter this month.
"DenMat has been around 30 years. The infrastructure from an IT point of view was all AS/400 [server] systems and green screens," Green explains. "We introduced Salesforce to the group, and immediately people started poking around with Chatter and relationships started forming. Our sales people started chatting with the accounting department about particular accounts."
DenMat didn't force employees to adopt Chatter. Instead, the firm let the application grow organically as employees started using it to collaborate with each other. Soon Chatter expanded from the IT and sales departments to marketing, customer service, accounting and R&D.
"Before Chatter, there was a lot of e-mail, but there wasn't a tremendous amount of collaboration. People were pretty much head down on their own jobs. We didn't have sales talking to accounting," Green says. "Now we're putting the rest of the company on Chatter because we've seen how it can work for us."
Green can identify 20 major problems that DenMat has been able to resolve within 24 hours due to Chatter conversations. For example, one customer was complaining to his sales rep that his Web site wasn't getting prominent enough display on DenMat's Web site. DenMat's IT department was able to quickly gather documents that showed exactly how often this Web site was mentioned and the number of people who clicked on it.
"This is improving our customer service, without question," Green says.
Chatter also is influencing how DenMat designs products.
"In the past, R&D would have developed a new tooth shape for our Snap-On Smiles, and the sales people would have run with what was developed. Now we have a platform for asking dentists about it. We have developers on Chatter talking about new features and functionality," Green says.
Green says he's comfortable with the security features of Chatter, which are important to DenMat because of federal healthcare privacy laws. He says employees are smart about not posting sensitive or private matters on Chatter, and that seemingly mundane conversations about the weather or sports teams seem to help build relationships among colleagues.
"If you're not investing or not putting together a roadmap for collaboration across departmental boundaries, then you are probably going to be at a competitive disadvantage against companies who do," Green warns. "These platforms really do help a company be more nimble."